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TODAY'S OTHER NEWS

Rightmove in crisis: “No clear downside” to quitting, agents told

A new analysis of the simmering Rightmove crisis says there is now “no clear downside” stopping agents leaving.

The Financial Times says that Rightmove’s dominance in recent years has been a classic case of what it calls ‘the network effect’.

FT writer Bryce Elder says: “The past decade has seen money flood into any company that could claim to be carving out a dominant market position.”

It says that its market leadership grew and so, as a result, did its revenues thanks to agents contributing their inventories and having to pay fast-increasing fees. 

But Elder then explains how the Coronavirus crisis has turned that position on its head: “If a company succeeds in establishing itself as the default route to market and that market then disappears overnight, those providing the inventory will want their pain to be shared. Advertisers expect reduced fees and subscription holidays. And if these incentives are seen as ungenerous, the company risks triggering an exodus that throws the network effect into reverse.”

Elder says the virus crisis is the first time that agents have been truly united in common cause against the monopoly power of the two major portals, citing past agent rebellions which ran out of steam quickly and “industry backed challengers such as…OnTheMarket failed to gain much traction.”

However, Elder suggests the current Say No To Rightmove campaign has touched a nerve in the industry. 

“It was never obvious what might fuel a rebellion against the duopoly. Now, however, it is. With the UK property market paralysed by Covid-19 there is no clear downside to cancelling high-priced ad packages that generate no revenue. Time needed to seek other arrangements has also become plentiful” he continues.

The FT describes Rightmove’s response to the crisis - an ill-judged deferred payment proposal and now a 75 per cent fee reduction for four months - as “fumbled.”

The article also extensively cites an analysis of Rightmove’s current problems by City investment consultancy Jefferies, which is quoted as saying: “Rightmove management may think that its four month fee discount has now put its relationship back on a sustainable footing. We see the opposite … We see its actions as directly leading to an opening of the floodgates.”

The article explains: “Quelling the rebellion and preserving Rightmove’s market leadership will require a permanent cut to fees, says Jefferies. According to the broker’s forecasts, which are more than 30 per cent below consensus levels, Rightmove will deliver little or no earnings growth in the next two years.”

At the end of last week Estate Agent Today exclusively reported on a video interview between industry analyst Christopher Watkin and the leader of the Say No To Rightmove group, Acorn agency group chief Rob Sargent. 

He says his group is already backed by 1,500 agency owners representing some 2,500 offices. He expects that this will reach 3,000 offices in the next 10 days.

He forecasts that the “tipping point” is coming in the near future for Rightmove and its competitors, in terms of how they move forward once discount periods and government furlough payments end as the Coronavirus crisis subsides.

However, the scale of Rightmove’s power and wealth is set out by the FT which says the company is wealthy enough to outlive the crisis and could pay its staff well into 2021 on current earnings. 

The piece concludes: “Yet a valuation of nearly 30 times 2021 consensus earnings, a premium to its long-run average of around 26 times forward profits, suggests investors have priced in a post-crisis continuation of Rightmove’s status quo. Anyone who has tried to negotiate with an estate agent will appreciate the risks being baked into that assumption.”

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    Clear number one in the consumers eyes ,much like all number ones...they will survive this easily

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    Don't you believe it Angus. We left last month and have had no problem convincing vendors and landlords that we don't need Rightmove.

     
  • Nigel Adams

    This article is disingeneous and bordering on the hysterical. The clear downside not mentioned in this piece is to cut off the biggest (and most cost-effective looking at our figures) souce of buyer leads. I'm happy if other agents quit as it will give a me a clear competitive advantage coming out the other side.

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    Not if your the only one left on there

     
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    'I'm happy if other agents quit as it will give a me a clear competitive advantage coming out the other side.' Hilarious.

     
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    I know it may seem like hard work to think of any other way of doing business and at the end of the day you are running your own circus so yours are not my monkeys. However, the old phrase of eggs and basket springs to mind listening to your awareness of marketing.

     
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    Reality is Rightmove like REA is Aus have been gouging.
    They win on eyeballs and consumer mindshare.
    They can afford to drop to more realistic pricing. Albeit Aus is different as they screw vendors for vendor paid advertising

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    I've been saying a year that Rightmove's years are numbered. A company that abuses dominance always fails. I predicted Nokia would when it could do no wrong and everyone laughed - not now are they. Rightmove are just out of sync and view their customers as the buyers! We get 60% of our leads from our own website, social media, youtube, 20% from rightmove and 20% from other portal. If you've built your business around sticking houses on rightmove then you're pretty stupid.

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    Wow 60 pc from own website from sales or lettings.
    If so you are awesome.
    Also a good crm strategy is important....you don't need to advertise if you have qualified buyers...a portals biggest fear is crms and agents get smart

     
  • Bruce  Patterson

    Property Pundit

    You don’t get this RM business do you ?

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    Care to explain oh enlightened one?

     
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    The reality is that some estate agents are old fashioned, greedy and lazy. Leaving Rightmove means they might have to think outside the box. Buyers in their 20's and 30's don't care where the house they want is advertised, nor which agent. They look at all the sites. They love the hunt. Yes some vendors who are just shopping around may get lulled into the Rightmove myth by those paying through the nose for it. But if you're well known and well liked your local area you have nothing to fear. If you hide behind a big desk with a bigger ego, with unknown minions doing the work, then yes, be terrified. Like dinosaurs, your days are numbered.

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    • 20 April 2020 16:20 PM

    What concerns me as a potential seller is if more EA withdraw from the major web portals how may potential purchasers source all properties for sale!
    Purchasers certainly don't want to return to the days of traipsing round EA on a Saturday.

    Such potential purchasers like the convenience of a web portal.
    If all properties AREN'T listed on these portals confidence in them is lost from purchasers.

    So I'm looking for a 3 bed house minimum.
    Currently I go on

    RM
    OTM
    Zoopla.
    I expect to see all properties for sale on there.
    If not I am unable to search the whole market.
    How do I therefore search that whole market?

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    not many agents are saying they won't use any portals atall. the top three are there and most will use at least one of them. Many of the agents at the moment are blowing a load of hot air over may do may not do, when those that really do just do it. Mark my words, Rightmove, Zoopla and On the Market will all survive and in the months ahead we will have new contenders such as Homesearch enter the market and Openbrix. The days of one dominating the market like Rightmove used to are over. competition is good but no one expects house buyers to have to do all the work.

     
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    • 20 April 2020 23:42 PM

    Ahh! So I should add those portals as part of my property searching regimen.

    I've also looked at fb but it seems a very confusing lay out and very few seem to advertise property on it.
    Which I find strange as fb is free as far as I am aware.

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    This has nothing to do with leads.

    It's all to do with the 'fear' factor and Rightmove know it. If you go on a valuation and you can't quote Rightmove, other agents simply use that against you.

    It's not that a lot of agents want to be on Rightmove, it's that they feel they can't afford not to be.

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    This has nothing to do with leads.

    It's all to do with the 'fear' factor and Rightmove know it. If you go on a valuation and you can't quote Rightmove, other agents simply use that against you.

    It's not that a lot of agents want to be on Rightmove, it's that they feel they can't afford not to be.

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    Clearly the leaders will have more listings.
    And the newbies will struggle
    Globally this is the issue

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    I believe a couple of things. Firstly we agents have overestimated the pull of RM to buyers and sellers. Buyers will go where the property is and sellers can be easily educated. Secondly we just haven't bothered to educate the sellers because many of us are too lazy.
    Having three portals to choose from has helped in this regard. For all those OTM haters out there, their profile through advertising has helped the public to understand there are more options than just RM.
    Finally, RM day of reckoning was always going to come. C19 has been the catalyst. We would not be even having this discussion but for RM deplorable treatment of independent agents to subsidise the corporates.
    What goes around comes around.

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    Well every office shld keep stats on where their leads and sales come from.
    Then it's an easier decision.
    Frankly a well maintained Crm and high local profile shld gain you more listings
    Then wait two weeks before listing on portals

  • Welsh  Cynic

    We do keep stats and can say that RM produce more sales enquiries, but OTM, more lettings ones.

    However, as long as Rightmove have all the sales properties on the market, they will be able to continue as the first (and in some cases the only 'port of call') for applicants.

    Move properties off Rightmove and onto another Portal and the picture changes. It would't take long for the public to realise what will have happened and the monopoly is ended and with it the 'fear' hold that RM have exploited.

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