The chief executive of Emoov, Russell Quirk, has suggested that the unexpectedly low take up of online agents may mean that it’s time to propose a compromise future estate agency model combining elements of digital and traditional operations.
In an article on LinkedIn he says ‘pure’ online and High Street models are now out of date, and likens them to ‘radical left’ and ‘traditional right’ politics - neither is appropriate for the modern world and a centrist alternative is required, he suggests.
“The current online model is generally tainted by allegations of there being no incentive to sell given its charging model and a perception that service levels are 'basic'. This latter charge has been levied by High Street agents keen to show that their higher fees are justified in return for a better outcome” says Quirk.
However, he concedes that this is in fact “a decent argument” against some onliners who are working merely as a listings operation rather than a true agency business. He hints that the basis of much online agency marketing - involving his estimate of £40m spending a year for Purplebricks, his Emoov service and Yopa combined - is unsustainable.
“On the other hand, high street agents are also caught by perception. A perception that they do little and charge a lot. This, in an Amazon world, is also unsustainable. A '9 to 5' approach and an opaque transaction is the antithesis of what the internet generation now insist upon. … A £3,000 bill that's based upon the necessity to cover office costs when the office is less necessary nowadays?” he questions.
Instead, Quirk - at one time a fierce defender of online agents - is now suggesting that the estate agency of the future is “a blend of these things.
He says there could be the credibility and trust of a High Street brand “with a semblance of a branch network to provide that visible comfort” - but without the scale of rent, rates and refurbishment costs that go with an old-fashioned concept of a large network of offices.
“The next generation estate agency model is not low service, upfront fees, nor expensive and unnecessary high street premises that few visit. It is a mix of the established branch approach, albeit diluted, at a justifiably healthy fee and one where an understanding of being able to grow market share but without the suffocation of a 1980's physical branch ethos, is key” Quirk insists.
But he insists that such a combination is extremely difficult to execute successfully - and he says the evidence is the similar experiments undertaken by Countrywide (“catastrophic”) and easyProperty (“a franchise disaster).
“My suggested utopia is one of healthy revenues and lower agency overheads - bigger margins and a sustainable P&L. But being clever about it. And agile. And unconventional. With a challenger online brand bolted on in order to capitalise as this sector grows but whilst sharing the broader infrastructure of a parent company” he concludes.
You can see Quirk’s full article here.
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So tech enabled high st offices then Russell. One more minor point. The essence of good agency is people, would good people be more attracted to a call centre, working from home or, a community centred High St Office location? Which alternative do you think they will tend to favour and aspire towards? Hmm, food for thought eh...
Back to estate agency offices on the fourth floor of a Victorian or Georgian building in the town centre then, where rents are a fraction of ground floor premises. It worked well for many top agents half a century ago. Back to the future?
Like in the kid's game he is getting warmer, but clearly has not worked out what this new magical model will look like. It is probably the most important financial decicion of people's lives and is very emotionally driven so no surprises that very high quality personal service needs to be at its core. People buy from people - so hiring and motivating first rate people is essential. No surprises that this often comes from small businesses run by their owners. But the TV giants forget that many sellers are still highly motivated by the words "local" and "independent". This is not something that the national brands will be able to realistically offer - however many "local property experts they hire". And he has alreadfy identified that the huge sums being spent on TV advertising and buying up Google adwords pretending to be "local" in every town in the UK isn't sustainable, especially when compared to the low cost of acquistion that comes from generating word-of-mouth by building a great local reputation - and through local presence, especially boards (which are still amazingly effective). Incidentally, reputation won't be built by constantly being pulled up by the advertising Standards Authority for telling lies in your advertising. Or by paying lip service to sales chasing because there is no motivation to solve the inevitable problems that arise because your fee has already been paid. Or by fixing the big review sites to present an unrealistic picture of the customer experience. It will be interesting to see what happens when the next big downturn comes and you can't just expect a Rightmove listing to get you a sale. My bet will be on small local independent businesses with excellent reputations for delivering above and beyond. If you are not delivering that then I think you'll get found out - and having a High Street office, or not - is simply not relevant if you haven't got this as your foundation.
Hi Nigel - in my experience very very few prospective clients are motivated by the words “independent” - it means nothing to them and is virtually impossible to define in any event.
Most buyers and sellers will have no idea whatsoever whether they have dealt with a “corporate” or an “independent” and quite rightly so as it is irrelevant.
He is on the right track. I opened my own office at the beginning of last year and my premises are compact and bijou, and thereby exceptionally cheap to run. This gives me a distinct advantage in being able to offer a personalised high level service at a fraction of the cost of my main town rivals. I don’t envisage a bright future for most town centres unless the rent and rates are massively overhauled, but writing this on my iPad whilst having a quick break in Spain, I can deal with everything via my mobile phone. I think Humberts have done exactly the right thing and it will be interesting to see how long it takes the rest of the industry to realise this. Apart from Surveyors, people on completion day and the occasional client, who actually comes through your massively expensive front doors?
Simon, I take your point in many cases as some independent chains are very similar in look and feel to the larger national ones. But the smaller newer breed of local independent agents that we are seeing emerge who have innovated in terms of service offering certainly are distinguishable and certainly in this part of Hertfordshire have taken significant market share over recent years. The key is to diffenrentiate, especially on service offering, but also in terms of promoting events and other businesses in the local area. I still hold that being independent and "owner occupier" are significant draws.
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