After my article last week predicting that Agents’ Mutual would likely seek to raise external capital, including possibly on the public markets, it has been speculated that this information was leaked to me by an insider.
That is absolutely not true. I simply made a relatively obvious assumption as to what was likely next for Agents’ Mutual given the situation they are in which in terms of their original objectives is dire.
It's true to form for Agents’ Mutual to try to silence or attack any dissenters. I have no axe to grind and have simply called it how I and many others see it and so far I appear to have called it pretty well.
Agents’ Mutual have now sent out more details to their members on their intention to float including new contracts and proxy forms for them to vote on the proposals. Before exploring the merits of the offering itself, it is worth asking a simple question. What has changed so much that the founders now believe they need £50 million more than they originally needed and are prepared to break all the original promises they made? How did they get it so wrong?
The proposal itself is even less appealing than I imagined it would be. Not only are larger agents like Savills getting far more shares than others (justified by what they have put in so far but contrary to what was originally stated in terms of equality) but it seems there will also potentially be shares offered to non-members to attract them including virtual agents.
Yes, that’s correct, the new rate card has pricing for virtual agents! So, the idea that its members signed up to as a key defender of high street agency and the promises that OnTheMarket would never accept online agents has now gone too. Listing fees are not going down as promised, but are going up instead - by up to 5% p.a. after the first two years. Oh, and any shares you get you can’t sell for at least five years as part of a lockup agreement.
All of this must sound pretty unattractive to members who signed up for equal rights for all, not for profit, lower fees, defence against online agents, etc. This is an incredible strategic U-turn and betrayal of core principles. Worse still, there is a lot of arm twisting going on here, with superficially much worse terms for agents who don't sign up - although that won't matter if the venture fails. Crucially, the one other portal rule will be ditched, but only if you agree to sign a new five year contract.
So, members are being asked to forget all the original promises made and to support a third portal which is now going to be for profit with escalating fees and promoting online agents alongside them. Surely the last thing the high street agents need is a third portal with whom they are forced to spend money which just increases overall marketing costs? Isn’t this precisely the opposite of why members signed up in the first place?
This looks a lot like a delusional last roll of the dice to me. I imagine this offer will be positioned by Agents’ Mutual as ‘what do you have to lose’? In for a penny, in for pound, as they say. But throwing good money after bad is never a great idea. You have to want to spend more on your marketing, be willing to accept equal promotion of virtual agents, forget all the broken promises and believe it is going to deliver far more in the future than it has in the past. Oh, and that it is still going to be around in five years’ time for you to collect anything on your shares. That is a tall order…
If I were voting, I would certainly vote ‘no’ to this proposal for pragmatic reasons but If I had signed up originally then I would also be voting ‘no’ because I would be standing by my principles and convictions. I suspect that some agents will vote in favour because it's hard to accept it when you have made a mistake and no doubt Agents’ Mutual will do a good job of promising a pot of gold at the end of the rainbow. Finally, I suspect that if you aren’t in favour and don’t vote you will not be counted, so make sure you vote either way!
As a wise man once said “Fool me once shame on you, fool me twice shame on me!”
*Simon Shinerock is Chairman of Choices Estate Agents. For more information on Simon, see his blog or his LinkedIn profile.
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What financial gain have you got tied up with RM/Zoopla succeeding Simon?
Just what everyone else is thinking too ......
Really change the record Simon - surely we deserve more useful information to read rather than bashing OTM. It really now sounds like you are on a One Man Mission - give it a rest !
Is everyone wondering what Simons connection with Zoopla is...or is everyone agreeing with him. Certainly not the latter from this viewpoint and I don't think many people agree with Simon. So OTM didn't get it right first time for one reason or another but the idea is still right.
You know what I find interesting is that some people are more interested in my motives than the issue itself. If you think I'm wrong then tell me why I'm wrong. I have seen plenty of posts from disillusioned members of OTM and a few supporting it's changed mission. You have to remember this has been going on a long time and my position has changed a bit but not much since the start. Right at the beginning I signed the non binding letter of intent and came close to joining, unfortunately once I understood the strategy I couldn't support it, added to this I was pretty incensed by the way I was treated once I voiced any dissent. Whatever your view is I will respect it if you argue it well but what I don't respect are personal attacks just because you disagree with me
I think the point I am making is not a personal attack on you Simon it is merely I personally made a choice to support OTM. I still continue to support it. Whilst I admire RM and Zoopla as a business model, the latter did not work for my business and the market leader is running away with its own self importance. They need competition and OTM does it for me
Thanks Angi, I appreciate that and I understand your point of view. What originally attracted me to AM was my antipathy towards RM, but I soon realised their strategy was daft and involved a direct attack on Zoopla, a business that was finally challenging RM. With AM it's been a case of out of the frying pan I'm afraid, I can see absolutely no benefits to what they have achieved or in what they are trying to achieve, apart from perhaps keeping portal costs down fir those who didn't join
And one more thing, based on what I have seen I would rather not have a powerful agent owned and led portal controlling my business, I'd much rather deal with a commercially driven independent organisation like RM or Zoopla
Simon is getting a lot of flak from the die-hards. It's a strong argument from him and all you have in response is mud slinging and 'RM & Z need competition"
Wow, seeing agents still supporting OTM, even after they went back on every core principle they pledged in the first place.
I wonder what you will think if Purple Bricks join OTM?
When your rates go up not down.
And whoever commits to another five years (even at £50)! after the performance received, well good luck.
RM laughing to the bank...I'm just going to grab my popcorn...
I feel we are at tipping point on all sides. IF (that's a big if) AM fails, then Rightmove and Zoopla can put their prices up regardless as they will then know that agents are completely powerless to act. I can not also support the new proposals for AM due to the fact (as Simon has pointed out) that it will allow the "virtual" agents out there to keep on going. In the medium term if AM fails all business owners will see their spend go up as RM and Zoopla will then know that we are nothing without them as there is no challenger in anyway!
The whole portal wars is a mind-boggling and actually needs the authorities that be, come up with a new meaning of the words "Estate Agent" and also need compulsary liscencing but that is an altogether different subject!
Simon, I was certainly not making any sort of personal attack either. I wasn't quite sure how to interpret the comment which had been made which was why I asked if people were questioning your motives or agreeing with you. But then also wanted to say that my own view is that the reasons for a third portal are still as strong as ever and from my position OTM has already achieved quite a lot. I know not everyone will agree. It is a pity it hasn't managed to get all the way in the present format but we all need to readjust business plans from time to time. Rightmove and Zoopla are run very capably, differently, but nevertheless for the benefit of the shareholders. This could be different and without it we will just continue to pay more and more to the others. As for allowing 'virtual' agents I think the world has moved on and in my mind there are just 'agents' and we need to decide how to position ourselves in the market to compete. Purple Bricks are just as entitled to be on OTM as anyone else.
Thanks Richard, I have to say I agree with Agent S. in a perfect world you are right and if AM were run by different people things could have been different but 'if' is a big little word. If they had attacked RM not Z it would have made sooo much more sense, I can't for the life of me understand their logic. Plus, the way they pontificated about their values and the utter bare faced nature of the volte face and the way they spent members money, seriously? You have a lot more faith in the great and the good than I do
Absolutely Richard
I don't have a problem with a third portal, is it too late now for this to make any difference to the strength of RM and Zoopla - well probably.
But I do have a huge problem with the way OTM have handled everything from the start.
They have not been true to their word and have wasted Agents money - better to spend more on Zoopla as a second portal than spend on OTM and not get any leads.
Here here
Problem is its not a one size fits all scenario.
Zoopla works in some part of the country but where I am it didn't bring me much so the decision to move was an easy one
I am not an expert on property portals so have taken my own decision and made the leap
I have more to think about than Property Portal War
Absolutely Angi, you have a business to run and so do all the agents who supported AM as well as the ones who didn't. Most Agents aren't portal experts, they are property experts and they are in competition with one another locally. As I keep saying and I know it gets boring, identifying a problem is one thing, coming up with the right solution is something else. I realise AM's demise will dismay and disappointment a lot of people but something else will turn up to fill the void, it always does. Ironically, if RM ever defeated Zoopla, which will never happen BTW, then the CMA would have to step in and either break them up or impose restrictions on them. In the meantime tech continues to develop at a pace and in a few short years we may very well look back at this argument with nostalgia as we remember those clunky old portals and wonder how we got by without whatever it is that will eventually replace them
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