Online Estate Agents – Is this the future of Estate Agency?

IMG_6293Online estate agents seem to be everywhere at the moment: on Channel 4 during the ad-breaks in Grand Designs, all over the Sunday newspaper property supplements and coming back in response to every google search. Yet they currently account for around 5% of the housing market – but are things about to change?

A few years ago we helped a client buy a house through an online agent and our experience was not great. (Read Katie’s blog)

However, we are now seeing some big players emerging onto the online market simply because there is so much money at stake and successful businessmen often merely look at the economics of the business model. Sir Stelios Haji-Ioannou, of Easyjet fame, is said to be rolling out Easyproperty this year and Dragon’s Den’s James Caan is also a big investor in eMoov, the country’s largest online estate agent. Steve Smith, the founder of Poundland, launched Estatesdirect in 2012 and offers the promise of online exposure on sites like Rightmove and Zoopla and local selling assistance for a basic fee of only £195 (plus VAT) and no commission.

In theory, the economics are simple. If an estate agent charges on average 1.5% of an industry worth around £3.75 billion, then cutting overheads by eradicating the need for a shop floor and reducing the number of trained staff to maximise profits seems to be a no-brainer. Some would argue that the huge investment needed to create a robust and foolproof software platform (Purplebricks.com are quoted as having invested £1million creating their system alone) is at least equal to running a high street office. But what this overlooks is the fact that traditional estate agents have similar development costs for their own websites. They are also to a certain extent tied by geography, unlike an online agent.

More worrying still is the emergence of webuyanyhouse.com into the market. Their car sales model simply offers a guaranteed purchase at a slightly lower price for someone who is keen to sell. However, when you transfer this business model to the homes market – a home being generally the most valuable asset of the owner – it leaves an unsavoury taste of taking advantage of the desperate house seller desperate to sell at any cost. Despite the discomfort we feel about the ethics of it, webuyanyhouse.com is fully bonded with The Property Ombudsman (TPO) and National Association of Property Buyers (NAPB) and is, in theory, regulated fairly in the same way as the rest of the market.

At Hatchards Homefinders, our experience has taught us that it is foolhardy to dispense with the expertise and knowledge of a trustworthy estate agent. Their understanding of the geographical area, the market, the property and the needs of the seller mean that they are in the right position to get the seller the very best result for their property – and there is something honest about that. That is why sellers choose a reputable estate agent 95% of the time and why we, as property search agents, prefer to deal with them.

Steve Smith was recently quoted in the Sunday Times as saying that “It’s predicted that within a few years, 60% to 70% of all properties on the market will be listed with online estate agents.” His position makes a commodity of the homes we select so carefully, refurbish so lovingly and in which we build our family memories. A reckless boast from Mr Smith perhaps, but who would have dreamed, 20 years ago, that so many people would be buying their groceries online?

, , , , , , , , , , , , ,

Comments are closed.