Estate agency and financial services guru Frank Lowe has warned that independent estate agents should draw up strategies for survival, with corporates on the prowl to extend their distribution networks.
Lowe was national estate agency director at Home Of Choice, the mortgage network which last year was bought by LSL, parent company of Reeds Rains and Your Move. He has also worked for Connells.
He said that in particular, independents should now get themselves organised to offer robust financial services, and that traditional referral systems were now obsolete.
Lowe said: “Independents should not sit idly by when corporate agents are actively demonstrating their ambition to extend market share through acquisitions.
“The latest agent to become absorbed into the corporate world is Blundells, with 13 offices in the Yorkshire area.
“If the mortgage famine was not a good enough reason to develop a joint venture with quality financial advisers, then the continued expansion of corporate agents is a timely reminder of the threat they pose to the very existence of the independent agent.”
Lowe is principal of Cheshire-based Estate Agency Business Solutions 2011, which specialises in drawing up business plans for independents which could be in danger of losing out “when faced with aggressive corporate activity, in a finite and delicate market”.
Comments
the bloke at the Pru said that in 1996, the bloke at GA reckoned that too, Royal life, Woolwich the list of smart arses who reckon Independants are doomed is longer that Mike Ockenden's legendary love length.
30 years after I first heard that I was doomed I am sill here.
Anyone selling their home will always be won over by someone who knows their job and cares about the property being sold as much as the vendor. A salaried corporate suit who has one eye on commission and one on flogging "services" simply does not stand a chance.
Frank who? Sorry mate your peddling something you haven't got a clue about. I have one of the best personal insider knowledge of corporate and Independent estate agency in the UK.
Corporates will never replace Independents. Yes they will be in the market place, yes they will gobble up some firms BUT only when the fiance companies are behind them. EA is a risk business and many corporates cannot give the returns their investors expected in this current climate. The profit figures actually aren't taking into account the set up costs, just like politicians, they don't tell the whole story. But they can't hind for too long as everyone knows, the truth comes out in the long run which is why so many big names dropped estate agency in the 1990's for doing exactly the same after the last boom, but this time it is a lost worse ... watch this space, in 5 years time, some big names may go under. Just like Cornerstone and Co. Many of those today are propped up by massive loans.
AC - we have been declaring referal fees for about five years
So long as the combined amount is less than a high street quote the seller does not seem to mind us having a small slice - nothing excessive you understand
Anyway - the next step is to have ones own conveyancing department and then there are no fees etc
@Rob & James
I am not sure that that will happen as there is about to be a huge OFT investigation into the insurance industry and solicitors for referral fees after crashes.
The police appear to be implicated in selling details to the industry as well.
The whole ambulance chasing business is built on these fees.
If these are regulated, then I guarantee that it will apply to the whole legal profession in all circumstances.
It means that an agent that refers a customer to a solicitor that pays a feen will have to admit to it.
The mortgage advice side is changing too - where advisors will have to charge a fee and be completely transparent with their costs and charges.
If both lots have to write to your clients saying "We will pay Floggit & Scarper the sum of £150" I am pretty sure that the referral business will wither.
18 months at most I would suggest
The future for independants is add ons - not just sales fees
Conveyancing especially
With the Legal Services Act due to come into force later this year and Alternative Business Structures about to become a reality more and more corporates will link up with large legal service providers. Independent agents and high street conveyancers (and others) should start making plans to fight their corners and combat what will be a new market place next year.