Lawyers, politicians, bankers, insurance sellers – no matter where you go, there are some professions that are just always going to be unpopular. And there’s another one that never seems to be out of people’s top 10 most unwanted list: estate agents.
Everyone has their own version of the same story: added to the pressure of house-hunting is the cost of commission and fees, which under the current model go more to the agency itself than the busy agent doing all the hard work.
Agencies are a vital part of finding the dream home, but the status quo system can be more of a nightmare.
But now a new generation is emerging, to challenge the traditional model. Disruptor services are: smart, personal, use PropTech innovative digital platforms built around the client, far more dedicated, focused on results, with an approach and a mindset that leads to good deals for everyone, not just the agency.
These disruptors have taken a look at the old model and decided to shake things up. They’ve looked at where real estate agencies are going wrong, and why they’re so unpopular, and decided to be different thanks to technology and its many advantages.
They’ve seen that estate agents have had it easy for a long time, and become complacent. For 30 years, property prices have risen continuously, and demand has been strong, both for buying and renting. As a result, agents have had no incentive to sharpen their skills and compete on service.
In some areas, a handful of estate agencies dominate the local market. They all hire from the same pool of agents, charge similar commissions, and promote their stock in the same ways.
Likewise, in some areas, a handful of people or companies own most of the properties, and they often work with the same agencies for many years. The effect of all this is to stifle competition and prevent other owners from getting the service they need.
The high cost of starting a new estate agency keeps would-be competitors out of the market. Aside from hiring agents, you need to rent an office on the high street. You need to pay monthly fees for property portals like Rightmove and Zoopla. You need to do your own marketing or pay a franchise to do it for you, and so on.
In the UK, estate agent commissions are among the lowest in the western world. This forces agencies to focus on the volume of business rather than the quality of service. It also makes it hard for newcomers to get to a sustainable volume of business.
Nor do agents need any qualifications to sell or let property. This is amazing, given the enormous value of some of these properties, which are typically the only major asset UK citizens will own.
Many estate agents are not motivated to work hard and deliver good service. Given the low salaries and commissions, it is tempting to cut corners and even lie at the risk of losing a job they don't like much anyway. In fact, they are more motivated to look for a better job than improve their skills in the one they have now.
Career growth inside agencies is protracted, with few financial benefits for people to become managers and directors, or rise up fast. Internal growth is based on lots of corporate bureaucracy and little meritocracy. Few energetic, honest, and charismatic leaders manage to survive that long in the old-style management and valuation agents’ performance.
Rather than being motivated to foster a culture that benefits the industry by building teams around values, and retaining talent for longer, those who do make it into management are more motivated to maintain the status quo than transform the industry.
These companies and people might not be willing to change, but change is coming. In other sectors, new technologies and innovations have emerged, as enablers of the shared economy. Now we are starting to see the change in estate agency too.
Innovative estate agents have started to circumvent traditional agencies. They are going freelance and serving their clients directly, with benefits for both. As a result, clients are getting much better service from highly motivated professionals. In turn, agents are making much more commission at the expense of the agencies, not the clients.
Once this becomes more widely known, the estate agency profession will finally start to attract the talent it so desperately needs. Property owners will finally have a personal property expert whom they can trust with their most valuable asset.
The agency model is changing. So are the agents. They may not be so unpopular for much longer.
*Edmond Ibrahimi is Director at Propertalis