Former City analyst Anthony Codling - who is now the front-man for a new property portal - has set out why he believes High Street agents will always ‘beat’ online rivals.
Codling, who last year left the investment consultancy Jefferies after several years as an equity analyst with a particular focus on the residential property sector, says online agencies have attracted vast sums from investors because an explosion of digital technology meant that in recent years consumers have been able to bank, shop and make appointments online.
But he insists that equating property with these other retail and convenience activities, which have boomed in digital form, is “a flawed logic” - and here’s why.
While banking services are broadly similar in person or online, and a book ordered from Amazon is going to contain exactly the same pages as one purchased in a bookshop, transacting a property is “different”.
In a presentation to the Guild of Property Professionals conference at the end of last week, Codling - who famously criticised Purplebricks on numerous occasions when he worked at Jefferies - dismissed online agents generally as “passive intermediaries” who list properties on portals and then wait to find a buyer.
They add little or no value to the process and would not exploit the desire of a person to buy a property, possibly at a higher price, he insisted.
High Street estate agents, by contrast, have a database of active potential purchasers and have a human mechanism - negotiators and sales progression teams - who hunt down those buyers who are willing to pay for a property.
Codling added that in his experience people will pay for value, and an estate agent’s commission of 1.0 to 2.0 per cent is unlikely to deter clients.
Looking at the current market, he told delegates that the need for agents to pro-actively and vigorously focus on sales would be accelerated this year by the lettings fee ban; this is because so many agents have entered lettings in recent years because the rental sector has expanded while the sales landscape has been volatile.
He told the conference that, as an example, the largest agent in the country would lose some £20 m in fees due to the ban and therefore would need to recoup this money on sales.
Codling did not name that agency as Countrywide but the troubled agency group has been a client of Jefferies in the past.
Codling’s new role since leaving Jefferies has been as chief executive of long-awaited property portal Rummage4.
He told the Guild event that there was no date for its launch but gave an example of how it could be used to show past sales as well as current instructions. He said that this would be a powerful tool during a pitch if it was “showing your agency owned an area.”