Why hasn’t the internet killed estate agents?
According to a piece in the Spectator, something called “relational capitalism” will keep agents going for a good while yet.
The writer, Rory Sutherland, says high street agents will still be very much around in 50 years’ time.
He argues that sellers use estate agents primarily so that buyers have someone to blame if it all goes wrong.
He says: “When you pay Messrs Knight Frank, what you are actually buying is a form of reputational insurance to pass on to the new owner of the house in the form of reassurance.
“The estate agent is the local man who remains in place to be vulnerable to reputational and legal redress. He has ‘skin in the game’, as Nassim Taleb calls it.
“The plate-glass windows are no longer there to display property: they are there for me to put a brick through if my new house turns out to lie on a flood plain.”
He says that agents should not fear the internet.
“The anonymous trading of commodities looks efficient on paper but is a disaster in practice.”
The Spectator article is here
Comments (16)
…even paying 1 percent ish… Wouldn’t get out of bed to be honest…
The sounds of someone who is very much afraid and has no idea of the structure of the online system. Having worked for an online agent it was indeed efficient and I was churning out 10 properties personally a month and that wasn’t even working a full portfolio. The older generation will still want the high street but they will die out eventually. Vendors are becoming savvier and understanding that when selling a property – it ultimately boils down to price.
And there it is summed up in one phrase:”I was churning out 10 properties…..” Thats why all of these outfits will hit the rocks.
“Having worked for an online agent it was indeed efficient…”
WORKED? WAS? Oh, dear – looks like you haven’t told them you’ve left… you’re still listed on their website as “Sales Negotiator”.
Their profile of you explains much: “…she learns something new all the time. She has recently bought her own property which gave her further insight into the whole process. It was an eye opener!”
Yeah, innit. But then most likely you were fortunate enough to have bought through a traditional Agent who was able to steer you through the choppy waters we navigate every day while you simply churn them up and knock them out…
With respect Anne vendors are no more or no less savvy now than they were in the mid to late 90’s when the first internet listing agents appeared and where widely condemned by the informed media as a bit of a con, something to be avoided. I don’t know for sure but many journalists will be old enough to have listened to those early stories of “I paid my money but didn’t sell” and will have had plenty of time ( 20 years) to track and follow the sector. There is every chance Rory Sutherland has better understanding of the PI/COAR than many who are pouring cash into the sector through crowd funding.
I am fairly certain you didn’t earn > £100,000 when you were churning out 10 properties per month, I know an online agent who sold £17,000,000 of property (at traditional agency commission rates for the area) in a single year I have watched someone transition from a senior negotiator in a local firm who turned up at PCS (Property Computer Show) looking for software into someone who is genuinely a market leader in her sector of the market. She is not getting a scrape off a listing fee, she is doing the same job and taking the whole pot into her account. The point is no-one with the skill to win instructions ought to be working for someone else. As soon as that penny drops suddenly COAR generates it’s own competition but not competition for the traditional agency. It is just a bit mad to earn money for someone else in a sector where everything is thrown into the internet; your listings as a small independent local online agent are no less visible on the main portals because you are getting the whole commission than if they are simply passing through a central office and you just get a scrape for doing all the work.
This whole ‘online agent’ debate is a red herring.
Every estate agent is now an ‘online agent’ (assuming they have a website).
Innovation will come from agents rebalancing their costs towards more efficient methods. Quality of CRM, for example, is appalling in UK property. There are very few agents who have grasped – or are even interesting in – this.
I expect to see shifts in investment to follow these patterns over teh coming years:
– offline marketing spend continuing to migrate online
– inefficient staff costs into more efficient technology (e.g. a 10 branch agent, with 70 staff today, will have 40 staff in 10 years but an amazing software system, or they’ll still have 70 staff but 50% more market share!)
– premises investment into marketing
The core function of estate agency won’t change, but agents will be able to compete at a lower cost whilst maintaining margins and improving service levels.
Agency won’t die, it will evolve. People who castigate PurpleBricks are ignoring this. They are an agent like anyone else – just looking to get ahead with their approach…
Morning Anne
When you say “Churning out 10 properties” was this churning Exchanges/Completions or Listed Homes?
Ms Lecomber may be a different animal to the norm, Ric – but ‘yer average’ onlinie doesn’t give a fuppenny – all paid up front & forgotten about!
I interestingly (or not) received an email from a lady who I did a valuation for recently. She sent me some feedback after she attended an “easyproperty” market research session. I am sure if easypeasypropertychris is reading this he will be aware this is something they are doing at the moment.
It was nice to get the feedback of which I have copied below….. Make nice reading for the High Street I thought and perhaps I now know why she came clean on the reason for wanting a valuation.
I thought you might be interested to know I was involved in some market research for Estate Agents yesterday at The Talking Shop in Manchester – it was sponsored by Easyproperty.com and asking us for our thoughts on Estate Agents and whether or not we would use an online agent. The traditional high street Estate Agent although more expensive actually came out preferably – judging by the remarks the Estate Agents on the high street very much still have a position as professionals in peoples minds rather than call centres who you don’t really know who is dealing with your case or whether they have any qualifications or experience. The local knowledge was very important and service a key element. The prices were pitched to us at £400 in VAT for a very basic service which didn’t even include updates on the progress of a sale !! Up to £1500 for ’all inclusive’. I think a lot came from the fact that a personal service even though paying 1% ish is worth the money because there’s far more involved in the process than ‘just’ advertising. Otherwise we’d sell our houses on EBay??
The deal breaker though for the whole group was paying all the Estate Agency fees upfront – not on your nelly – sorry.
Oh and cheesy shiny suited Estate Agents didn’t come out well but I think you can be confident that your company does not embrace cheesiness in it’s culture Thank Goodness!
Anyway… there you go – nice to get a potential home seller actually feel strongly enough to send the feedback afterwards.
Hello Ric
‘Local’ is my word of the day prompted by the latest version of the PB TV advert I have once again been tempted to get a free valuation from my ‘local’ PB rep.. t seems from the PB site She might be in the county but her experience is with an agent 55 miles away.
Would you mind asking your lady how she would define the word ‘local’.
Down here local is normally 5-10 miles max not 40 +, in London 1-2 miles is local.
It would be interesting to see the consensus on the word local. The rep here also covers Taunton which is 60 miles in the other direction. A radius of 50 miles with a chunk out for where the sea is gives one rep a patch of about 4000 square miles- welcome to local (Australia style)
Hi Robert.
No need to ask I am sure! Clearly a very intelligent person, favouring the High Street over Online Only, I like her 😉
So for me like most I am sure she would agree with us, local is same village, perhaps same Post Code but certainly no more than a 10 miles in MOST cases….. except perhaps for some slightly more remote areas where I am sure there is a need to use a “nearest agent” which perhaps is a fair bit away.
Anyway busy busy so off for another fun filled day…. have a good one.
I know you are after catching Peebs again and getting another bunch of flowers so without trying to spoil your ironic post of the week award would suggest; £30,000,000 invested buys a lot of apparent evidence , the desire to brown nose wealthy business people even more but the most effective weapon in the predicted demise of Agency is industry ignorance.
Ros needn’t feel so lonely now here is another journalist who understands agency. Would it be wrong to suggest they somehow get together to add some depth to the Property editor gene pool or do you think with both of them saying intelligent things others will follow?
“high street agents will still be very much around in 50 years’ time.”….Sorry have to totally disagree with this statement. All the evidence points towards it being a totally incorrect statement.
Repeat 50 times… “I will not bite”… I will not. I won’t.
Not yet.
I agree with the title…
Google translate- Spectator to English; Estate Agency is a service industry not a retail sales industry.