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Why I want to join Agents’ Mutual

Before we go any further, assuming you are an Agents’ Mutual member, let me ask you a question. If you had been made this proposition two years ago, to support a for-profit portal, committed to increasing fees, where corporates pay less than you and get more shares than you, and where Ian Springett gets £20 million, online agents can list and so on, what would you have said?

To help you make your decision on the upcoming member vote on demutualisation, let's review what's on offer both in terms of shares and the new business proposition…

My understanding is the new OnTheMarket will be offering shares as follows:

- New agents will get shares for nothing and free listing for 18 months

- The current board will receive a substantial shareholding

- 27% of the shares in the new company will be issued to new members

- Shares could be substantially diluted in the future

- Shares will be locked in for five years but 10% can be sold after 12 and 24 months

- These shares could be worth £24,000 or more per gold member branch, depending on the success of the float

- Loan notes are to be converted to shares

The free shares will go to any new agent who joins but the specific question that remains is how many of that 27% will go to the corporates? My guess is most of it. If I had to make a bet, I'd say 20%. 

If I'm right, then when you take the shares reserved for management and the shares held by the investors, the new company would be controlled by a group whose interests look pretty well aligned. 

The big corporates would have free or reduced price listings and they could support fee rises that would be imposed on their smaller competitors in order to drive up profits - that's a very virtuous circle for them.

The business proposition

In summary, the business proposition appears to be to copy Rightmove and in particular Zoopla by doing the following:

- Selling add-ons

- Widening the advertiser base

- Selling other services, particularly software for agents

- Adding functionality, an online hub and calendar 

- Holding basic subscription fees initially before gently increasing them

- Controlling agents’ listings

- Dropping the One Other Portal Rule on the condition that a new five-year agreement is signed

- Applying a 10% discount for agents who voluntarily keep OOPR

- Holding agents who don't sign up to the One Other Portal Rule

- Spending £30 million on marketing in years one and two, reducing to £20 million thereafter

Based on this information, would you have signed up two years ago? I didn't think so.

However, if you did sign up, the big question is what to do now? Time is very, very short - amazingly so I'd say. There is an awful lot of information to take in and it will be tempting to abstain. If you do this, you will be helping the ‘yes’ cause and increasing the likelihood of the float going ahead.

It's my opinion that if you vote ‘yes’ or if you abstain you are helping big agents, investors and the board achieve their goals which are to make money by being just like Rightmove and Zoopla.

However, conversely, if you vote ‘no’ and you win, you will have used them to achieve your goals which were and still are to create an agent-owned portal with low costs to counterpoint the existing purely commercial players. If you lose the vote you still have the option to go along with the proposition if you want to.

We know roughly what to expect if the vote is ‘yes’, you get another version of what we already have - a mini Zoopla/Rightmove. 

But what do you get if the vote is a ‘no’? That's where things start to get interesting.

My guess is that if the vote is ‘no’ the current board will resign, or at least there will be a big shake-up. 

This will provide an opportunity to use the momentum created by this attempt to demutualise for the smaller mainstream agent members to seize control of their mutual and make it what it was always intended to be.

The great thing is that a new board would have a mandate for real change and some of the proposals on the table could be adopted, like dropping the OOPR, adding positive functionality and thinking of ways to lure in the fence-sitters. 

The kernel of truth in all this is that it is the agents whose data is being used to make other people money. In order to get to first base, a true ‘Agents’ Mutual’ must attract agents like me and others, it can't work as a large minority, it has to represent and attract the majority.

So that's why I want to join a real Agents’ Mutual, not the outfit whose proposition has failed over the past two years and certainly not the Frankenstein’s monster that would be created if this float goes ahead. 

And by the way, I think this analogy is especially apt. If the float goes ahead, I think the newly created company could suffer a similar fate to the mythical monster created by a man who would play God.

*Simon Shinerock is Chairman of Choices Estate Agents. For more information on Simon, see his blog or his LinkedIn profile.

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    Couldn't agree more.

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    Absolutely. We are holding off to see which way it goes. If it goes the way I think it will the yet another Zoopla/Rightmove is born.... If things go the way we hope then it could be a real rival as it should have been at the beginning.

  • Simon shinerock

    One of the themes I have been reading is the idea that this was all a plan from the start. I don't know whether it was or it wasn't but after I wrote this article something worth mentioning occurred to me. It seems as if the interests of the board have always been to go for a float and this means that there has always been a conflict of interest between the aims of the board and the aims of the members. Any new AM should be committed to transparency, I have nothing against rewarding people for a good job but I am very troubled by the idea of rewarding them for doing a bad one.

  • John Evans

    A completely biased view with many incorrect facts. Simon the voice of Zoopla is again scared and the propaganda machine is cranked up.

    What would you do Simon if you ran OTM?

    Simon shinerock

    Firstly John I challenge you to point out one incorrect fact and secondly to actually fault my argument. As to the other question, if I ran OTM I would do so in a transparent way, I would communicate with the membership and allow them to have a say. I'm a very creative businessman if I say it myself, my track record as an innovator speaks for itself. I have made it my business to keep in touch with the many significant changes that are going in in the business, some good some bad, some pivotal. If I were running OTM I would rally the membership behind me, show them real leadership and with everyone pulling together all things are achievable

     
    Kristjan Byfield

    John- please dont just blankly refute. Explain which points Simon has detailed are wrong- and why. What exactly do RM or ZPG have to fear from you guys- dropping the OOP rule you are no longer any form of threat to them your smply joining the club and going against the main reason OTM was formed- by increasing agents marketing costs NOT reducing and by joining the 'monopoly' (OTMs marketing words during recuritment not mine).

     
  • Kristjan Byfield

    Spot on in my eyes Simon- think I agree on every single point.

    Simon shinerock

    Thanks Kristjan, I didn't just write this without thinking about it, I have really tried to represent the situation as it really is, something some people find hard to deal with

     
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    Agents Mutual was a ''no brainer'' for us independent agents, but most agents were too stupid to see the benefit and too stupid to read what the future will hold if Agents Mutual fails. If you are such an expert Simon where are your properties on Onthemarket, I cant find them. We will only have ourselves to blame when rightmove turn the screw, further, on their pricing model. If you agents had supported onthemarket fully, the proliferation of ''lets pretend we are estate agents'' would not have happened to the same degree and rightmove and zoopla would have struggled immediately without our stock. So...tell me why it has not been supported?

    Simon shinerock

    Because it was a non starter and a disingenuous one at that. My stance is a matter of record, I've never denied the problem but as a rule I'm against going from the frying pan into the fire and now into the furnace

     
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    you could have got out of the fire and been on the hearth rug by now if you and the other agents had seen the light....''we will wait and see what happens'' well it is happening and we will see who suffers from the fence sitters attitude. By the way it was never a non starter and the food to feed a property portal is ...the property stock which we agents hold. We shouldn't even be having these conversations, you were happy to feed rightmove and zoopla but you wont feed yourself...either very stupid or loads of shares in the other portals !!

    Simon shinerock

    Geoff I have been anything but a fence sitter and at the beginning OTM was nothing like RM or Z both of whom are good. It was self evidently a non starter and part of the reason may well be human nature but then again, we are human so what you gonna do, pretend we aren't?

     
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    but why would an agent want to give up a portal that supplies them leads for one that didnt?

    Simon shinerock

    Promises promises

     
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    on the market would have supplied you with plenty of leads if we had all put our stock on it, but we didn't so it is all our own fault. Yes Simon otm was nothing like rightmove and zoopla you are correct, it was designed to give us agents a bit of control and not screw us for money.

  • Simon shinerock

    Geoff, if is a very big word, if the moon was made of cheese we could fly there and make pizza. I didn't like or trust the proposition for good reason. However, as I have indicated, all is not lost and there is a way of resurrecting AM as the Portal it was always meant to be. To do this there needs to be a no result and independent agents need to seize control of their portal. As a mutual it has a future, I'm sure I or someone else with the right ability could quickly turn it into a real force to be reckoned with, rather than the Frankenstein's monster it will become if the float (or should I say sink) goes ahead

  • John Evans

    We are all online agents, do you mean call centre agents?

    Simon shinerock

    Yes, by your definition I mean call centre agents

     
  • John Evans

    The membership levels have plateaued, OTM needs to change. Their proposition is the best route forward. It will be a low cost alternative to rm that doesn't bite the feeding hand.

    Simon shinerock

    John, I have tried my best to set these issues out as I see them, I think this new strategy is a dud as well as being hypocritical, but if you continue to have faith in the OTM board then support their float

     
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    Simon - here we go again..... people like me and others made a grown up decision and have stuck with it. I wanted to have control over my own destiny - I got zero leads from Zoopla which only catered at that time for the Southern region and put my money in OTM. Have they got it right - not all the time - have they got a good product - absolutely !!
    I put my money in and will continue to do so. Am I stupid - No Am I adult - yes
    Please your rhetoric is actually getting a bit cringey - it actually is beginning to sound like you have a vested interest in RM or Zoopla - can I ask you a direct question - Do You ?

    Simon shinerock

    Angi I have already answered the question about vested interest. I believed right from the start that Zoopla was mounting a strong challenge to RM and the right strategy was for OTM members to drop RM. 'This would have evened out the portals and given agents real bargaining power from day 1. I still don't understand why this was not universally accepted and can see no logic for the failed anti Zoopla strategy other than it creates a money making opportunitiy for the board

     
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    Some agents like to moan about how much they pay the two main portals, in the same way they used to moan about the exorbitant advertising rates of the local property rags. I doubt whether the advertising budgets of an agent have actually changed that much in 15 years - just reallocated to different media. My feeling is that a competing portal can only work if it lists all properties. There's no point only having small proportion of stock as the user simply goes elsewhere - and will never return. Perhaps an alternative plan would have been to have started small and "regional" and then expanded into neighbouring areas as the portal reached saturation point in each region. But then again, perhaps not. Tough nut to crack, and hats off to anyone who tries. I'm sure there's someone sitting down planning an alternative to "Google". And good luck with that too.

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    Hi David - absolutely they did and remember the good old Prudential days when they took the radical decision to stop all advertising across the board. Suicide but lets be honest it worked. I was pay £600 a week for one page in the good old 1980's - look at it now.
    I await Simon's thoughts on taking on Google with baited breath !

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    Simon, what angered me when OTM came to see me, was their openness about pretty much destroying Zoopla. As someone who supported Zoopla (originally FAP) right from the start, and in return they supported my business in terms of being open to discussions on their rates, this didn't sit well with me on a number of levels. Clearly this was the target for OTM as they would have been well aware that if they had taken market share from RM, then the result would have been a loss of RM dominance and a likely reduction in their pricing - which in turn would have had ramifications for the OTM pricing model.

    Simon shinerock

    I agree David, I knew Andrew Pendry the owner and founder of FAP really well. I watched as FAP, PropertyFinder and Zoopla mounted a combined challenge to the might of RM, it was looking good until OTM rode in on their white elephant to snatch defeat out of the jaws of victory

     
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    Simon - in answer to your last post.

    Your vested interest worked for your business. You were in the fortunate position to maybe have an agency who Zoopla allowed to promote and advertise your business to its full potential in ways that others agents could not ...... would you happen to know if they did ?
    Plain and simple it didn't work for me as it didn't for many many agents.
    I then made the decision to leave and put my advertising spend elsewhere
    This is rather like Brexit - two choices

    No more debate - you have your packs so read it fully and make your decision.
    You do not need people with vested interests in competitor sites making your decision for you
    Do what works best for your business and use your hard earned marketing money wisely !

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    I was sent an email yesterday about something in Australia that is apparently also coming over here too. I have never heard of it. This chap has seen a demo and said its brilliant. I checked their website but its not live yet www.linktosale.com.au

    James Robinson

    Thank you for the tip, it will be interesting to see what they send out

     
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    Hi Mand,
    thanks for the link. Do you have any further info on this from your contact? We are interested in trying new approaches. Checked their website and the Oz version goes live start of oct, have left a message about uk version as its mentioned on their holding page.

     
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    The email I received was from a friend who works in Real Estate in Perth. Apparently a couple of staff at their agency viewed this new system. I got back to him and asked a few questions but unfortunately didn't get much more insight. Here is his reply

    "Our agency does sales, lettings, room lets and property management. The system is vastly different to what we currently use/have seen, it is very interactive and we will be able to chat live with tenants and anyone else in any language, there was so much - too much to explain, but we were blown away and plan to use it, the good bits are they are talking about a flat fee model of just $65 to list unlimited properties - no more paying per property, plus there are all these tools to help us market to social media and if I got this right, a rating and review system built in where agents can be reviewd by clients and vice versa. I will ask Cathy to provide her spin on it as she played with it the most. By the way, this isn't a big corp thing, apparent developed by a woman in the UK and her brother who is in real estate over here, i think that's why they are looking to try it over there too"

     
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    Spooky ... just been reading this article: https://www.estateagenttoday.co.uk/breaking-news/2017/9/estate-agent-today-panel-what-next-for-agents-and-onthemarket

    Kind of related, maybe my friend is on to something!

     
  • James Robinson

    An excellent piece Simon, until I had read it I had reluctantly swallowed Springett's fait accompli float or die claim however your counter arguments have made me stop and rethink everything. So ignore Angie C and keep writing

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    I would have assumed James that you had read the information in your pack to make you come to that conclusion. Everyone does have a right to an opinion but to be keep banging on the same old drum ... really !

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    I would have assumed James that you had read the information in your pack to make you come to that conclusion. Everyone does have a right to an opinion but to be keep banging on the same old drum ... really !

  • Simon shinerock

    Angi I think there is someone banging a drum but it's not me methinks .....

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    HA HA HA you know Simon that's exactly my sentiments :)

    Simon shinerock

    :)

     
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