Rightmove has been warned not to squeeze agents too hard.
City analyst Nicholas Hyett, of Hargreaves Lansdown, said that Rightmove needed to be wary of placing too much pressure on the agents it relies on for its revenue and profits.
On Friday, Rightmove announced record revenues and profits. Revenues for the six months to June stood at £131.1m, up 10% from the same period the year before, while pre-tax profits were £98.1m – a profit margin of 77% and up from £87.5m.
The rises were almost entirely driven by increased revenue from estate agents, whose spend was up by 10% to £99.3m.
But Hyett said that since Rightmove charges by branch, office closures could be a concern for the portal.
He said: “Rightmove simply is the UK property market. If you’re buying a property it’s the first place you go.
“It’s all very well arguing that estate agents have no choice but to pay, but if conditions don’t improve some will find they still can’t.
“Rightmove may have found the goose that lays the golden egg but it needs to make sure it doesn’t squeeze it too hard.”
Despite its ‘gravity defying’ results, the City seemed concerned: Rightmove was the worst FTSE performer on Friday, with shares falling 3.1%.
Rightmove shares ended up at just under £50 (4,934p).
On Friday, alongside its first-half results, it also announced a proposal to sub-divide its shares by ten so that, for example, shares would cost £5 rather than £50, making them more affordable for investors including its own staff.
A general meeting to vote on this will be held at Rightmove’s offices in Soho Square, London, on August 22.
Separately, another faller on Friday was Countrywide, whose shares dipped by 4.4% to finish at around 48p. The shares have been as low as 38p in recent weeks, with a high of around 56p on July 5.
RM is clearly (in footballing terms) losing the dressing room. It comes to something when even hard nosed investors and analysts notice that they are royally taking the proverbial!
The day will come…
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It’s too late for such a warning, its been too late for quite a while.
Rightmove compare the costs of local print advertising to justify their annual price hikes. “Look what agents were paying for print advertising!!!” The thing is a printing press wasn’t the sort of thing many people could afford, the machinery the type setters, the paper and the distribution all cost money, lot’s of it, the costs were justified. Agents understood the costs and collectively took a share of them in order to have something that was a necessity.
Portals don’t have those cost, it costs about £216 per agent per month to run a portal of Rightmoves size and complexity. Normal profits on that is about £45 so Rightmove could easily be charging average £260 per agent per month.
The industry as a whole has not properly recovered from the 2007 crash; prices in some places have but volumes haven’t. Election, Brexit, election, Brunfight (Brexit uncertainty bun fight) means agents are hurting.
Like agents in North Devon never have and never will forgive Vincent Boni at North Devon Journal for his antics in the early 1990’s agents are not going to forgive what Rightmove are knowingly doing to them for the past 11 years.
Digital presence is no longer something agents have to rely on an aggregating portal for; Portals are becoming dated and the next generation technology is beginning to appear. Even if Rightmove moved this morning to charge £260 per agent per month they have lost agents hearts and minds and will struggle to recover from the hardship and resentment they have created for themselves.
Just caluculated if Rightmove operated the way we do; allowing subscriptions to be determined by the #local house price index, they would now be charging an average £304 per month not £987.
I don’t have a problem with anything Rightmove do other than how they charge agents. The little guy is subsidising economies of scale agents and the non-geographic passive intermediaries at the heart of fee erosion, that’s taking advantage of a dominant postion and I don’t like that.
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A perfect summary Robert
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We are all in business to make a profit in order to run our businesses successfully. There is a point at which however, taking advantage of our clients and taking too much profit becomes obscene. There is line over which businesses people with any modicum of human conscience don’t cross.
Rightmove crossed this line a long time ago, and continue to see it getting smaller and smaller in the rear view mirror. In fact, I doubt it’s visible.
As agents we do have some control though. We need to vote with our feet and bin them.
Alternatives exist.. it’s up to us.
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I’m surprised there are only 4 comments at 09:04 Monday morning !!
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1st week of the school holidays!
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Even if you’re not at the point of binning them due to their market penetration, there’s certainly no reason we shouldn’t all be drastically cutting the monthly spend to the absolute minimum now.
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Awwww no, don’t do that. My property buying decisions are swayed by it being a featured or premium listing. Said no one ever.
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‘I chose my selling agent purely because they had a rightmove microsite’. Said no vendor ever.
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Death by greed. Bring it on !
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When the best performing industries in the US have profit margins of sub 20%. Even microsoft has less than 25% net profit. Rightmoves 77% profit margin is frankly obscene.
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I went to a valuation this morning and I advised the client about all three portals and how one of them fleeces us agents. I advised them that whilst we are still advertising with them I am confident that with exposure from the other portals and our own website and database we will not struggle to find the right person for the property. I won the valuation. We all need to start educating the public and working together to help bring about the changes that we all desire.
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It’s a shame that Agents believe they have to be on RM to be successful, granted there is no getting away from the convenience these property portals are bringing to the consumer but at what cost to the agent? We work with lots of independent Estate Agents who are all performing well online, generating leads and converting them. Through our lead generating agency websites and digital marketing bespoke to the property industry. We know what it takes to be successful and to avoid getting ripped off by these portals.
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Oh! Goody! The Rightmove rep is coming for a visit!
Said no one ever
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A thick skinned organisation with thick skinned teflon coated reps who don’t five a monkeys; why should they?
I think we are all a little envious.
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As a property investor / seller I’d be interested to know how much you pay to use Rightmove for an office and how much it cost’s per property on the website each month. I use an agent who is on there because I know most buyers are on there as well so obviously want my portfolio there as well.
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Sorry I don’t agree with that. As a professional in property the very last thing you want is the ‘react to enquiries’ randomness of the portals. Given 50 applicants the best price is determined by the best 2 purchasers and the competition an agent generates between them. The other 48 also rans are exactly who you don’t need until the best 2 aren’t interested.
So curious and contradictory is your post I don’t have a strong confidence in it. Your post is a bit portal rep’ish
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Sorry Robert May but how is my post contradictory? Is marketing not putting something in front of the biggest audience and then influencing the most interested parties?
It was simple question as I’ve seen a lot of posts on here over the past few months since I found this site so interested to see what it’s costing you each month.
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The contradiction is not the post but the thinking of a property investor. There is no way you would want the 48th rank applicant buying your property. If you sell through a normal agent that is going to cost you on average £28,000, if its one of the PB exclusive applicants buying 20-30% below market that is somewhere between £56k and £85k you’ll be missing out on.
None of the professional vendors I know are too fussed about agents listing on a particular portal as invariably the best and most able applicants are registered with agents.
The portals simply introduce new purchasers to an agency. Any agent who is delegating their job to the portals isn’t one you should even consider using.
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It is up to us, the agents and the owners and suppliers of the stock that give them cred, to vote with our feet or demand a realistic cost. The milk the historic entry prices that agents signed up to without challenge. It was based on FOMO as I have said before. They only exist due to agents advertising with them. The independents that represent the majority of the market are being held to ransom with charges of £1000-2000 per office. The corporates have a legacy pricing, going back to the days when Rightmove needed stock and so lured the big boys in with lower office charges and shares and investment. Remember where Miles Shipside started…a corporate agent. These corporates get massive discounts, but are still paying a premium as can be seen by Robert Mays calculations. Wake up Countrywide/Haart/LSL and others. And all you independents demand the charges these guys are being levied. There are so many pricing plans…why? To confuse and make it impossible to compare.
Agents, please wake up or do you want them to continue crowing about world beating return on capital, whilst you bleed or go to the wall. Their position has also launched and built the call centre boys and girls too. What an own goal, wake up and do something about…you are supposed to be negotiators and skilled business people.
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Beware, people are not what they post!
Personally I despise social media and PIE is one of the exceptions to my rule of non participation, I’m still hidden behind a user name nonetheless, what worries me about most of this is that other than PIE ( and the other pub and some others ) where the hell is everybody?
Multiple thousands of people plying their trade and what? 40 ish regulars at best?
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I am suspicious of seller 0169 too in terms of language, that said the Rightmove problem is not about buyers or leads from buyers, it’s about gaining instructions, just realised I capitalised Rightmove, like God
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We have so many issues with Rightmove…. corporate multi-office agents with double or triple office listings (for a single office) across various areas, agents with ‘extra offices’ that aren’t in our area – listed in our area! – I think the site is seriously dodgy. They allow web agents to be listed as ‘local estate agents’ in your area despite them not having any listings in your postcodes nevermind a physical office presence (apparently these agents pay for ‘virtual offices’ on the Rightmove site)… go ahead and try it on the ‘Find Agent’ search function on their home page. It beggars belief and leaves us fuming. As an independent agency, we do the most business in our postcodes and we, along with thousands of other indie offices up and down the UK, are the backbone of Rightmove – but we’re treated like second class citizens. We raise these issues time and time again and get different answers depending on who we speak to. I’m sure there are laws to protect consumers, which we are, and there are violations left, right and centre here…. class action suit waiting to happen.
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