“On behalf of the approximately 1,000 agency branches we serve .... we would call on you, without other agenda, to withdraw it for the sake of our industry and prospective home-movers alike” writes Rawlings.
The core of Rawlings’ argument in the letter, reproduced in full below, is that there is little consumer awareness of OTM, and without that there is no knowledge amongst would-be buyers that properties are no longer generally duplicated across both Rightmove and Zoopla.
“Buyers are simply not being exposed to the same number of properties that they would have seen pre-OTM” claims Rawlings.
He goes on to say: “This has led, not only to a decline in transactions, but also to a decline in new instructions because many people are not bringing their house to market (or are withdrawing it) simply because they do not believe they will find anywhere to buy. This has led to a vicious circle verging on a confidence crisis. And confidence is the one thing on which property markets thrive.”
Estate Agent Today has asked OnTheMarket for its comments on the Rawlings/Payne letter.
The full text of the letter is below.
Open letter to Ian Springett, CEO On the Market, Agents’ Mutual Ltd.
Dear Ian,
I write as an estate agency consultant, trainer and marketeer of 25 years in conjunction with my business partner, Bradley Payne, who holds a Doctorate of Statistics.
On behalf of the approx 1000 agency branches we serve, as well as the wider industry, we believe we have identified that On The Market’s “one other portal” policy is directly contributing to the current decline in transaction volumes in the UK, albeit inadvertently, and we would call on you, without other agenda, to withdraw it for the sake of our industry and prospective home-movers alike.
The current situation:
- sales transactions have been down every single month of this year compared with the corresponding month of last year, dropping 4% across England and Wales on an annual basis, and 10% for London. (Source HMLR);
- instruction levels have plummeted by 8% this year (Source Rightmove);
- widely reported portal traffic figures show that visitor sessions on the property portals are down year on year by nearly 29% (Aug/Sept 2014 vs Aug/Sept 2015);
- pre-OTM, buyers assumed that most properties would appear on either Rightmove or Zoopla and there was therefore no need to “portal-hop”. This is borne out by the fact that, according to research by Nielsen, a whopping 80% of homebuyers only use one portal to conduct their property search. (Just as people might use Google or Bing to search for information on-line, but are unlikely to use both). This was not a problem when most properties appeared on both sites. Consumers had not been conditioned to think that they need to go on multiple portals to check out every property.
However, it is a problem now! This is because the OTM one other portal rule has meant that far fewer properties are now duplicated on both Rightmove and Zoopla.
Yet nobody told the consumer! Such a fundamental shift in consumer conditioning can take a decade to influence. The excellent OTM awareness campaign has only served to suggest that OTM is an alternative, not an “as well as”.
The effect of this is that buyers are simply not being exposed to the same number of properties that they would have seen pre-OTM.
This has led, not only to a decline in transactions, but also to a decline in new instructions because many people are not bringing their house to market (or are withdrawing it) simply because they do not believe they will find anywhere to buy.
This has led to a vicious circle verging on a confidence crisis. And confidence is the one thing on which property markets thrive.
I am not suggesting that OTM is a bad thing - it’s a great site. However other contemporary disruptors such as Uber, AirBNB, Amazon Prime, etc all started from the position of “consumer first”.
A “by the agent for the agent approach” has unwittingly failed to recognise the driving forces behind the proposition and in doing so has shot the industry it seeks to serve, along with the consumer, in the foot.
This problem could be quickly corrected if the one other portal rule were to be lifted, and on behalf of the industry and consumer alike, I would urge you to drop it to prevent further disruption to the industry and restore normal market conditions.
Yours sincerely,
Richard Rawlings and Dr Bradley Payne.
Rationale
In 2014 there were two portals used by the majority of homebuyers, Rightmove and Zoopla. For argument sake let us assume both had 85% of the listings and 50% of homebuyers went to each portal. That would mean 100% of the home buying public saw 85% of stock available. (Of course there is an overlap as 15% of the listings were not on Rightmove and vice-versa).
Then in 2015 a third portal, On the Market (OTM), launches and its stock and visitor levels are understandably quite a lot lower than RM and Z. Based on the condition set by OTM, that an agent may only use one other portal in addition to OTM, results in a reduction in the number of listings in the two main portals used by the largest proportion of homebuyers.
Effect 1 - Start with limited public awareness of OTM and assume that 50% of searches are still on RM and 50% are on Z, but 10% of stock has moved off each to OTM results in:
RM has 75% of listings with 50% traffic
Z has 75% of listings with 50% traffic.
Then listings viewed with the potential of a transaction have dropped from 85% to 75%.
Effect 2 - Moving forward where awareness of OTM in the public grows and assume that 20% of homebuyers decide to use OTM instead of the other two portals (some of course will continue to use both or even 3 portals, but we need to account for a proportion who will only use 1 portal).
So 40% of searches are on RM and 40% are on Z, but now as 20% of the stock has moved off each to OTM then the net effect will be;
RM has 65% of listings with 50% traffic
Z has 65% of listings with 50% traffic.
OTM has 20% of listings with 20% traffic.
The result is that listings viewed with the potential of a transaction have now dropped considerably.
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The shame is that we all want an industry owned portal, and because of the divisive approach that the Agents Mutual board and team have followed, it is looking increasingly likely that this project will fail.
That will most likely mean that the vast majority of those who got involved this time will never want to entertain the idea of backing an industry portal again. Their fingers have been burnt.
A real shame.
The change to stamp duty at the end of last year, agents over valuing to win stock, buyers anticipating a slowdown in the market, possible interest rate increases, the general election...any of these are plausible reasons for a reduction in transaction levels and a lot more likely then not finding every available property through the internet a newspaper or the high street.
In 2007 transaction volumes were 60% higher than today.
I then bought my cat. This distracted my attention from buying a house and the butterfly effect came into play.
And look at the proof. Volumes are down.
Evidence that it's the cats fault...
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Seriously!!!
House buying is all about mortgage liquidity - Basel 2 - Mortgage Market Review et al.
That's the route cause.
This is a good example of the law of unintended consequences. For those who disbelieve this analysis try to understand that people 'don't know what they don't know' therefore, if they only visit Zoopla and 'don't know' about OTM it means they will perceive a big reduction in stock coming to the market. As it is a fact that seeing stock leads to stock as well as sales this analysis is valid. The whole industry has therefore suffered for the folly and poor judgement of the OTM venture, a venture on which the industry needs to call time
Why don't agents just avoid the portal and concentrate on the popular two, or create one for themselves. It certainly wouldn't take too long to raise the money and there are plenty of people able to develop web portals, with technology far and beyond the curren
Why don't agents just avoid the portal and concentrate on the popular two, or create one for themselves. It certainly wouldn't take too long to raise the money between estate agency groups and there are plenty of people able to develop web portals, with technology far and beyond the current offering.
WOW
What a load of rubbish!
I use to enjoy listening to Richard as i thought he had a pretty good balanced view of the industry (although sometime opportunist).
Pretty much every agent is on RM and pretty much every mover looks on RM, to blame OTM for lack of stock is ridiculous!
Sorry Smile you're in Denial :)
No i think not.
I do not advertise with OTM but some comments are just ridiculous. Some of the Pro brigade are laughable but some of the Anti brigade are just as bad.
There is no sound reason Richard can blame the state of the housing market on a portal. Just take a minute to say that outloud "A property portal is the reason the UK housing market does not have enough property for sale"
Its bonkers! - Where as i agree OTM has a number of issues (in the main attracting enough supporters) they cannot be blamed for this.
Smile Please - take time to look at the possible cause and effect of buyers maintaining their use of just one portal to search for properties (Nielsen stats), whilst at the same time the OTM 'one other portal rule' causing less stock to be duplicated across RM and Z and you'll appreciate that the buyer is not seeing as many properties as before to potentially view, make offers on and buy. It is a factor, not the only factor for decline - but can't be ruled out and is definitely not bonkers ! We're all on the same side here ! We want to maximise the opportunities for buyer enquiries and not reduce them - and I'm afraid the one other portal rule has played its part in reducing them!
Oh come on stats can be manipulated to look at anything, Hey even Russel down the thread managed to raise a cool 2 million on a business that does not break even and will not for some considerable time going to show bu***hit baffles brains!
The main reason we have no stock is election, stamp duty changes, Changes in pensions, MMR and so on. These all have an impact by themselves but coming together has created a "Super storm" as long as rates do not go up the market will correct in my opinion by quarter 2 next year we will have a more settled market and numbers will return to more "normal" levels.
Never been on Rightmove. Selling more than anyone else in my town. Too many targets and analysis.
Learn the job and do your best for people.
And if OTM then allowed so called online agents to list, they'd be an all inclusive, proper property website and would have the opportunity to hold all UK inventory, increase traffic and thus giving greater confidence to buyers and agents alike resulting in a more viable and visible business. But that would be a sensible, commercially astute move and so far, the AM board seem not to want to do anything sensible or commercially astute. Therefore my prediction of OTM's demise by the time the candles are lit on their first birthday cake, still looks likely.
They do allow online agents to list Russell - they were promoting a compliment that Keller Williams gave them a couple of days ago. Hilariously Keller Williams run exactly the same structure as Purple Bricks. I.e. not high street premises (which is a requirement of membership with OTM), central hub etc.
It looks like if you are a personal friend of Springer you get special favours!!
OK so lets look at it from the position of a prospective buyer (John)
John sees a bus advert for Z and starts his search on that portal. Lets say John wants to move for job reasons from his current home in Swindon to a new property near work in Reading. He uses Z to look at agents and their properties, and not being local he is not to know that several Reading agents do not list on Z as they have moved to OTM. He does some viewings but doesn't find what he wants. His 'impression' is there is not much around at the moment so being busy with his new job he delays his search until the new year and consequently doesn't list his own property for sale in Swindon until January. (He can commute on the M4 until then).
No-one told him that if he used Z he would 'also' need to look at OTM to find the rest of the listings in Reading. Likewise he might have done better looking at R but he would still not cover the whole of the market. At a time of low stock anyway, having it dispersed across portals doesn't help and no-one thought about sticking a big advert on Z to tell buyers that they also had to look at OTM !
You say that this applicant from Reading has done some viewings but can't find what he wants so gave up his search. So those agents he did viewings with did not tell him about other properties on their books? Or the buyer didn't consider registering with other agents or look in the local paper or perhaps spend an extra 10 minutes on the internet before he found Rightmove or OnTheMarket? didn't decide to drive around the area looking for 'boards'. This buyer doesn't sound at all serious to me?
We know from the Nielsen research that 80% of buyers only use one portal !
You are making assumptions that every buyer has loads of time on his hands to do physical searching, at a time when the vast majority of people conduct their searches online. Even if just 'these people' who are not as you say 'serious' fall away from the market it will be a factor in a decline in transactions! Remember that most prospective buyers are prospective sellers too !
Looks like we are going to have to agree to disagree, but being as i cant walk away i will point out how silly that analogy actually is.
In the old days before portals John would have driven to Reading and walked around the town center going into all the the estate agents, he also would have picked up a local paper to show him other agents, he would look at this stock and possibly even call or visit other agents not in the town as he was looking to make such a big move it was worth his time.
Fast forward to 2015 and the all conquering internet! - John may like zoopla, it very well maybe his favorite portal but most buyers like John start their search on Google, John will probably type into google "Houses for sale in Reading" and he will have a number of pages to visit from the comfort of his own home, probably spending many evening looking at all the different portals and websites helping him find out if his move is right. And guess what while searching he will not only find, zoopla, rightmove and otm he will also find individual estate agents. The internet is the virtual high street.
Put it this way my wife recently wanted a new "Kitchen-aid" food mixer i do not log on to John Lewis and search just their website i type "Kitchen-aid food mixer" into google and i have my choice of shops, colours, prices and location.
John is not representative of todays mover in your scenario.
Ok, one more try for the Gipper. Many people act irrationally and illogical, motivated by serendipity and coincidence. Impulse buying accounts for many many sales and can only take place if the buyer is stimulated to act. Where you are going wrong is assuming that everyone acts like you or your wife, they don't, there is a continuum made up at one end of those who buy and sell for wholly sensible practical reasons and go about the process methodically and thoroughly. At the other end there are those who wake up with no intention to move and by the afternoon have decided to buy a cottage in a village they never even knew existed that morning. Then you gave everyone between these extremes. I studied statistics at Uni so I appreciate what a normal distribution curve is, look it up you will then understand what I am saying a lot better. The market is driven by big numbers and any change that has the capacity to affect behaviour will result in an effect. Of course there are many other factors over which we as agents have no control but in this case we do have control and the one other portal rule is an own goal.
Simon appreciate the interaction but we both know deep down 'John' in the story above is few and far between and despite your contempt for OTM it has no effect on the market (be t they wish it did though!). i have numerous qualifications in finance (not just uni) but i do not feel the need to shout about it to make a point.
Just because we have bits of paper to our names means squat in the real world, As a self made business man you would agree to that i am sure.
Actually I'm the first to admit to being academically challenged, I cited my stats experience merely to highlight its basis in fact, kind if an endorsement, plus you never know who else us reading this stuff, there's always a chance they might be impressed:)
But John is actually a mover as he is my brother in law - and this is a real life case where Z have just 5 listings compared to RM's 11 for his price range, but where the 5 are not suitable for his criteria. I've spoken to him and suggested he looks on RM as well as there appears to be 8 unique properties not shown on Z. (I've also suggested he looks at OTM's 3 listings). So a bit chaotic for a would be buyer and seller! Let's as an industry not be so blinkered in thinking there is such a thing as an average buyer. And let's stop making it more difficult for them in a world where other market sectors are making things more streamlined and customer (in this case buyer) focused.
Despite how not in touch with the world John is he has members of family and friends which point out to him how normal functioning individuals search for property.
So now to make your point relevant we are looking at a technophobe who has not moved in over 15 years is agoraphobic and a social outcast and does not own a television!
Really? well that's still a section of buyers then. Why rule them out?
Yes i am sure those handful of potential buyers that possible may have a property to sell are responsible for there being less property being available ..... Clutching at straws spring to mind ...
I suggest we await OTM's response - no doubt they have stats of their own!
Surely they did some market research with homebuyers before launching?
What?
What stats are OTM going to have?
You think they will produce a set of stats showing that launching their portal has directly led to less property coming to the market?
One: Thats just bonkers as previously stated.
Two: Even if they did believe / prove this, they would not confirm it as would be the final nail in their coffin!
Are you an agent or just looking for a chat??????
I mean, surely with the amount of money invested by agents OTM would have played out the likely scenarios and the effect to the homebuyer and seller by insisting that agents remove their stock from one or other of the already well known portals?
Surely?
Smile Please - I thought it sounded odd to partly "blame" a portal as well, until I saw the research conducted by a highly qualified statistician. However, transaction volumes have "only " fallen by 8%. Is it inconceivable that the one other portal rule could not have caused an 8% wobble? Please don't get me wrong - I am not suggesting that people not using OTM is the issue - it's not. In fact OTM visitor numbers reported at between 2% and 5% of the market are negligible. Listing migration is not! The point is that buyers (especially those important speculative ones) who used to assume that they could access most properties using EITHER Rightmove OR Zoopla, now have to use BOTH - even without visiting OTM. But they don't! They still think one major portal is enough and that's why they believe there is nothing on the market as fewer properties are duplicated over both major portals. As an industry we have collectively failed the consumer by diluting their easy access to property for sale.
I think that the NAEA sit on the board of Agents Mutual don't they, so their grubby fingerprints are over this as well. Given that they represent the whole industry, and not just the self serving agents who think the AM approach is acceptable, I think that EAT should ask them for some response to this piece of analysis.
They have remained very quiet on the issue and yet still 'officially endorse' Agents Mutual (and give up one of their highly paid staff member's time to attend no doubt endless meetings). I think they have a very firm obligation to explain their position and the potential damage a project that they have endorsed and subsidised has done.
"As an industry we have collectively failed the consumer by diluting their easy access to property for sale"
Really? Richard from seeing your offerings over time and a number of your podcasts / interviews and such like have you suddenly had a shift in your beliefs?
We failed as an industry giving away our identity and after that we failed to stop portals hiking the price up. And now we are failing to fight online offerings which are bringing our industry down to just listers not full service agents.
Also as you well know for most agents its not about appealing to buyers 50/60 miles away its about appealing to sellers within a 5 - 10 radius of your offices, Its not about national identity its about local identity.
As i have stated further up the thread i believe OTM has not had any impact in property coming to the market its down to a number of other influences that have culminated at the same time. In fact most agents i speak to (and myself) are selling property faster than ever and despite lower numbers of property coming to the market many agents are on for their best financial year, its almost as if people are panic buying.
And just because a statistician you respect tells you something you are not obligated to believe him (you are of course welcome to) but just because he says it does not mean its right.
One other thing, I was speaking to an Internet entrepreneur last night, he has nothing to do with property, actually he is into fly fishing! What he said though was highly relevant, it was this. He said that rule one in launching a disruptive website is you have to be better than the competition, much better, unless you are, don't bother. I think this sums up the OTM fiasco quite well
Actually, Smile Please, I am passionately in favour of agents gaining local instructions - I agree that's what the business is all about and that's what I've spent the past 20 years helping agents do. Of course people are panic buying because of the flawed view that there is not much available. And if they can't find anywhere to buy, they won't list their own property, hence falling instruction rates and a vicious cycle kicks in. And by the way, if you think that online agents are the disruptors, they really aren't - they are just cheap agents helping people sell privately. Not a threat. Get over it! Haven't you spotted the real opportunity yet?!
Hi Richard, we should talk
The NAEA should not be involved with this at all. It stinks that they endorse, back and maybe even financially support this pet project.
I would like to hear (and many peers no doubt) from Mark Hayward as to why he sits on the Agents' Mutual board. He is risking NAEA memberships and income.
The NAEA website states: "We were established with the goal of upholding good practice and high professional standards in UK estate agency."
This is not "good practice" Mark Hayward...
I could not agree with you more., I'd forgotten about the NAEA they are that relevant. At the start of this I offered Mark the oportunity to present his point of view but guess what? That's right, he didn't dain to respond. So there it is Mark, perhaps one of your many acolytes will read this post and maybe you will respond now, I doubt it though...
NAEA like to give the impression they are here to promote good agency and will only accept agents keeping to their "code"
Truth is in (my opinion) they are just looking to raise themselves revenue, charge you a couple hundred quid a year for a sticker and use of a logo. And supplement it with qualifications that (again in my opinion) are not recognised by either employers or the public.
Ask yourself why they are for regulation (which is a complete myth it will actually change anything)? - Answer they are one of the best placed to roll this out and they will see their coffers swell under the new members influx.
I do not see any relevance in them, what have they done for our industry?
How can the NAEA support a company with such restrictive trade practices, surely they must be embarrassed that they give their support to OTM. I cant understand that with their position in the industry, they find it morally acceptable to continue with their support?
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