Will online agencies take over, or do we still need face-to-face contact?

Like most industries, estate agency is changing. A general trend to a more hybrid model, accelerated by the pandemic has resulted in online agencies taking a far bigger share of the market than ever before.

According to data from TwentyCi's quarterly Property and Homemover report, at the end of 2017, online agents had a 6.3% share of the overall market. By the first quarter of 2018, this had risen 11% to 7% where it held fairly steadily until the second quarter of 2020.

Then, in response to the complete closure of the residential property market in the first lockdown, online agents’ market share started to creep up, with TwentyCi's latest Property and Homemover report - released in July - revealing that the market share of online agents now stands at 8.1%. This is a 0.5% rise on the previous three months and a 1.1% annual increase.

And data from online agent 99 Home puts the share even higher; its latest data shows that online and hybrid agents are actually enjoying a 13% share of the market, with Purplebricks and YOPA making significant gains over the past year.

So, while many would argue that the shift to online was an inevitable one, given the fact that most High Street agents had to close their doors at the peak of the pandemic, it would seem the move was already well on its way.

And in fact, according to TwentyCi, there has actually been a much more seismic shift that, it argues has, had a much bigger impact on the online and hybrid market share than the pandemic - a change in customer demographic.

Hybrid and online agents have traditionally appealed to the owners of lower value properties; in fact, in Q4 of 2019, online agent market share for properties valued at less than £200k was 10%, but for the market as a whole it was less than 8%,

In its 2019 report, TwentyCi said that onliners were failing to gain traction with property sellers in the South West and the East of England, where traditional high street agents have more market share and larger proportions of more premium properties are located, and that to make any real gains online agents would have to crack this market.

“Online agents consistently resonate with the lower-value end of the housing market,” said TwentyCi's chief customer officer Colin Bradshaw at the time. “To achieve significant growth across the market we would anticipate a change in approach from these agents to engage with the broader housing market.”

But, since then, online agents have made inroads with higher value properties; throughout 2020, TwentyCi noted a trend for ‘improved levels of penetration into properties of greater value’ and in April 2021 reported that hybrid and online agents had seen an annual rise of 28% in new instructions in the £1m+ price bracket.

Then in July, TwentyCi's data reported that the market share of online agencies within higher value properties was continuing to grow which was pushing the overall market share up, noting: “There’s been a 10% growth in the range of properties marketed for between £350,000 and £1m, showing a significant level of penetration of Hybrid/Online agents into houses and apartments of greater value. Whilst some of this will be driven by the uplift in transactional activity and the rise in the average price of property coming to the market, it also does demonstrate the increased adoption of their alternative customer offering.”

Whether it is a natural shift, a move forced by covid, or a combination of factors one thing is clear - the market share is becoming less heavily weighted to the High Street. But what does this mean? Will estate agents eventually disappear from the High Street completely?

According to Akshay Ruparelia, founder of Doorsteps.co.uk, the High Street estate agent is here to stay. Despite the fact he heads up one of the UK’s best-known online estate agency firms, Ruparelia says technology will never replace the need for human interaction within the property industry. “I don’t think the estate agent industry will ever be completely automated or technology-based…but I do believe in a hybrid model, where local experts and consultants do the face-to-face work backed up by a digital infrastructure.”

And this is a common view, not just in the estate agency sector, but across many ‘interaction’ heavy industries, that are looking for a better mix of tech and human interaction to become more efficient without sacrificing the personal touch.

It makes sense for regulated firms like estate agents to make use of technology for processes that can be automated, giving them more time to focus on the parts of the job that technology can never replace.

For estate agents - like many professionals, particularly in regulated sectors - there is a huge amount of admin and paperwork that needs to be done, a large part of which is customer due diligence and record-keeping. Historically, this would all have been done manually, with clients asked to bring in passports, copies of bills etc - and staff doing manual checks on these documents, and cross-referencing them with other databases and lists to verify the client. They would then have to manually input the results for the required record-keeping rules to be met.

Many agents still do things like this - which has been particularly difficult during the pandemic due to the various lockdowns - but in this day and age, where we have advanced verification and biometric technology and better access to data than ever, there is no need to still be relying on manual checks.

Not only are they hugely time-consuming, but doing them manually is simply not accurate or robust enough. Fake documents are now so sophisticated, they are almost impossible to spot - the only way to be sure a client’s ID is genuine is to run electronic verification checks using an online platform.

This automatically identifies, verifies and screens the person, checking not only that the ID itself is genuine, but that it matches the individual that has presented it. We even have biometric and selfie video technology meaning you don’t even need to see the customer to be able to run the check.

And, thanks to our fully integrated app, agents can access SmartSearch from any device, meaning they can run a check via their phone or tablet when out and about and the results will be delivered to that device in seconds.

Not only is it easier and more accurate to run checks electronically, but it is also a much easier way to meet record-keeping requirements, as, with SmartSearch, the checks themselves are automatically hosted and monitored on the platform and accessible at any time. This means agents don’t need to worry about record-keeping as it is all taken care of.

Data shows that there is a clear shift towards a more hybrid estate agency model, where agents are using online tech to make their lives easier and allow them to concentrate on the bits they are good at, the bits that machines can’t do. But one area that machines can take care of - and do a better job than humans ever could - is customer due diligence.

By using an online platform, all estate agents - whether they are High Street based, completely online or a mix of the two - can lower costs, increase efficiency and mitigate errors, not only giving them a more robust and reliable result, but also freeing up their time so they can focus on the parts of their job that will always need a human touch.

*John Dobson is the Chief Executive Officer of anti-money laundering platform SmartSearch - an online solution used by thousands of estate agents across the UK to verify their clients