OnTheMarket chief executive Ian Springett says rival portals may want to “interfere” with his aim of converting agency members from free or discounted deals to market-rate contracts.
Last week OTM’s latest report to shareholders and the City said that around 1,000 of its existing members on free deals had converted to to paying contracts an average revenue per agency of £337 per month.
Now, in an interview with the Directors Talk financial website, Springett says a key target for the portal over the rest of this year is to get more existing member agents to convert - and it is at this point that he makes an allegation about rival portals.
He says: “Clearly we need to continue the process of moving to paying contracts for the agents who are on the portal. We won’t be announcing that on a frequent or regular basis because we can’t conduct that activity in public.
“It’s a negotiation within the industry with individual agent firms, and obviously competitors have a vested interest in trying to interfere with the process as well. So we probably won’t be making particularly big announcements about it [converting agents] until we get to our interim report in October.”
He says that instead investors should look out for more information on the traffic to OTM and the value it delivered to agents.
Elsewhere in the interview Springett spoke of the year to the end of January 2019 - the first year of OnTheMarket being listed on the London Stock Exchange - as being “great”.
He also claimed that by May this year OnTheMarket was delivering 33 per cent of the leads sent to agents by what he called “the big portals.”
Meanwhile a report by broker Edison - commissioned by and funded by OnTheMarket - forecasts that the portal will be in profit around 2021.
In OTM’s 12-months figures released last week, losses for the company widened as administrative expenses more than doubled, with advertising expenditure six times higher than the year before. It also had a near-doubling of its staff costs.
However, Edison says that these losses allowed OTM to build an underlying base of participating agents and gain traction with the property-buying public in the UK. “Both these objectives have been achieved” it says.
The report then goes on to say: “We previously indicated that we expected the group to return a profit as the [average revenue per agency] grows and for it to turn cash-flow positive in FY21. We have now formalised this by publishing our forecasts for that year.”
Edison believes the current difficult housing market provides what it calls “a useful backdrop” to OTM attempting to build market share, for two reasons:
“The ‘new and exclusive’ listing option works well for agents and their customers. Listing new-to-market properties on OTM’s portal for 24 hours in advance of any other portal means people with high purchase intent are more likely to visit the website (and hence the listing agent’s website) and subscribe to property alerts, so the quality of the leads is higher; [and] If agency branches are transacting less business, they will inevitably be examining closely each line of their expenditure. The high price of a Rightmove subscription and the regular increases in cost make it a key line item. If an agent can achieve a significant proportion of market reach for a much smaller fee, the decision to switch should become easier.”
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Any excuse will do.
On the market is 0n their way out.
One day, Estate Agents across the country will remember that onthemarket, rightmove, zoopla have very little to offer estate agents. Estate Agents are the businesses that hold signed Terms of Business with owners selling or letting their property and without feeds of property the Portals don't have a product and in reality the portals should pay estate agents to upload their feeds. The portal model is great for the portals but it is the opposite for agents, portals have many revenue streams based on having a supply of property, take that away and they have nothing. Money saved by estate agents could be spent on their own independent advertising, websites etc etc.
This is it in a nutshell. The portals are websites, nothing more, nothing less and extremely vulnerable ones at that. Price-chopping and turning to customer's (non-existent) loyalty will not save them.
Good luck being successful without the portals!
Whether you like it or not, people search for properties to buy and rent online - and, 9 times out of 10, they will turn to one of the portals to do so. Very occasionally they might head straight to an agent's website, but that's very much the exception rather than the norm.
What happens when agents tell sellers and landlords that they will no longer be advertising on these sites with an incredibly active and captive audience? I can't imagine they'll be very happy.
I understand agents' frustrations with the portals and the rising fees they charge, but surely they are a necessary evil? It's similar to Just Eat/Deliveroo and takeaway establishments; they almost certainly don't want to pay the high commission fees charged by these middlemen firms, but they also know that they need to be on there for the sake of their business. If they're not, demand for their products could fall considerably.
Surely a similar story with Rightmove/Zoopla/OTM and agents?
Jeremy. You need to take a rain check.
You have had a free period whereby you probably listed properties from OTM.
Get your hand in your pocket and pay.
That goes for the rest of you who had the free period.
Scott.
Necessary evil.
All about competition.
Would love to let all Portals go.
They have us by the you know where.
If you think OTM is the answer, you haven't understood the question.
its free because its rubbish and doesn't deliver, we are on a freebie and we get jack s h -t in traffic , so Peter why should anyone now get their hands in the pocket when there is no return ? it was free for a reason
Peter, unnecessary evil IMO but only if agents unite. Agents used to go toe to toe and compete service to service. The portals gestated when many agents didn't have their own websites and they filled a necessary void for many. It made sense to subscribe to them back then but they only have us by the you know where whilst we all glibly continue paying them ever increasing rates that don't reflect the market. Stop the feeds, redress the balance of relationships with the portals and in reality they should be paying us! Wishful thinking maybe but it is a stance agents should take. Portals would be a an empty space without any properties, their associated onsite advertising sales would be under threat immediately...
'the portal will be in profit around 2021'. It won't get to 2021.
Only because the portals refuse to accept individual private listings do EA stay in business.
It should be perfectly possible for a portal to make money out of listing properties for free or very cheaply.
How many vendors or purchasers would bother with EA if private listings were facilitated by the major web portals!?
Google must surely come up with something like this.
That would wipe out the EA industry.
But I reckon it would mutate where vendors who listed privately instructed an EA consultant to manage all aspects of a purchase with a FEE not commission being paid.
Of course many private listings wouldn't bother using an EA Consultant.
I believe Google did try this private listings malarkey but were knocked back due to something about EA Law.
But never say never.
Just imagine a free or cheap permanent listing until sold for say £50.
Most vendors are forced to use EA as cheap continuous private listings aren't available.........................................yet!!
But there are a few LA out there that have devised a business model which doesn't involve charging their LL clients anymore in charges to make up for lost tenant fee income.
I'm sure EA could adapt and survive even without listing and sale commission.
But as it stands RM and Zoopla are the only game in town.
They know it and charge accordingly.
But if Govt allowed private listing that would transform the EA industry with many vendors doing it all themselves.
Most cars are sold by free listing.
Few use dealers.
Property will go that way eventually.
Crikey.
Your binary analysis shows you have no clue how estate agency works. For a fee I’ll explain it to you (not really) :)
We never bought in to it in the first place and never took the free listing either. Just never appealed.
Well Paul Barrett I guess you haven't been following the on line market place, Purple Brick and the other online boys are losing money hand over fist or going bust, why.... because it takes more than just putting a property on a portal to sell it, so without the potential of experienced support, private sellers would flounder and potentially miss sell, so good luck with that pipe dream Paul, a car is hardly a house, or do you think sellers and buyers should do their on conveyance? you could save another £1500 and never mind the liability :-)
@ Property Wizard 18 June 2019 12:57 PM
You say, "Well Paul Barrett I guess you haven't been following the on line market place, Purple Brick and the other online boys are losing money hand over fist..."
No mention of Countrywide etc I notice?
Unfortunately for EA the masses have shown they are willing to try out different versions of EA.
Free listing should they ever occur would be a market changer.
I doubt this will ever occur as it has been proven that the online offers will never make any money!!
So I believe EA won't be going anywhere soon.
Which I guess is quite reassuring for the traditional EA
A bit of consolidation in the sector and traditional EA will carry on actually making money which is more than can be said of the online offerings!!
EA LA all a bit the same really, do we really need them,? not really. We can Re Let without them at a small cost and certainly not one that keeps them in their 4x4s and flash socks. The finding of a good tenant game to a professionall LL is quite simple and we only used a trusted LA when their charge was circa £200 max across the board and No Charge for a tenancy renewal or a Check Out. We only use an EA when fee was 0.75% and for 6 weeks max and then moved on or went Multi with only fee to the EA that sold.
LA need to get in real world or they are out. EA have to be more proactive. Quite simple really.
Bet you're a dream to work with.
Yes i think i am really.
Trust not Tricks and we get along swimmingly.
For a bit of facts which may help you to understand better PP. Been in this " game" for over 35 years. Have owned over 90 properties. Currently manage my own and that of others. Very happy to use a LA on Tenant Find only when charge is £200. This was always how it was before LAs got too smart, to Flash to "cocky". Lots of staff, lots of cars, purposely adding fees for Checking In and Checking Out, tenancy renewals, adding a fee onto a maintence bill, have seen charges of £150 to a landlord for pressure increase on a gas boiler. £45 to £75 for a key when tenant locks themselves out. LAs have shot themselves in both feet now. And only the intelligent honest LAs will survive.
Same applies to EA, fees were always circa 0.5% max 1% but then like LA they get too smart for their own good.
Dont give up dates, dont view properties before " viewings", dont chase solicitors, dont chase valuers/surveyors.
the way you talk it seems to fit, my way or hi way as,.
You talk quite a lot of rubbish in the above but you continue in your little world, we have work to do in the real one.
I'm afraid it is our way.
When I put my properties up for sale as I exit the PRS I will be doing it my way.
So no commission based sale process.
A simple listing and I will deal with everything.
I expect to pay no more than £100 to list until sold.
I can sell my properties easily.
Conveyancing will be carried out by nominated solicitors.
No need for any EA to get their hands on my money in commission.
You will be sadly disappointed if you believe that LL are incapable of selling their own properties.
But I guess we'll see won't we as LL exit the PRS in increasing numbers!!
You might be proven correct that LL do need EA to sell their properties.
I doubt this.
But I know I have been wrong about a few other things
I guess we will see what happens in the very near future!!!
Steve Duncan you are a twit.
My way is my way and I'm not asking or telling you to do it my way. I am saying Trust Not Tricks and chummy if you like tricks then i dont give you long in the simple game of letting out properties by Professional LLs.
Stop being a twit and listern and learn.
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