Alongside housebuilding numbers and a proposed ‘mansion tax’, the debate over the significance of online estate agents is one of the hottest talking points in property, sparking considerable animosity between the tech-savvy online-only operators and long-standing high street names. Although online agents currently boast just a 5% market share, their popularity is undoubtedly on the increase.
“Almost every other sector has been disrupted by the internet, and it’s only a matter of time before the property market follows suit,” says Will Clark, director of sellmyhome.co.uk. “There is a trend for vendors and buyers wanting to be more actively involved in the sale or purchase of a property, and that’s what we provide, a 21st-century, virtual experience that works around the lifestyle of our customers.”
Online agents point to the cost of their services, claiming that they can significantly undercut the ‘percentage’ system charged by high street estate agents. The fees are attractive to proactive sellers who are willing to take care of the nuts and bolts – such as conducting viewings – themselves.
For example, property developer and TV presenter Sarah Beeny’s Tepilo offers packages from £495 plus VAT, with advertising on Rightmove and Zoopla, a home visit by an agent and account management included. Added extras such as EPCs, floor plans, professional photography and a ‘for sale’ sign are individually priced between £50-£99 each, with a comprehensive bundle available for £795 (plus £150 if you want a virtual tour and EPCs) up front. On a property priced £200,000, Tepilo claims to save sellers £3,006 compared to a 1.5% fee charged by a high street agent.
Sellmyhome.co.uk offers similar packages, including one where vendors can pay £299 up front and the remaining £799 on completion. Will Clark says: “Consumers are becoming more aware of the alternatives to using a traditional estate agent and credibility is growing in the online sector. Vendors want their properties to be as visible as possible, and want a service that fits around their busy lifestyles”.
In response, high street agents prefer to fight their battle on the customer service front (more on this later), but also remain suspicious of the pricing structures offered by their online counterparts.
“Buying or selling a property is not the same as buying a book from Amazon – it is a complicated legal transaction. Some people try the DIY approach [and] most regret it,” warns James Wyatt, of the Surrey estate agency Barton Wyatt.
The up-front fees offered online also come under attack. “[Online agents] have little incentive to go out of their way to help you sell their property as you have already paid them,” states Matthew Dabell, director of Aspire estate agents in South West London. “Aside from this, if the asking price is wrong, the whole process may lose you more money than you ever thought possible.”
Dabell adds that he “hesitates to call them agents” as customers are “simply getting access to some of the national property advertising websites”.
Patrick Coyne, director of Holdens Property Services, says there is a significant difference between online and high street as “selling a house should not be all about the fee to sell it. It should be about achieving as much as possible for that house and moving it in a time frame that suits all parties involved, and this is something I believe online estate agents do not fully understand or grasp”.
High street estate agents claim that the online model simply cannot compete in terms of service, with a thorough procedure running from marketing to completion justifying the additional cost. They believe that the specific local knowledge of a high street agent results in a more accurate valuation for sellers, and the opportunity to view a range of relevant properties for buyers (the typical homebuyer visits nine home before feeling ready to purchase one).
High street agents also claim that it is the human side of estate agency that keeps complicated deals on track. “Everyone loves to mock the job estate agents do, but when problems occur, that’s when the good agents shine; the ones who go the extra mile and build human relationships which keep that sale alive, rather than giving up at the first hurdle,” says Patrick Coyne.
Coyne believes that online agents lack experience, which will result in issues such as sale chains collapsing. “This knowledge and skill cannot be achieved from a call centre or a few clicks of a mouse,” he says, “you get what you pay for and in time the realisation will be that to save £1,000 on an estate agent fee will cost you more overall without the trained experts that a good traditional agent can offer.”
Ian Westerling, managing director of Humberts agrees. He says: “Traditional agents can provide far better service levels, exceptional local knowledge, and ultimately, will generate the best price for their clients.”
Adam Day agrees that quality customer service is a benchmark in competing with high street agents, but claims online agents are already making headway. He says “[We can compete] by working on the same principles of providing customers with a trusted brand and building client bases – and we are doing exactly that.”
Opening hours are one area of customer service where online estate agents outstrip their counterparts. Online agents are open for an average 86.9 hours per week (with Purplebricks providing a 24/7 service), compared to 67.2 hours for high street agents, according to a recent report by marketing agency The Chat Shop.
A sticking point among some high street agents is the suggestion that they feel threatened by online agents or are failing to adapt to the changing technological needs of the market.
Matthew Dabell disagrees with such hypotheses, claiming “there has been a gradual move from predominantly locally-based print media advertising to today’s multi-faceted marketing campaigns that embrace all technologies”.
He continues: “Less than 50% of our enquiries are actually sourced from adverts online. In fact, almost 30% come from people who walk in to our office to discuss things face to face and a further 15% come purely from recommendations.”
The aforementioned report by The Chat Shop looked closely at the online presence of five top high street and online agents, concluding that traditional agents were embracing technology more quickly and thoroughly than originally expected, though online agents led the way on all key metrics including vendor approval.
The report also concluded that despite traditional agents having a very strong foothold in the online market (Foxtons have 300% more traffic than the top five online agents combined), for smaller brands an operation wholly focussed on a high street presence is likely to be vulnerable as the requirements of clients change.
Patrick Coyne urges caution in the adoption of technology. He says: “High street agents will constantly embrace technology if it benefits our client – the seller. Agents have to remember technology should be used to achieve results and not just to have the next tech fad – having the biggest and brightest does not always lead to the best results.”
Both Ian Westerling and Adam Day agree that cost can be a sticking point. Westerling agrees that “adopting new technology is key” but “cost precludes many agents becoming early adopters”. Day takes a more aggressive stance, arguing that “agents either don’t believe in technology or simply don’t have the capacity to integrate it, because most are just two or three office outfits that don’t have the spare revenue. It could be those agents that really feel the effects of online agents.”
A better future for consumers?
So what threat do online agents provide to traditional high street operators, and how much business are they going to get their hands on this year? “[They will make] a small dent,” says Patrick Coyne, while Matthew Dabell believes they are “not a significant threat”. Ian Westerling offers a different view, commenting “online agents will emerge as a relatively big part of the UK offering, but they are really best suited for first- or second-time sellers”.
In the online corner, Adam Day says “2016/17 is going to be a really significant time for our sector, but 2015 could see it grow quicker than it has in the past,” and Will Clark goes a step further, predicting “an enormous leap” and says he “would be surprised if the market share held by online agents did not double in the next 12 months.”
Even if high street agents consider talk of a revolution to be premature or even deluded, they must accept that their online counterparts are having an increasing effect. In a hotly contested debate that sometimes sparks anger on both sides, it pays to remember the consumer.
73% of the public (rightly or wrongly) say they do not trust estate agents. The growth of the online model might not have an earth shattering effect on the market, but at the very least it should provide consumers with greater choice, and perhaps give some high street agents a wake-up call, whether that involves lowering their costs, offering longer opening hours, or simply ensuring they really are providing the very best service they can to their customers.