Why estate agents must come to terms with change

Well, I pretty much agree with all of that. We had Rightmove and Zoopla in this week and they we happy to share tales of agents signing up in droves. Zoopla took a hit in January, but after this set back, they are now signing up more agents than they are losing.

Rightmove have never been stronger.

OTM has only served to strengthen Rightmove, and OTM seems to be at a tipping point. Once agents look for ways for get out of 5 year deals and cracks appear, I suspect that the floodgates will open and they'll jump back on board with Zoopla.

The problem for a lot of the big players who were instrumental in promoting OTM, is that their pride will mean that they'll still there until the end, playing music as the Titanic sinks.

You're probably right Glenn but I'm trying my best to suppress the 'I told you so' urge although I did tell them so :)

Do you remember the Wales England Rugby international, going into the last minute England had won? They lost!
How about New Zealand - USA in the Americas cup? New Zealand 8:1 up, first to 9 is the winner? They lost!
You were doing good till you started gloating Simon, 6 months into a 60 month project is too early to be claiming victory.
If AM keep sailing along behind Rightmove and Zoopla they will stay in 3rd place and you will be proven correct, there are people who will really hate that. (Peebee....errr well, come to think of it all of them)
In the same way as Larry Ellison made a decision and bought in the strategy, motivation and experience of Ben Ainslie, Ian Springett needs to do the same. Agents Mutual needs to tack into clean air and sail its own race rather getting too bogged down with matters Paul Smith’s article indicated they haven't properly understood yet.

On the market is a long way behind the viewing stats of Rightmove and Zoopla, but that does not matter, it is actually a different beast; one is an entertainment and gossip channel, one is a self serving lead machine for products and services and one is a lifeboat web presence. All 3 are portals, each has its own audience aims and objectives. A sports car, an estate car and a van!

PS Like Sabine I know how to get the best out of a van!

Thanks Robert, I needed that

You know it isn't personal!

This isn't a straight forward battle between portals for leads or page views, it is far more subtle than that and absolutely contrary to poplar thinking Rightmove is the most vulnerable.
Had there been some ego-less thinking from both Zoopla, NAEA and AM we should have been looking at a very different outcome to what we have here and we should have had it since 2012 before AM was even mentioned.
Rightmove have not been strengthened by AM, that is digital spin. As soon as you scratch beneath the figures they are complete tosh but because no one wants to appear as if they don’t understand everyone just nods.

The biggest problem the portals have in this market where we are is no one believes their content any more. As a result savvy buyers and tenants are approaching agents direct again, they are starting to realise it's the only way of getting called first. In my view we as an industry are moving towards a marketing paradigm based on big data and the sinners will be those agents who see this and capitalise on it first, some have already done so

That was winners not sinners :)

So a solution that takes applicants not only to the agents door but puts them within earshot of the negotiator in seconds is where it is headed, a paradigm shift away from Generation 3 portals?
So seismic is the shift in what is possible when EVERYONE puts their ego to one side and works on competing with each other on service not price I have worked out a £240 branch spend plus a £125 donation to charity will mean being able to regain some of the profits agency is currently missing out on by not controlling the environment.
I have done a calculation for one agent local to me; sub £8000 spend with >£2300 for Agents giving should enable £171,000 additional profit per 0.1% recovered commission. They are currently 0.43% below sensible commission levels so close to £750,000 down on profit. That puts the concerns over portal subscription rises to bed straight away.
How many offices do you want to sign up Simon- £1/day per branch plus VAT – no crowd funding, no shareholders to satisfy just an honest and intelligent solution based on experience of what is required.
Now you can thank me Simon! You really do need that!

Yes of course, thank you Robert

Hi SImon,

"You see Paul wants licensing".

I'm not really sure that this has anything to do with the portal wars or protecting the establishment. This is really is a separate debate all on it's own, and I would suggest that many agents that are not with OTM agree that licensing and the raising of standards is required for the industry.

If you remember back in F1 when Jordan appeared, innovated and were suddenly whooping Ferrari etc the rules got changed so the old guard could compete again. Same thing Paul. If you can't innovate, control.
3 or 4 months ago Simon and I had a chat about my generation 5 stuff and he poo poed what I was attempting, yet here he is 3 or 4 months down the line preaching the words I have been saying for 6 years and Glenn is nodding in agreement. It has to be said 12 months ago I was Voldermort in a lot of peoples eyes for saying things many people are now beginning to understand.

Paul Smith either hasn't understood the whole landscape of what is going on or does not know how to control it. I do! I am up early again doing my data phishing examination exercise. This morning I am concentrating on Simon's business. I am looking at how the firm he supports so fervently is (inadvertently? ) giving an almighty leg up to the firms both he and Paul Smith both want to control- their respective and your competition.

"If you can't innovate, control"
But it is mainly ARLA who represent thousands of the small independents that have been pushing the regulation route more than anyone.

If you look at what was going on between 1994 and 2009 it was our innovation that was controlling the lettings Industry. When the innovation stopped so did the control. Part of the Rummage4 project is to introduce the stuff I was working on when i quit CFP. Genuinely there is no need for regulation if you enable strong competition.
Inevitably regualation ends up being achievable by everyone and so it defeats itself. Creating a system that gives commercial firms a commercial advantage works.

Paul, I agree regulation is an issue in and of itself, however that doesn't stop me challenging Mr Smith's motives, which I do. In terms of regulation as an issue Per Se, of course it isn't bound up with OTM but it was brought up in Mr Smiths article so I addressed it.
In terms of whether it's a good thing or not that very much depends but the track record for comparison is not good. I was in the financial services industry in the 80ies and I entered estate agency partly because I needed a life boat to escape the FS ship which was terminally damaged by regulation, I say terminal because it has never recovered.
The FS regulation is so flawed that collective investment is trying to reinvent itself in the form of crowd funding, just as the new name for banking is peer to peer lending. So Robert it's not true that regulations are always surmountable, another example is sale and rent back, an industry ended by regulation just as Wonga Et Al got what was coming to them.
The trouble with the FS regulations is they only really look at the salesmen, not the products, it's like regulating car salespeople and allowing car manufacturers to build death traps. Anyway, to add balance it is true that regulation has helped the American realtor go up in the estimation of the public but this is partly because it's light touch and most average people can meet the requirements.
I myself do not believe we need regulation, what we need is strong enforcement of the rules which some agents knowingly flout, this needs resources, not exams. I don't trust the motivation of either the NAEA or ARLA, I have had unpleasant experience of both and I dont think an industry body can be trusted to set fair standards for an open competitive market, in this respect there are clear parallels with OTM. Finally Robert I really don't know what you are going on about, I have never trashed your ideas and I have no clue what you mean by your last mystifying paragraph, please explain!!

"This needs resources not exams"
The exams are the final part Simon, it's the studying before hand and then passing those exams that gives someone a sense of pride and a passion for the industry they work in.
Just Trying to do the right thing is sometimes not enough in a profession where peoples lives and other peoples money is involved. Anyone can currently set up an agency with zero experience or qualifications just as I did 10 years ago, and just as you did when you left the FA industry.
I bet you sometimes look back at those early mistakes you made and appreciate that they could so easily have been avoided if you had done things differently.
Nearly everyone outside the industry is crying out for it, it should be up to us to persuade and lean on government to show the benefits.

Your experience of FSA is an example of bad regulation; before FSA things were good and everyone knew who to avoid, along came FSA, we all did 'exams' all passed and suddenly everyone was the same. There wasn't good, there wasn't bad, everyone had a bit of paper that said they could flog financial services and everyone got stictched up with endowment mortgages or equity release schemes. Because they were regulated they were safe! What I getting at is that any regulation will hide the bad in with the good just as it did in FS.
The last mystifying sentence, take a good firm and make it better, give someone like you, like Paul House or Paul Smith a commercial advantage over weaker competition and it works for everyone apart from those who most need controlling,

The heads of Northern rock, RBS, Lehmanns etc never had to deal with 'people' in the same way that a letting/estate agent has to.
Not sure it's comparable.

Although there are clearly some similarities

The issues brought about by FSA weren't restricted to the headline cases of Northern Rock etc. What we are seeing in the both sales and lettings right now are reactions and upshots to stuff and policies Gordon Brown put in place to react to world events.
In 2004/2005 I had a meeting with my sales team where I stopped what we were doing as a selling policy and implemented a strategy that saw us sail through the problems of 2007/ 2008 to the extent we were out selling our competition 9/1 with demo to sale ratio average just short of 7:10. The people who called the strategy change "MADNESS" later asked me "How the **** did you know that?"
The detail doesn't matter Paul the point is regulation will only benefit the people it should be controlling, the very best way of getting the rubbish out of the industry is to compete them out.

I think I get it now Robert, so oblique, why not just say.'I agree with Simon' :) However, I want to clarify one point. Prior to the FSA there were over 200000 financial advisors who we called life and pension salesman. Today there are about 15000 qualified and in practice. These last remaining lost souls are compromised mainly if elderly gentleman who could not face change, they are mostly retiring. Their replacements are not advisors at all, merely button pushers blindly following a headless bureaucratic monster.
Paul, I agree a simple practical, common sense examis a good thing, or if not an exam a days compulsory training. The problem is if estate agency is regulated that's not what will happen. What will happen is that the qualification will start off confused and irrelevant and gradually get ever more complicated, infected with hidden agenda and the need to justify a job for life.
There are a lot of idealists who want a lot of things changed to make this world a better place, when they get their way they make things worse. Me, I like competition and as a consumer I like being aware, all I want to know is when an estate agent asks for a back hander that the authorities will deal with them.
If you give a man a fish you feed them for a day, if you teach a man to fish you feed them for the rest of their lives. Teach consumer decision making and awareness in schools, soon after we won't even think about regulation

Of course I agree with you Simon but then again I would, you are now catching on to things I can prove I have been saying since 2004! Simon you are a genius, an early adopter, a man of insight.

I agree with you, Compooter says no Financial advice is a nonsense and so is the whole panel surveyor, online valuation modelling that supports the dumbing down the property side of investment and financial services.

LOL I agree!!

Simon , it is a big claim but a true one; not only did I teach the industry to fish I was the one handing out fishing rods. I am now showing them (YOU) how to divert a stream into a clay lined hollow to form a fishery.

I'm just a seller but this is my take on property portals.....

Rightmove is simply a better design than Zoopla from a user experience.

Zoopla is intrusive. To display and estimate the value of the owner's property without their prior consent is considered a breach of privacy by many people.

Zoopla's estimates are calculated incorrectly. They are based upon the property. But the price a house sells at is based upon both the property....and the circumstances of the owner. Zoopla ignore this second criteria in their calculations.

Email alerts.....serious buyers want to know what's been added to the market NOW and they want to be told rather than have to hunt them for themselves. Once again Rightmove wins at this facility.

Sold Subject To Contract and Under Offer signs....utterly meaningless terms. No purchase is guaranteed until contracts are exchanged. Up until then buyers can pull out on a whim. Agents should advise their sellers to keep their properties on the market for further viewings and offers right up until the day of exchange of contracts. The terms should be removed from property listings.

The primary reason for property listings is price discovery. Internet portals providing virtual viewings have improved the accuracy and speed of price discovery. An improved property value calculator tool with an accuracy of 1-2% would transform the market. One way to achieve this might be to allow online viewers to rate property listings in different categories such as location, condition, features etc. Most viewers of online portals are not buying or selling. They just want to know how far or behind the market they are. But they are happy to entertain themselves rating other people's properties.

Eventually, property listings will be free or very close to free. Creating a property website is technically easy with a modern CMS. Promotion is harder but Google local search and maps makes every home a potential top search page listing. The agent will just be hired by the seller to show buyers around the property, probably listed as independents on Checktrade . Some agents will become advice consultants. The rest will find something else to do with their lives.

Stephen, your views are understandable, reasonably wide spread and almost wholly inaccurate.

'The middle man is always worth his fee' look up this quote on google and you may start to see the true picture. The reality is the UK already has the cheapest selling fees of any major country and they are likely to go up not down.

It's true that online only agents and private seller sites will grow but their growth will reveal an inconvenient truth, the sellers on these sites will get less money and more headaches than sellers who use agents.

Buyers who fish in these online ponds are looking for bargains, buyers who want the mainstream look in the mainstream. You may think you are clever enough to negotiate the best price for your property without an agent but you are wrong, a good agent is literally invaluable and we will be the last people to walk the earth, you will see, oh sorry, no you won't!

"the sellers on these sites will get less money and more headaches than sellers who use agents"

There is an expression used in story telling....show, don't tell.

If you are so confident of your abilities, why do you need customers like me? You can be the seller. You can purchase your own portfolio of "bargains" off the internet and then resell them two months later (unaltered) using your agency skills to achieve an immediate short term profit?

PurpleBricks provides the services of a local agent. He's very good and filters out the tyre kickers. I don't pay him £5k. But not all agents are like that. A friend of a friend has a property for sale. She has had 5 viewings and 5 failures simply because the property was never suitable for their requirements (can't fit their caravan on the lawn or doesn't like the area...duh, so why view it??). Incompetent agents bringing unsuitable clients can cause stress and disappointment. On top of that, the flat rate agency commission structure is an incentive for the agent to achieve monthly volume sales rather than the best price for a particular customer.

However the major mistake you're making is in thinking that there is a negotiation. There isn't. Negotiation is a valid tool when information revealing price discovery is hidden to buyers and sellers. That information was once held exclusively by agents. This is now drifting to anyone with a keyboard and more information is being delivered each year (crime stats and traffic density being the latest). Yes, there is still an older non-keyboard customer out there but they will dwindle over time as they enter the care homes.

Price discovery is fluid. The properties considered to be bargains will attract much interest resulting in many offers. This will raise their price. Over priced properties with no interest will either reduce their price to find a market or wait for the 1 in a 1,000 buyers who has no alternative option but to buy it due to external (family, job, etc.) or sentimental reasons.

I'll be honest here, one of the main negotiation tools used by agents has been....wait for it....LYING. For example, claiming that there are other interested parties in the property when they are just made up. Both buyers and sellers will have to harden themselves to the disappointments in the process. Agents often act as a buffer of bad news. People will get used to taking these knocks. They've adjusted to every other market that has moved online, particularly job hunting. There will always be a client base for customers at the top end of the market.

In summary, the internet makes any market move quicker because it speeds up the price discovery process. Today there are a dozen online only agents. By 2020 there could be 50 to 100. I could develop my own online agency service in a week. But Google could eliminate all of them in one fell swoop by introducing their own agency tool. There's no reason why every property cannot be up for sale 24/7, 12 months of the year waiting for the big whopper on the end of the line to bite the hook.


A middle man is worth the investment when he has access to knowledge that the rest of the market doesn't have. With the exception of foreign investors buying up central London, residential property isn't one of those markets.

• Terence Dicks
• 07 December 2015 13:27 PM

You may not pay him £5k, but you WILL pay them regardless of whether or not they sell your property. You will also use their conveyancers which are quite a bit more expensive than normal conveyancers, therefore almost matching the high street agents on price. You obviously do not not mind donating almost £700.00 for no service received, so please feel free to carry on.

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I think I'm guilty of being a little unclear. When I referred to 'online only agents' I was really talking about the sites who pretend to offer agent services to get onto Righmove and Zoopla but actually aren't really agents.

Of course it's possible to offer a free agency service if you want to, equally there will always be cheap incompetent agents as well as expensive incompetent ones as well. However, the fact remains that any property seller who thinks they can save their agency fee by doing it themselves is mistaken, at least on average and this is of course about playing a numbers game.

Sure you will get examples where a private seller may win but take a fair sample of cases and the pattern will be clear, on average you get more money when you use an agent and on average the more you pay them the more money you get. It has little to do with price data either, it has everything to do with dealing with the interest in a property in a dispassionate unemotional way because as an agent that's your job.

Believe me, as bad as you think some agents are and some agents are bad, they are nothing compared to some vendors who, left to their own devices will literally send themselves and their buyers mad. Having said all this where we agree is that online and private will grow, probably considerably over the next few years and some will make the business model work.

As with all business models, only the cleverest or the best funded, or both will survive and they will lose money on the way, then as always happens, the loss leading will stop and the prices will rise.

To restate, we have the cheapest agency rates already, under a third of what they are in America, we all love a bargain but remember this, 'there is always someone somewhere who will sell something cheaper than everyone else and he who buys on price alone is that mans lawful prey'.

Hi Simon,

In reference to...

"the fact remains that any property seller who thinks they can save their agency fee by doing it themselves is mistaken, at least on average and this is of course about playing a numbers game. "

and
"on average you get more money when you use an agent and on average the more you pay them the more money you get"

I'm willing to be convinced if you are willing to provide evidence to support this claim. But so far you haven't provided any. And as I stated earlier, if this claim were true then agents would flipping bargain properties from private sellers for quick profits. But I don't see any evidence of that either.

"It has little to do with price data either, it has everything to do with dealing with the interest in a property in a dispassionate unemotional way because as an agent that's your job. "

Your comments regarding price being a secondary consideration suggest to me that that you might not have personal experience of buying property yourself. You have to be in the game with your own money to understand the forces behind it.

Firstly it would be illegal and unethical for a middle man to do what you suggest, there are plenty of 'we buy any house' companies willing to buy property cheap. i have bought and sold many properties and I always use an agent and I choose the best not the cheapest. There is currently no empirical evidence to back my claim, just common sense and experience. As the private market grows online I'm sure evidence will emerge and we will have an answer, albeit the answer is already self evident

One aspect of Agents vs Portals frustrates me because it's such a simple fix. Stepping through the problem and solution:
Google undoubtedly rules web, any portal not doing well in Google isn't doing well.
The portal needs to get people from Google and keep them on their portal.
Portals have the advantage over agencies because they have more properties.
But, and this is where agents give the portals power, when a property is listed by an agent they put it on their website and the details are sent to the portals.
Here, we get a little techie: Google has two ways of finding out a new property listing - either they discover it or they're told about it.
Telling Google about a page is called 'pinging' in essence it says 'Hi Google, come look at my new listing'.
Very few agents ping new listings at Google; every portal pings Google the second they get the details.
Outcome - Google sees the portals as providing all the fresh, new content it craves; not the agents.
Adding pinging to a website costs peanuts and every agent should be doing it.
End of geek sermon :)

I don't want to be off subject too much but when I started working in property I had just left the very high tech science industry. Something about being too old to think straight any more by their standards. Science and academia are riddled with procedural thought, ideas and just plain bitching. A lot of it is to do with gaining some sort of position. As you guys are finding out, the one who can make the best regulation and get them enforced with exams gets the kudos. Never mind those who do not need examining and regulating. Those people are upstarts who must be kept out of the work at all cost. They would undermine the exam and accepted opinion, 'you see'. Of course they do not mean exam. They mean the position the exam gives you.

A manager I once worked for said, "Those that can do, do and those that can't teach". Instinctively I always see regulators and procedural experts as trouble. They do not fit my ethos of getting on as best you can. Even looking after property you have to have exams for this and that perhaps except for painting. I can do electric and plumbing. It is so easy compared to building electronic chemistry instruments safely. (I have an electric C&G now so that I can be regulated).

I can not give any true answers to what is needed but I will back up what many have said. Use good agents both for property and letting and if you are into leasehold property flats then look for flats that have been built properly and have good block management agents in place. I can confirm that if you get any of that wrong then it will cost you. I never, ever deal with some one who I can not talk to face to face. There are details a portal can never provide.

Portals are there to advertise. That is it. Ideally stop there.

The skill our whole country needs at present is to get get rid of vast numbers of regulators, examiners and know it alls and give the 'doers' a chance to shine. I would say that if these people have never run a good business in the property industry, in our case, then it is they who should be examined before they are allowed to pontificate to the rest of us. How can we turn that table around?

As always there are exceptions to sweeping generalisations. Greatness is spotting them and allowing them to flourish. Unfortunately spotting greatness never come into any exam syllabus that I have ever heard of.