The prospect of technology transforming the selling and buying process, including more power for portals and especially online agents, dominated parts of the mainstream media over the weekend.
Following two shock announcements in recent days - the sale of ZPG to a US Tech fund for £2.2 billion, and a possible £100m merger of online agencies Tepilo and Emoov - one newspaper, the Daily Telegraph, even went so far as to say the property industry was on the verge of a digital revolution.
“Expensive, cumbersome, restrictive and unpopular - it’s hard to think of a major sector that is more ripe for disruption” the Telegraph says of the agency industry, warning: “It is hard to believe that the local estate agent can survive much into the next decade.”
Matthew Lynn - a financial expert who writes for the Wall Street Journal, The Spectator and Money Week as well as The Daily Telegraph - wrote in the latter that the two deals suggest “serious money” is coming into the house buying sector with a view to transforming how the public buy and sell.
He predicts websites “will take over [the role of] traditional high street agents” - but he insists that’s merely the starting point.
“Add-on services will be taken over by artificial intelligence systems. And after that the tech giants such as Amazon and Google will inevitably move in” he says, adding that “At the end of the process the property market will be a lot more efficient - and there will be a lot of turmoil along the way.”
Lynn believes that with £9 billion invested in PropTech ventures worldwide in 2017 - much of it in the UK - it’s surprising more technical innovation hasn’t already been introduced into how we buy and sell.
He is particularly praising of online agents. “Most operate on a fixed fee rather than taking a percentage of the final sale price, making them radically cheaper. They don’t need lots of offices and they don’t need many staff, giving them a far lower cost base.”
Lynn doesn’t hold back with his revolutionary vision, saying tech-led transformation will also completely change how systems for mortgage provision and the “fairly repetitive” work of conveyancers are so routine that they are “making it easier for robots” to do tasks.
He says there will be many casualties along the way, including PropTech start ups that fail to make the grade, but he warns that change will come - and rapidly.
“For the customer, the market that emerges at the end will work a lot better” he claims.
The Daily Mail - owned by DMGT, which has a 31 per cent stake in ZPG - writes that the portal sale will focus attention on how the public start their house buying.
“Zoopla and rival property listing website Rightmove have become a fixture of the UK house hunting experience, with buyers heading straight to the portals to look for properties for sale. Estate agents pay to list properties on the websites and, as home owners cannot directly list there, the portals are also benefiting from the rise of online agencies” it says.
Meanwhile financial analysts Bloomberg says the ZPG deal is all about extracting more profit from data and says Twitter is the model for this - its sales jumped 21 per cent in the past quarter even though user numbers rose just 1.8 per cent in the same period.
“While [ZPG] has bought small tech companies such as Hometrack and Calcasa, ZPG’s data business makes up only eight per cent of its £245m of yearly revenue. Should the UK housing market fall further, the smart targeting of buyers will become essential” Bloomberg says.
It also claims to know how that will be done: “ZPG has vast pools of data on the housing market and buyer behaviour but its ability to squeeze the most value from that data is limited. Machine-learning techniques could, for instance, make it easier to identify why a property sells. Silver Lake wants to pair ZPG with Red Ventures, a North Carolina startup that specializes in big data analytics.”
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They might have my data, but will never have my heart & mind.
Hmm, there is a lot of truth in this, however, I challenge the idea that it is less costly to operate off high st. Actually, I believe estate agency to be a hyper local service and one where relationship building, knowledge, experience and communication skills are paramount. It’s true that only a few individuals possess or use these skills. The ones that do will prosper well beyond the next decade, the rest will indeed struggle. I foresee far less agents moving forward.but for the ones who adapt and improve I think there is still a bright future with perhaps higher fees being the norm but a better more effective service demanded for those fees, we shall see
Guys - don't let this scare you, unless of course you are an average agent who refuses to accept that this is a brilliant opportunity to pull away from the crowd. People WILL ALWAYS pay for a service they prefer. So be PREFERABLE! These are exciting times - you just have to look at your business through different glasses, understand the modern consumer, and give them something they will absolutely LOVE! Have a great day.
Very well said Richard.
The only agents that should be scared are those who don't do enough (and never have) for their Clients. Their days are numbered and I for one will welcome that.
This won't go down well, but there is a lot of truth in what he says. I don't for one minute think estate agents will be disappearing anytime soon - just look at how many there are of them on the high street! - but the demand for online services is on the rise massively, particularly among younger generations.
Millennials (how I hate that word!) will be much more willing to embrace the likes of Purplebricks and the newly merged offerings of Tepilo and eMoov. They shop, bank, date and live much of their lives online, so it makes sense that they'll want to buy, sell and rent that way too. The agencies that meet this need will thrive, the ones that don't will struggle.
Hands up who has used Uber?
Traditional taxi drivers were up in arms about Uber, many still are. Yet, the fact is, like them or loathe them, Uber are giving customers something they want. That's the only reason they have been as successful as they have in disrupting the taxi industry.
Local taxi firms are now starting to catch on and releasing apps similar to Uber. They are fighting back.
There's a lot of parallels with online agents vs high street agents. If the high street agents stop complaining for a moment and look at what THEY can do better then the whole online vs high street argument will be dead in the water.
Uber.
They are a disgrace to the Taxi business
Perhaps, but they've also given customers what they want.
I agree totally, Richard. The thing NOT to be is the "average agent" who can't "pull away from the crowd". Unfortunately most estate agents follow the average route and try to be everything to all people. The thought of specialising in certain types of property, for example frightens many because to do so means turning away other instructions which goes against the grain. My guess is that in 10 years time we will see a third of the number of high street agents that there are at the moment (and that will still be more than a handful in any one town or city, unlike banks), with most of those specialising or thriving on their established, personal reputations. Very positive, very rewarding and a very satisfying way of doing business for those who make the grade.
Agree with most of the comments. We need to stop discussing Purplebricks or others. We need to focus on improving our own service and adapting our service to modern customer needs. Let's focus on what works best for our customers. Customers want an instant gratification in anything they do these days. They want minimum effort, less admin, more streamlined process.
Agree with Babek....indeed have just written a long piece on exactly this subject!! Problem is getting the age group off their phones to service those who can't.
There needs to be a balance. No matter how good an agent is, they do need to adapt to customer needs. As bad as the post-instruction service is from PB et al, they have some fantastic tech in place that the man on the street loves and all agents can learn from it.
Adapt your business to survive.
Make sure Customer comes first not profit.
Profit will come if you can adapt to change.
Interestingly having read through a number of purple bricks reviews over the months, its the human element of their offering that generates the most cause for complaint. Maybe something to latch on to there.....
High Street Agents will be around long after The Daily Telegraph has ceased to exist.
Nicely put Kit.
High volumes of transactions are a thing of the past for the foreseeable near future. So it goes that every sale for a high street agent now has to be worth more in commission. Customers are a lot more savvy so a one size fits all strategy won't work anymore. You have to justify your higher fee to the customer.
That means streamlining processes, offering a concierge style service, communicating promptly and regularly and....turning down instructions from unrealistic vendors who want a top price and a top service but are only prepared to pay peanuts..
There are a large number of good conventional high st agents who do no possess the desire to be self-appointed market leaders, who do not have the time to invest in gimmicks nor award ceremonies. It is these agents who actually make up the majority of the industry.
My view is that, without taking anything away from the dynamic forward thinking agents, it is silly, futile and irritating to tell all agents to rise above the average. If they all did that, they’d all still be average. There will always be those who invest more in marketing and tech and do well from it, but no matter how much marketing and tech you have, there is one asset more valuable than all the rest combined when it comes to any agent’s future prospects, and it is this:
Your reputation.
There are agents with strong long standing local reputations who do very well from that alone, and have no need for marketing and tech gimmicks.
I’m not saying that these gimmicks don’t have some value, of course they do, but it is merely add-on value.
Nothing will give a better return on investment than building a reputation as a trustworthy, reliable, friendly, accessible local individual known for getting the job done.
Too many of us industry suppliers have been pitching our wares as the revolutionary be all and end all silver bullet for too long, and there is fatigue among agents.
Resi agency has never been tougher than now. Agents need real, tangible value from the supplier industry. Help to streamline without losing the human touch. Help to cut costs and become more visible if good.
We must stop the scaremongering that this sort of article peddles, recognise that agents are being ruthlessly exploited by the portals, and come together to find a way to help the best agents, ie all the ones who get the job done well and quickly, get more value out of tech than they currently do.
How many complaints have we heard about Purple bricks from clients and applicants alike. He who wields the knife rarely wears the crown. The market is still undecided so there’s all to play for
This is a fantastic debate and one that splits many of us straight down the middle.
The business will become more consumer led and what works for them we will need to adapt to. The beauty of service, satisfying for the agent and the client when delivered, appeals to so many who are willing (currently) to pay for it. However generational changes will likely make “service” a semantical change for “precise automation”. If the automation delivers results then this also will be considered “service”.
Like many businesses, a lot of the estate agency “disruptors” will tie there own professional nooses.
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