There will be blood…

This year, October 31st will not just be the catalyst for spooky pranks, witching tales and bumps in the night because, as if Halloween were not scary enough, the date also marks the beginning of a potential bloodbath for our industry.

I’m dead serious because at the end of this month the furlough scheme ends, the initiative that has allowed many a business to hang on to life by their fingernails. The truth is that whilst the pandemic has been devastating in many ways, there were already an awful lot of estate agency firms on the edge even before the virus hit; and which Rishi’s business support measures and stamp duty bonus have inadvertently resuscitated.

The question I pose therefore is, will some of them now use Covid and the end of furlough as ‘cover’ for imminent redundancies and branch closures?

Cover? Yes, see also ‘kitchen-sinking’, the method whereby companies and politicians use the cover of a crisis to mask bad-news hoping that some of the noise will get lost or be better accepted. Utilising a problem such as Brexit, bad weather, political turbulence or a terror event, or in this case a global virus, to ‘explain away’ poor performance, a mistake or even an unsustainable business model that’s in the doldrums. Also known as a ‘Jamie Oliver’.

Consequently, here’s what I think will happen amongst the bigger estate agency players soon…

First the bad news

To the sound of howling in more ways than one, furlough ends on Saturday night. And the full reinstatement cost of thousands of estate agency employees will be deemed unsustainable/undesirable by certain property bosses despite a well-intentioned, hastily introduced Job Support Scheme (JSS) but which requires a multitude of hoops to be jumped through in order to claim, especially for those businesses with more than 250 employees.

Whilst pipelines have been artificially bolstered since June, FDs and CEOs will already have discussed that there’s a cliff-edge coming once the stamp duty holiday ends. April, May and June 2021 will not resemble anything like what many of you think August, September and October 2020 have represented as some kind of ‘new normal’.

Q2 next year will be a barren, revenue-wasteland by comparison complete with double helpings of tumbleweed, dust and rigor mortis.

But canny, albeit rather unscrupulous bosses will have gathered that the JSS can be used to pay staff their notice before they are marched out of the door and, quite remarkably, will also be allowed to sustain outgoing employees’ salaries during statutory redundancy consultations therefore making it ‘attractive’ for some agency firms to pull the trigger on lay-offs now, knowing that the tax-payer is funding the walk to the exit.

So, as the person in charge of the P&L, especially in a publicly listed business such as Countrywide for example, already horrendously wounded and gasping for air, would you deplete the rich flow of temporary cash by spending it on reinstating people in November? Likely not, preferring instead to hold Covid up as the reason to oust busloads of staff and offices starting soon. After all, why else would the meeting rooms at Countrywide Towers be filled with discussion around re-capitalising their coffers via the ‘generous’ lot at Alchemy to the tune of £90m, a sum that it does not need – unless this were to be earmarked for future redundancy payments and branch closure contingency monies? I’m afraid that if it is so, you heard it here first.

On the further subject of Countrywide, Property Industry Eye has this week reported that 23% of their branches have allegedly shut. This then is some kind of proof that although lacking any actual strategy – merely death by a thousand cuts and a series of knee-jerk, desperate moves seemingly – the corporate agencies are indeed beginning the slim down, albeit under the radar. Foxtons, LSL even Connells – have all quietly shuttered offices where they can get away with it and on a piecemeal basis to avoid one mass redundancy cost.

Until now.

The direction of travel is set and whilst the closing of premises has been a mere leak in the dyke so far, the tsunami is coming and which means that many of you reading this today may not remain employed in a few short weeks’ time. Merry Christmas indeed.

Before you resort to calling out my apparent insensitivities in the comments below though, remember that I am merely the Ghost of Christmas Future in this scenario – the messenger, not the one executing, as such.

But there is ‘good’ news

The flip side of this soon to be forced change in business model, some 15 years on from the dawn of innovative estate agency models like House Network and Emoov launching without the inconvenience of pesky branches, is the realisation that estate agency firms can indeed operate successfully in areas without having a physical office presence. Even the laggards and the luddites should accept, out of necessity if nothing else, that less can be more and so now watch as they shed offices and people as a strategic volte-face in a more public manner.

Some less enlightened management team members will fight the inevitable and will see this reality as a stigma, as defeat, as failure. As I’ve set out above this will be a sad, tragic consolidation for the industry’s people. The human cost will be significant.

But what it is… what it actually is, is progress – if you can get your head around the fact that sometimes, in order to survive, going faster and outrunning the threat means losing some weight rather than staying fat and slow.

The physical footprint of our sector is now shrinking. The key is maintaining a decent market share in each town (yes, it can be done) without the millstone of premises costs – or at least as many premises. As the corporate giants morph into fewer locations from which to operate, as overheads plummet and balance sheets sigh a collective relief, the ‘people’ will then become more obvious as the drivers of success – not shop-signs.

Empathy and relationship building, prospecting and nurture will take precedence over silent offices full of Candy Crush experts sitting waiting for a Rightmove lead to ping them into action. And above all, whilst the resulting financial transformation will bolster the companies themselves, this levelling-up – to coin a modern phrase – will provide greater reward for the individuals themselves in the form of a higher share of fees as it becomes glaringly obvious to the industry’s gentry that it is the people themselves that make the income – not an office. As they earn more, customer experience will also improve because agents will have sufficient incentive to look after their clients much better.

There will be blood. But I’d argue that in the fight for sector survival and indeed prosperity – it’ll be worthwhile for those that do decide to act strategically and not out of necessity later.

One final thing. Which if any of the current crop of UK estate agency bosses are fit to lead the change necessary – and I do mean lead rather than just manage (they are different things)? Because I suspect that in addition to the short-term blood on the floor that we’re about to witness, there will also be some rather higher profile heads chopped too.

Happy Halloween.

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17 Comments

  1. AndSotheStoryBegan

    “Empathy and relationship building”?

    He gives the impression that he couldn’t spell the words. Interruption marketing on steroids, if actions speak louder than words.

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  2. Hillofwad71

    Headphones the Ghost of Christmas Past
     
      “The flip side of this soon to be forced change in business model, some 15 years on from the dawn of innovative estate agency models like ………… and EMOOV launching without the inconvenience of pesky branches, is the realisation that estate agency firms can indeed OPERATE SUCCESSFULLY  in areas without having a physical office presence”
     
      “When all else fails there is always delusion ”
     
      “There will be blood. But I’d argue that in the fight for sector survival and indeed prosperity – it’ll be worthwhile for those that do decide to act strategically and not out of necessity later.”
     
    “Experience is a hard school but fools will learn no other”.
    Priceless from someone who drew monies from mug investors from Crowdcube in the summer of 2018 from the necessity of just keeping the lights on for few months  with no strategy in place but to borrow some more money  
     
    “Halloween were not scary enough, the date also marks the beginning of a potential bloodbath for our industry.”
     
      Scroll  back just  2 years  it was Christmas which was the bloodbath for Emoov employees .According to the latest administrators  report their  work sorting out the carnage is still unfinished  reports no salary was paid from the 1st November and 4th December 2018
     
      “”Empathy and relationships”  
     
    As staff at Emoov were looking to a miserable Xmas no salary,no job Headphones insensitively was sending out bottles of wine to journalists promoting his new business

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  3. NeighSlayer

    Like a Tory voting down free school dinners, actions speak louder than words.  
     
    You utter Richard Cranium.

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    1. jan - byers

      I do not work to pay for other people’s kids.  My parents were far from well off they did not ask anyone else to feed theor kids.  Other people’s kids are their responsibility not the taxpayers.

      In this country now so many people think that all their problems should be solved by the govt (hard working taxpayer) giving them money.  They do not think what they can do to help themselves.  It is the mentality of total entitlement

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      1. NeighSlayer

        That?  That’s the bit that incensed you to reply?

        I look forward to your next instalment on how to take candy from babies.

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        1. hgrlet

          She is just some Tory Boomer that romanticises war time britain. It’s all very amusing and not a little embarassing.

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          1. jan - byers

            I do not take anything from anyone I believe we are all responsible for our own family – I look after my own family – I am not responsible for anyone else’s family. I do not expect the taxpayer to pay for my choices.

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        2. jan - byers

          I do not take anything from anyone I believe we are all responsible for our own family – I look after my own family – I am not responsible for anyone else’s family.

          I do not expect the taxpayer to pay for my choices.

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          1. hgrlet

            So… What about roads, hospitals and libraries? I assume you don’t use those either?

            Search yourself, do you honestly believe that children should not eat through no fault of their own?

            Do you think we deserve to call ourselves a developed nation if children go to bed hungry?

            This is your brain on conservatism, rabid individualism and thinking along the lines of “Well me and mine are fine so f*** everyone else!”

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      2. hgrlet

        I often look forward to seeing your wildly outdated, dementia’d ramblings.

        Imagine feeling this type of vitriol against disadvantaged kids.

        “Hard working tax payer” Okay but what about unpaid taxes by multi national corporations like Amazon and Vodafone?

        The sooner your generation rescinds to care-homes and stop voting the better.

        You should be ashamed of yourself.

        And for the record your rocking chair ramblings about your grandfather flying spitfires and your parents bootstrap mentality is the single most pathetic thing I’ve ever seen.

        Pining for days gone when racism was accepted and children were raised in work houses.

        Pathetic.

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        1. jan - byers

          My generation ? I am 32! LOL Of the snowflake generartion but not a snowfalke who thinks I am entitled to everything I want.  
          I hagve no vitriol against any kids.  I have 2 of my own.  What I said is that I am not responsible for other people’s family.  Nor do I respect people who think every problem they have is for the govt to fix for them with taxpayers funds.   If anyone makes a choice to have kids it is their responsiblity to look after them, not mine. 
          I agree that some cpmpanies do not pay the tax they should.  That does not mean that I think I should pay tax to look aftyer other people’s kids. 
          For the record I do not care what you think.  You are another snowflake who can be rude on a pc screen – big man LOL 
          I find your desire to show how wonderful and woke you are is somewhat self aggrandising and self absorbed and pathetic.  Your obvious anger becauase someone does not agree with you shows how entitled and self absorbed you are.  
          I am far from a rascist but of course that is what the snowflakes do when anyone does not agree with them they just say – oh you are a racsist then.  Boring and predictable. 
          The fact is my great gf did fly spitfires and he is not a snowflake. Thankfully no one has ever had to depend on you  for anything as you are weak and pathetic and have no backbone.  You are one of those who blames the govt for everything and expect them to resolve all the problems you have with taxpayers money. 
          Your sense of entitlement is astonishing.  You have been wrapped in cotton wool all your life.  
          The fact is life is very competitive and hard.  Get over it and stop expecting the rest of the world to look after you.  Look after yourself. 
          I will not be looking at the thread again as I have moved on so your infantile insults and ridiculous comment w ill not be noted little snowflake. 
           

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        2. jan - byers

          It is also astonishing thnat you denigrate, hate and despise the millions of people not only from the UK but many other nations who defended the Uk the world those from many other nations who defended the world againt Fascist domination and racism.  You laugh at these people and their ideals and laugh at the oreals they endured you do not understand how much you owe them.  Nor do you care. You are just wrapped up in your own little self entitled, self absorbed existance where all that matters is you.  
          You would rather the UK had been taken over.
          If the world had been left to weaklings like you to repel Fascism and rascism it wouid have had no oposition.  All the older people you call rascist did something about it – all you do is a bit of virtue signalling.  Well done! 
          I guess your family did nothing and were the same weaklings as you. You are just very weak and pathetic.
          Now – off you toddle snowflake 🙂 
          I will not be looking at the theread again I am bored with you. 🙂 
           

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      3. 0racle

        I can hear the theme tune to ‘Dambusters’ gently playing in the background as her kids eat worms in the garden…

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  4. Whaley

    An enjoyable, unfortunately realistic view of where we are at the moment but I did have to grin at this bit.
    “ or even an unsustainable business model that’s in the doldrums. Also known as a ‘Jamie Oliver’.”
     
    Would it be too cheeky to suggest it’s also “A Russell Quirk”?
     
    Because surely you’ve had a terminal case of lack of awareness when stating later
    “ innovative estate agency models like House Network and Emoov launching without the inconvenience of pesky branches”
    Or of course pesky profits….
     
    Those points aside I don’t think you’re far wrong of your overview.
    As for “ going faster and outrunning the threat means losing some weight rather than staying fat and slow.” 
    I’m actually deceptively fast for a chubber.

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  5. Hillofwad71

    The Countrywide story is far from over just in case shareholders think it’s not worth bothering to oppose the Alchemy proposals

     

    They need to secure 75% shareholder approval with Hoskings at 13% and  Catalist at 10% that is far from guaranteed

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  6. SS

    There a saying and it goes something like this. ” it is not the strongest or fastest that survives, but that which adapt the quickest”.

    And whilst I see how for some, their disliking of this chap will prevent them from seeing the truth in what is being said, I would encourage all business decisions makers to actually pay attention to consumer behaviour (because it has changed will change further) and adapt their offering accordingly.

    Further, I agree with him that this is how progress works.

    new behaviour/trend – generally mass unacceptance of change (though some will lead and later become models to assimilate), failure/closure of those that don’t adapt (end of the road) – growth for those that adapted and increased revenue/market share and it all starts again until next time!

    The amazing thing to be inspired by here is that this process of change rewards those that are conscious and aware. Those that don’t deny reality or twist facts to fit their own agenda or desired outcome. It really is that simple and the rest is just bs being spouted by superficial, dead beats that know nothing beyond the pursuit money, which they think will give them security!

    ” To see truth, all knowing must come to an end and out of destruction comes creation, and the new”

    Now grasshopper, go put your special skills to use and help some with their move, its a the biggest thing most do and so you should have every eventuality covered- assuming your are a processional- if not don’t worry the next 6 months will decided for you!

     

     

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  7. James White

    The stamp duty cliff edge is 30th November; after that forget the SD being a relevance in any transaction.

    This combined with a lack of new stock will feel like a quiet period compared to the last few months.

    Doom mongers are forgetting that the banks are handing out almost free credit at the moment.  Whilst ever that lasts, and there is a housing shortage, houses will continue to sell….

    This last few months is not the new normal for sure, but calling a depression in the market whilst ignoring interest rate factors may be wide of the mark…..

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