Have estate agents missed the chance to ‘find their happy’?

Matt Fleming
Matt Fleming

As the hangovers cleared following Peter Knight’s impressive EA Masters Awards do in the autumn, I looked at a couple of LinkedIn posts relating to the event. I was amused to note that the principal partner was none other than Rightmove, a long-time backer of the organisation.

Now, I’m sure it can’t just be me that’s noticed, but if anything tends to stoke up emotions when two or more estate agents congregate in the same place, it’s the subject of the property portal once described by Patrick Hosking of the Times as a “cash generating gorilla” with “Herculean pricing power”.

So, it came as a bit of surprise to see they had such a high profile at the event. As Principal Partners, I’m guessing there would have been a Rightmove table at the dinner – a great opportunity for some of the more vocal dissidents to let them know first-hand how they felt about their relationship. I’d have loved to have been a fly on the wall. I’m assuming the amiable and popular Miles Shipside would have been in attendance, presenting the human face of the much-maligned portal.

True success for any commercial media channel, is achievement of ‘critical mass’. Coined from the phrase meaning the minimum amount of fissile material needed to sustain a nuclear chain reaction – in the media world, it’s when you command an audience of a size where your advertisers need you, more than you need them. A bit like the London Standard back in the 90’s.

As the first UK property portal on the scene with any meaningful inventory, Rightmove achieved this blissful state relatively early in its life – and has never really looked back. Their strategy of promoting the site direct to the consumer was key, and their iconic campaign featuring former England footballer Ian Wright, exhorting homebuyers to “make the right move” is still talked about today – in stark contrast to the bland or off-target ads that followed, both from them and their competitors.

After their estate agent founders took the business public in 2006, it stepped up the leverage of its market share, demanding ever larger fees for the use of its shop window. The agents cried “foul!”, but it’s tough to play hardball when your prospective customers invariably say to you, “you will be putting my house on Rightmove, won’t you?”.

So, with their ARPA (Average Revenue Per Advertiser) growing way beyond inflation year on year, and with the challenger brands never quite building the momentum required to dent their market share, Rightmove thundered on, deaf to the pleas for price restraint from their advertisers and oblivious to criticism from the industry generally. They were the darlings of the City, hardly surprisingly, and they are comfortably inside the FTSE 100 with a market cap. of around £6B. They looked invincible.

Then, along came Covid.

Even the mighty Rightmove had to make concessions as the first lockdown hit the property market hard and income for the agents pretty much evaporated. Along with the other portals, they had genuine concerns that half of their advertisers might cease to exist otherwise. During the spring of 2020, the property market was a dark and gloomy place.

Then an extraordinary thing happened. When the first lockdown ended in July 2020, after a couple of extensions, the house-buying public came out in their droves. Working from home had resulted in thousands of people reassessing their property priorities, interest rates were nailed to the floor, the government introduced a stamp duty holiday and the combination of all that was the most unexpected bull market I can remember in 40 years in the business.

Suddenly, agents didn’t need Rightmove to sell their precious inventory. They had endless lists of people on their books begging to be given first dibs on anything that came on the market. Asking prices were met, or exceeded, anything decent was sold within hours of being listed, and the Nationwide was registering double digit inflation. The agents, almost suicidal just a few weeks before, were enjoying a boom beyond their wildest expectations.

So, you’d think that, at last, here was their chance to negotiate hard. “I’m not happy with your rates and I won’t be using you – I’m switching to Zoopla!” All those agents that had complained for years that, if only they could, they’d be off – this was their moment. But, in the event, it was a little bit like Brooks Hatlen in the Shawshank Redemption. He spent years locked up in that hellhole, but when he was finally set free, he couldn’t leave. He’d become institutionalised and, in his mind, he couldn’t survive without it.

Countless agents have said, both to me directly and in endless published comments on the subject, they would be off – to Zoopla or On The Market, or even one of the smaller players, if only they were able – and then Rightmove would realise the error of their ways and step into line. But if not this summer – when?

Rightmove recently published their half-year results and normal service was resumed with an impressive set of post-lockdown figures. Revenue was up on 2019 at almost £150m with underlying profit a mouth-watering (or eye-watering depending on your view) £117m and, crucially, an ARPA of £1,163 – 8% up on the pre-covid number. They were able to boast an average 1.7 billion minutes per month spent on site.

Most important of all, despite the fighting talk, very few of those disgruntled agents and developers jumped ship, in a market so hot that they could have attracted buyers by waving a flag from the bathroom window.

Jason Tebb
Jason Tebb

Despite the arrival of the likeable and industrious Jason Tebb at On The Market, more impressive technology and investment from Zoopla and even the debut of the Bruce brothers’ latest brainchild, Boomin, the juggernaut thundered on. Even when the market presented a golden opportunity for the subjugated to vote with their feet, they mostly stayed put.

There is of course, the other nagging fear that lurks at the back of every agent’s mind; an agitated Rightmove, under pressure from their shareholders, watching their market share slide and their income fall, turning directly to the consumer and offering to sell their home without the need for an agent at all – the thing that nightmares are made of!

Do you remember the old saying, back in the 80’s, “Nobody ever got fired for buying IBM.”? That is a pretty good summation of where we are. It’s an aversion to risk. Whatever else you say about Rightmove, there’s no denying they are going to deliver you more eyeballs, for longer, than anybody else and that doesn’t look like changing any time soon. The ‘short-termism’ that characterises the industry means that the need for new instructions this weekend outweighs the need to rein in the owners of their main channel to market over the longer term.

It doesn’t matter how vocal the agents might be, if changing portals means risking losing instructions, or reservations for the developers, there aren’t many who’ll chance being the first to dash for freedom.

Although it might be a while before we see such perfect conditions for mass escape again, some brave souls will recognise the opportunity to take a stand is still out there. Savvy homebuyers know that looking at property porn on the portals is one thing, but in this febrile market, where demand far exceeds supply, chances are, by the time it’s online it’s already been sold. Perhaps, when the next potential client asks if their home will feature on Rightmove, the agent should say – “No need, I have a string of buyers standing by!”

So, my message to the agents and developers for 2022 is, don’t complain if you haven’t found your happy – you had your chance.

 

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11 Comments

  1. Simon Bradbury

    What an excellent and well thought through article – thanks Matt.

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  2. Chatty Cathy

    Interesting article Matt but when I talk to LL’s and sellers their view is ‘agents get paid for just sticking it on line’ and agents say ‘we don’t need the websites as everything’s selling’ clearly both of these views aren’t true as there’s 10’s of thousands of properties available all over the country. Using Rightmove, Zoopla, Facebook, Google, your own website etc all have a benefit and audience to market in front of so would the sensible starting point not be to look at where the largest groups are and then work on how to be most effective in that space?

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  3. Ric

    It’s just a guess, but I predict if the next big opportunity was “Breaking News: The internet has been closed down forever” I still think we would stick with RM. What else would we moan about.

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  4. Robert_May

    For 8 years once Primelocation and Findaproperty were in house and the duopoly was formed Zoopla gave up any realistic hope or opportunity it had to overtake Rightmove, many agents despise  them for their contribution  towards GH case with OTM.  They can invest what they like, taking sides in  that fight will not be forgotten in a hurry. As a portal and a SAAS business ZPG have multiple  issues that  prevent them going belly to belly with Rightmove or stop them getting overtaken by OTM. They lack the domain knowledge and experience to get SAAS legacy issues resolved onto a single platform and that’s a burden Jason  Tebb doesn’t have- he can concentrate on being a better portal without  needing to worry what’s happening with a  set of legacy CRM systems and  the increasingly frustrated customer base.

    Rightmove has been confident and complacent, Covid has shown how serious applicants  are happy to get intimate  and pro-active with agents- the lack of available listings means anyone serious about moving home has to  connect with and be front of mind with the agents most likely to list the homes they want to buy.

    Analysing the numbers as I do in some outcode areas 25% of agents have no available listings, another 25% have less than 3 homes to sell. that is commercially unsustainable.  Agents might be desperate to stay on Rightmove but unless commission paying transaction increase they have a stark choice to make; pay to be on Rightmove with no or few available listings, something that  works against them and for their competition or come off and take the line they don’t need Rightmove to sell property.

    I’m  bound to be wrong on  on all of this; I’m challenging the group-think promotion of Rightmove, I’m challenging agents who delegate their job to the portals and I’m challenging  suppliers, influencers and commentators  whose  own business is portal reliant. I’ve seen how quickly  complacent firms can  be overtaken so although I don’t think Rightmove will be or need to be beaten I do not think  the opportunity for change has not been missed

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  5. KByfield04

    The market closing in first lockdown gave agents a unique opportunity- to challenge Rightmove with absolutely no risk. For years agents have shouted ‘but we are the market not RM’ yet the most commonly cited reason for not leaving is ‘being crucified by our competitors’. It is this fear, justified or not, and the brand recognition/expectation of RM with the general public that has, for so long, prevented agents from at least trying to survive (or god forbid thrive) without RM. However, if you can’t leave when you industry is forced to close its doors for months, or even unite to temporarily remove listings (en masse) to remind certain execs who the REAL bosses are- then ultimately you have likely emboldened them further- if that was possible. If you haven’t left by now, let’s face it- you probably never will. Either way, probably time to stop moaning about it.

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    1. letstalk

      I couldn’t agree with exactly what you have written more if I tried. Any agent that continues to list with them is part of the problem, therefore you cannot moan when the inevitable happens…

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    2. AcornsRNuts

      The pleasures of each new year:

      Waiting for the first reported hearing of a cuckoo.

      Reading the first “Why won’t agents leave RM”? report.

      Some things in life never change.

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    3. Robert_May

      The opportunity  of lockdown 1 was lost to people too ambitious to deliver what they  promised. The number of people suddenly diluting a well considered strategy  demonstrated what has to be overcome in order to challenge  Rightmove.

       

      The duopoly was broken, that will not repair now, but strategic alliances and innovation will stop Rightmove’s ambitions of reaching £2500 ARPA

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  6. KC54

    We left RM in Feb 2019.  Couldn’t be happier!!

    We have not lost any business, in fact we have gained.  And saved many thousands of pounds in the process!

     

     

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    1. The Outsider

      Afternoon Mr Bruce

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  7. Woodentop

    Well it took to near the bottom of the article to find why agents advertise on RM …..

     

    It doesn’t matter how vocal the agents might be, if changing portals means risking losing instructions, or reservations for the developers, there aren’t many who’ll chance being the first to dash for freedom.

     

    It seems to have been lost in all the comments made that a web portal is first and foremost “an instruction tool”. This is basic estate agency. Some agents have lost the way, that web portals sell houses …. really! They introduce to a potential buyer but there is more to it than that if the agent is clued up with their operations, not sat in the bedroom waiting for a buyer to take control. Not all agents are on RM, many have made the jump and not lost business using other portals. It was the fear (fake news) that was installed by the media reports/readers comments and competitors threats to damage your business if you left RM. There are some big players on RM who will continue to make it a market leader and drive the public to use the site for their next home search. Neither seller or buyer is interested in the costs to agents and going by the success of other options e.g. Zoopla they are more than prepared to shop around and not look in a one horse stable.

     

    Your option is either stick with RM if your are that fearful or do what many agents have done … stand up the plate, plan and implement your business model/marketing strategy with your customer base. If others have done it … why can’t you?

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