It’s official; the estate agency business is tougher than ever.
Contrary to perceptions that may exist amongst observers and even clients, the advent of portals, interactive websites and social media have made life tougher for agents, demanding more systems management skills and strategic marketing expertise than ever.
A few months ago the findings of a unique piece of academic research on new business practices in the estate agency industry was published.
The report New business practices: Estate agency interactions in England and New Zealand housing markets by researchers from the University of Sheffield and University of Auckland, published by the RICS Research Trust, investigated technological innovation in the industry and changes in home movers’ behaviour.
Clearly technology has moved on tremendously over the last decade. It’s hard to believe that my ten year old daughter was born before my iPhone. I remember life before children, life sans phone is a blur.
As we kitted up with our personal technological hardware, the residential and commercial property sectors changed face with the advent of sophisticated websites, portals and social media.
Even high street agency offices have changed in look and function over the last decade. Powerpoint images joined static pictures in windows, while some agency offices looked more fun (and better stocked) than the pub next door.
However, as the research points out, it is the relationship between technology and customer behaviour that drives the direction of change.
Technology on its own is not the issue. We are not obliged to text, tweet or check work emails while watching Newsnight or Graham Norton.
The fact that we can (and do) builds expectations that others will do so also. Those random thoughts on whether a particularly attractive light fitting is included in the sale is not really demanding of a response at 11.46pm, but increasingly we are, if we’re honest, expecting it.
When there is an army of agents propping up the lounge bar-like office this is perhaps manageable; there is in theory a back-up person, if only to cover for holidays and perhaps the odd tweet-free night out.
However, for smaller agencies this level of service is quite a burden.
So too is the technological and marketing stuff now expected by a client. The research notes that property portals and other online/mobile channels now dominate property marketing. Great for selling a house, less so for building agency brand.
This means that other traditional and non-traditional routes of print media, advertising, tweets, multi-media market comment and the like are still needed.
This of course adds to costs, work and skills requirements, which are felt more acutely by the smaller agent without the marketing machine whirring away at head office.
Does all this mean that only large agents armed with a robust marketing budget and staff on call 24 hours today will survive in the post technological revolutionary world? The research suggests not.
The study finds that there is a demand for a range of services in demand in the UK: from lost cost minimal through to the high service model.
This presents sustainable opportunities across the sector. However the study also reports that repeat customers and recommendations from customers remain essential for generating new business. Portals, websites and social media are no replacement for good customer service.
Service is not of course the preserve of the small or large agent. Robust business practices are available to all, just associated with differing challenges.
The research also notes, the increase in the availability of information and data has armed buyers and vendors with market knowledge.
Much of this information was previously in the domain of the big-boys agency world, but these days, data and research has to be pretty unique for it to be reserved for ‘special clients’.
Such material is increasingly a qualifier rather than differentiator, but it is perfectly possible not to play this game at all, as many successful agents have proven.
The correct interpretation of such data and research by buyers and vendors is another matter.
Personal contact and conversations are needed to tackle that one, which is tricky when agents, big or small, are entering the lives of vendors and buyers further down the line when they have “done the research”.
The analysis undertaken by the academics (which is well worth a read as I have most certainly not done it justice in these few words), presents a positive story for the industry.
Life has changed, driven by the powerful combination of technology and consumer behaviour.
In this country we are fortunate, this has spurred the development of spectrum of services models. This has provided choice to vendors and options for the evolution of individual agency businesses.
The range of service models now operating in this country contrasts with the situation in the researchers' comparative market of New Zealand. Here the market is dominated by a high-service model offer, inevitably this is associated with higher costs.
I am not making any comment either way on the case for and against regulation, but it is perhaps interesting that New Zealand is a more regulated market.
*Sue Foxley is Research Director of ThinkBarn