An insolvency firm claims 153 estate agencies have gone bust in the past year with more than 7,000 “showing signs of financial distress.”
The firm, Moore Stephens, names Foxtons (which reported a 15 per cent drop in revenue in the first quarter of this year compared to the same period of 2017) and Countrywide’s tumbling share price (down yet again to under 38p by the end of Friday) as evidence to back up its contention that the UK estate agency sector is in fragile condition.
Moore Stephens says the onward march of online agencies, competing with fewer fixed costs than traditional firms, is worsening the position; likewise the forthcoming ban on letting agents’ fees levied on tenants will make income for many agencies even more marginal.
“Sales volumes appear to be in decline, with the number of property sales in London alone falling 20 per cent from 2014 to 2017 and the number of property sales UK-wide falling one per cent in just the last year” says a statement from the company.
Chris Marsden, restructuring partner at Moore Stephens, says: “Insolvencies of high street estate agent are increasing as online competitors continue to chip away at their sales and undermine commission rates.
“Some areas in the UK are appear to have an excess capacity of estate agents, which could mean there is not enough business to spread around as property transactions stagnate.
“Estate agents with a traditional model may have to look at whether they can reduce overheads and review their service offering to effectively compete in the current market.”
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It’s ironic really, online is the least profitable, most broken model imaginable and yet High St Agents are bein encouraged to follow them off a cliff. Please remember those doing the encouraging either have a vested interest or know nothing about the industry. Yes, things are looking thought but the solution, if you want to survive isnt to believe the online nonsense, it’s to dig in, have faith and strengthen your existing business
Someone once said, the internet will never take off. Once upon a time, Amazon just sold books. While high street only agents continue to refuse and accept reality, they will continue to loose ground against online only agents.
Although I do agree, in one thing, high street agents do need to step it up. The likes of Wolworths did not or move with the times, and we all know how that ended up! Savills have the right idea, investing heavily in an online business, while continuing to run a strong high street brand.
Simon.
Good man.
All high street Agents need to do is sharpen up.
Good customer service and reasonable fees.
If we do this the on line boys will struggle and die.
Agreed, I think we should also look at additional lines of income, expense reduction and improved customer service but it’s basically a case of sticking to the knitting and waiting for the online craze to fizzle out. A lot of detractors will cite the horse and cart and the car but cars were a step forward whereas an anonymous call centre backing up an anonymous online ad is a step back, not all progress is progressive!
So here comes the rant......PROACTIVE vs REACTIVE. I viewed with a Purple Bricks local property expert a while back, first point to discuss was that he had no agency experience he'd gone from a golf pro to estate agent over night and also didn't live local to the property he was selling or know anything about property or the local area. The sellers had paid for the viewing service as the agent showed me round or at least opened the front door and let me have a look around. Viewed with another Purple Bricks agent a few weeks ago again no interest in the property and just followed me around. When I asked if he had anything similar to this on his books or coming up his response was "were not proactive mate you just need to check online for other properties and book a viewing if your interested". If customers knew about this service they wouldn't pay a penny for it and this is what "real" estate agents need to be highlight to potential customers. Once Purple Bricks have your money for listing the house the literally have no incentive or motivation to do anything at all other than sit back and wait for an email to come in (reactive). High St agents need to up their game, what happened to being called by an agent because a property that suit your requirements is coming up, now not all but most agents mass email properties to their clients regardless of whether the meet their criteria on the hope that they will get it right and get an email back to view. No calls and sometimes a text to call them about a random property (wheres the service). Arguably they are being proactive, but effective, I don't think so? So my view is (real) estate agents need to go back to basics and start selling houses the traditional way and show the potential vendors the value of what they can do. Really show them the difference between proactive and reactive and what impact that can have on the result and the price. Get the right price and the fee is irelevant, do a s**t job an they might as well have paid Purple Bricks for the same outcome.
Thanks for the input.
I agree.
Step up High Street guys.
As soon as PB came on the seen we stepped up.
Over the last year I have lost only 1 Valuation to PB.
We are qualified through Propertymark.
MOVE 2 AYRSHIRE
Very simple. The figures essentially do not matter. The housing market does not go up OR down the market goes up AND down and we must adapt to the circumstances at hand. That is why the High Street can always be successful. We, on the High Street, will need to "step" it up but that should come naturally to us experienced Estate Agents.
The only thing that PB. are good at, is selling the idea to investors looking for a quick return. Everytime there is a cloud on the horizon, such as a (no) profits warning, they come up with something new, such as the purchase in Canada, paid for of course by their investors. They are trying to stay just ahead of the wave hanging over them and the time is coming when that will crash down. The biggest pity is their 'success' again paid for through advertising by their misguided investors, is to reduce estate agency to nothing of value, something anyone can do and worth very little. A lot of Sellers are finding out the hard way that 'buy cheap and pay twice'. Unfortunately the most important effect is not any threat from them, but they seem to have convinced all and sundry to 'have a go' and the only way they can try scratch a living is to over value and drag the fees down, further and further. Lemmings, moving towards their own destruction.
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