Frankly, I am both fascinated and frustrated with the constant mud slinging between estate agents when it comes to which business model is best – typical beliefs include “Corporates are Bad… Independents are Good” and “All Online Estate Agent are useless”.
As I see it there are now four basic models is estate agency, some of which merge with each other just to make things a little bit confusing! Some agencies are seen as a corporate but have a high degree of latitude to do as they see fit, some independent agents operate within quite strict guidelines (such as a franchise) but I believe that every estate agency business still operates within these four basic models:
+ Corporate
+ Independent
+ Self Employed/Brokerage
+ Online
I am not going to contend that one model is necessarily better than another, I truly believe that they all have a place in the market offering a slightly different proposition to both the consumer and the individual estate agent. However, in my experience there is a common denominator which I will share with you at the end of this piece, though I suspect that you will already have spotted it!
I have the benefit of personally having worked within three of the four models I’ve identified as both as an agent and as a consultant – corporate, independent and (currently) self-employed. I confess I have never worked with or for an “online agent”, though I have been impressed with their innovative and challenging approaches which I believe have bought our industry more benefits than problems. I have also had personal numerous and mostly positive interactions with online agents when it comes to sales progression – certainly no worse than interactions with agents using other business models.
I am sure that many readers will disagree with my analysis and definitions but if we are to criticise (constructively or not) the various options, I believe it is important to at least attempt to identify the basic traits as I see them.
So here goes…
Corporate
I would define a “corporate agent” as one that is generally “BIG”, has a significant number of branches/outlets and often has a well defined set of common standards that should be adhered to throughout the organisation. They may or may not be publicly quoted but are often well funded. They tend to specify a basic salary to employees, commission and other benefits as well as a clearly defined career path.
They also tend to leverage their size by offering the consumer extended coverage through their network and marketing offering. A “corporate” agent will also generally benefit from significant economies of scale when it comes to suppliers – particularly for example when it comes to portal charges.
Independent
An “independent” may or may not be part of a franchise organisation and/or be a member of an affiliation group such as Guild Property and/or Relocation Agent Network. Typically they are “small” – perhaps less than 10 offices/outlets?
They are typically owned by partners, a small group of shareholders or family members and take a more flexible approach when it comes to an employee’s package and promotion prospects. They perceive, with some justification, that their smaller size and structure often makes them more agile and able to respond rapidly to opportunities that may arise. They will find it difficult, though not impossible, to achieve the lowest possible costs from suppliers due to their size.
Self Employed/Brokerage
This increasingly popular model is typically based in a single non-high street location, sometimes covering a large geographical area and is generally based on the premise that you “eat what you kill !”. It is actually a very popular model across many (perhaps even most?) parts of the world.
Normally, agents will receive a 60% to 80% cut of whatever the total fee of a sale they generate. These individuals, and for the record I’m one of them at eXp, generally work on their own though they often have a support network to assist them with compliance, marketing and lead generation. They can frequently benefit from preferred supplier deals agreed by their overall central banner brand which contributes to their biggest advantage – a lower cost base.
Online
This much maligned (generally by other estate agents) model was once seen as a significant threat to traditional and hybrid estate agency and there is little doubt that it caused many agents to question exactly how they do business themselves. The main focus of this model is to reduce costs to the clients by offering a range of marketing packages that are frequently much cheaper ( even free!) than the competition. They are able to do this by enjoying massive economies of scale, again with suppliers like the main portals. They offer a range of renumeration packages to the people who work within this model, though these are often biased towards results, be that to achieve listing or sales/rentals.
They have a big focus on I.T. solutions to the challenges of selling and renting property.
So there we are – I am sure that many of you will dispute my analysis but would suggest that I have merely outlined the general behaviour of each model rather than provide an exact definition. I am equally confident that you may dispute what category you would apply to yourself and your competitors. As I have mentioned, many of these categories actually merge with each other and you and your firm may display some different or even all of the characteristics mentioned. So what does it matter?
Well I believe it matters for three (don’t you just LOVE the power of three?) reasons…
Firstly, the names of these models are frequently used by contributors to this and other forums, often in my view, inaccurately and with malice. This article is just an attempt to at least try to bring some clarity – a useful approach if we are to dispassionately assess their relative merits.
Secondly, we need to acknowledge that there really is NO objectively superior model – they all have considerable advantages and disadvantages to customers and the individuals who work within them. I have outlined SOME of those advantages but I am sure there are many more!
Thirdly, what is the common denominator of success within each of these (and indeed any other) models?
I believe I have the answer to that question – it is the individual person.
Yes in my experience, despite and sometimes because of the use of technology, sophisticated marketing techniques, clever CRM systems and of course the increased use of Artificial Intelligence it is still the individual who is the key to ensure the business is successful whatever the model…
How efficiently is a potential lead dealt with?
How is a looming problem sensitively and appropriately communicated to a customer?
How will advice on marketing or pricing strategy be conveyed to a client?
These and many other questions are the key to an effective transaction and in my experience best dealt with by an individual person – it’s where our real value as an estate agent is actually established.
Do you agree?
It’s always about the people, irrespective of the model.
Well said Simon
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As ever a well balanced opinion from Simon, personally I find it hard to like the Purplebricks approach but it certainly sharpened us all up, locally the self employed agents are doing very well but perhaps not building up something to sell when they retire, as Simon says it takes all sorts.
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Wealth creation is a great outcome but a lousy purpose. That’s the problem with many of the models. They are promoted as a way to earn £100,000+ pa and attract the agents fixated on money. As with low-fees, it is the last resort for those that have run out of inspiring ideas. Sometimes, those agents will do “whatever it takes” to generate that income,which is not always beneficial to the homeowner. The founders of the model don’t care as long as there is growth.
I agree, it’s always about the individual. Do they have the character, transparency, integrity, courage and resolve to want more for their clients than from them. Are they good fit for those leading the model, or simply mercenaries?
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Simon, an interesting breakdown, but I think there’s a flaw in separating “independent” and “self-employed” agents as distinct models. Independent agents are self-employed—the key difference is structure. An independent runs their own brand, often with higher overheads, while a self-employed broker under a larger umbrella benefits from shared resources and supplier deals. But in both cases, if they don’t sell, they don’t eat.
Corporate agents, on the other hand, have the advantage of a salary—until an accountant decides otherwise. Economies of scale and institutional investment can absorb lean periods, but job security lasts only as long as the numbers justify it.
As for online agents, most were never true estate agents in the ‘duty-of-care and skill’ sense. They were passive intermediaries, relying on marketing claims rather than meaningful agency work. The handful of brilliant agents within those models were the exception, not the rule—something I pointed out in my early analysis when the industry was still swept up in the disruption narrative. That analysis, incidentally, also predicted the rise of the self-employed model as a more viable alternative.
You’re right that success ultimately comes down to the individual, but the business model dictates the pressures, incentives, and sustainability of that success. A great agent in a flawed model is still constrained by its limitations.
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