Moving with the times The traditional high street estate agency could disappear amid claims from online newcomers that they are overpriced and wasteful. Many agents are disparaging, but others are abandoning their high street offices for new ways of working. Graham Norwood reports
It is not just Britain’s politicians who face change in 2010. Estate agents are witnessing a revolution which, since the new year alone, has reached fever pitch.
First, Tesco’s iSold has linked up with established agency Spicerhaart to set up a £999 sell-a-home service, now being piloted in Bristol before it is implemented nationwide. Second, Google will soon allow estate agents and private sellers alike to list homes for sale for free, using images taken from its Street View service and listing details on a map.
Third, TV property developer Sarah Beeny has established www.tepilo.com, promoted as a “private house sales” brand through a magazine and social networking site, as well as on the website itself. Fourth, website Zoopla! is staging online auctions where buyers need never even visit the properties they bid for.
These new services are very different from each other but share a common analysis of the established estate agency business model. They say it makes only limited use of new media such as the internet – “agents set up a website and think they’re in the 21st century,” says Sarah Beeny, dismissively. These new services also claim traditional commission-based agents are expensive to sellers, profligate by siting offices in prime retail locations, and offer little genuine competition over fees and services.
Unsurprisingly, the estate agency establishment has reacted – either by opposing the new initiatives entirely or saying they will not change older agency practices.
“UK commission rates are some of the lowest in the world, so it’s unlikely they can fall significantly. Vendors are very keen to choose an agent who has advantages such as brand, position of office, web systems and quality of people,” insists Knight Frank’s head of residential, Patrick Ramsay.
Emotional benefit
“Online house sales won’t catch on. Why? The English are too reserved when talking about money so they won’t negotiate,” says Douglas & Gordon’s Ed Mead, an estate agent since 1979 and now on the board of the Property Ombudsman.
“Nothing can replace the personal and emotional benefit of having an agent, not least when they enter into negotiations on your behalf, and so removing you from what can become an emotionally draining process,” says Savills director Jonathan Cunliffe.
But other senior players are more receptive to new ideas.
“We’ve seen the solicitor, stockbroker, accountant, travel agent and bookmaker all desert the high street,” says Simon Albertini of London agency Friend & Falcke. He says estate agents’ emphasis should be on expertise, not shopfronts. “This business is largely about people and reputation, less about office location. Over the coming years, you’ll be seeing fewer of us on the high street.”
Lucy Morton – outgoing president of the Association of Residential Lettings Agents and a partner in WA Ellis, a London rentals agency – warns that sites where owners can sell or let are “a big risk when marketing your greatest financial asset”. But she adds that established players are changing the way they work, thanks to new technology.
Her firm is shifting advertising from print to online, and is increasingly using Twitter and online newsletters to create a brand instead of more expensive traditional public relations and marketing. The company and its clients – tenants and landlords alike – now communicate directly by text and e-mail, not just in meetings and by telephone.
However, the real changes in estate agency are not being seen in London, nor at the top end of the market. Provincial high streets are the focus of real revolution.
York-based Hunters Property Group, run by Kevin Hollinrake, used to employ 200 staff but now has 70. It is developing a franchise system further afield, in places such as Essex and the Isle of Wight. Hollinrake wants 1,000 “personal agents”, each in a strictly defined patch and operating from their home or an office or a car. “The customers get a much better service, and the agents can earn two to three times what they would as employees,” he says.
Darrin Carter, an estate agent for 25 years, used to run his Grantham agency Carter Estate Agents from a traditional office – but not any more. “In 1985, we thought sticky-backed colour photos on details were revolutionary. Now we have the internet, social networking applications, e-mail and SMS texting. My business does everythinga traditional agency does – except we don’t have a high street office,” he says.
Carter says agents must learn from the sales techniques of budget airlines. “You still go to the airport, get on a plane and end at your destination. But you book online, don’t have an in-flight meal and the cost is less. Agents will start to leave the high street and look at home-working or lower cost offices. There will be choices for consumers on how to pay, moving away from percentage-based no-sale no-fee.”
Behind the scenes, even bigger and older agencies are looking at change. Savills is considering how it should use Twitter and Facebook; Chesterton Humberts is already experimenting with them informally; and one other top-end agency is considering a “twin-track” approach of traditional office-based sales at older “high” commission rates while also running a lower-cost online-only service.
Business models
With an industry clearly in the middle of change, it is unsurprising that letters pages and online chatrooms of estate agency publications are rife with debate, fuelled by recent recommendations from the Office of Fair Trading urging new entrants to come into the industry and, if they wish, to bring new business models with them.
With challenges like these, whatever happens to home information packs and planning regimes in a post-election landscape may pale into insignificance. As a politician once said, the winds of change are blowing.
Tepilo – the new confronts the old
If one new service exemplifies the clash of cultures between old-style and new-style estate agency, it is www.tepilo.com, the private sales website set up by Sarah Beeny.
Estate Agency Today calls her “the dread Sarah Beeny”, accuses her of making “rants”, and slams the Daily Telegraph for interviewing her, advocating “an anti-Telegraph movement”, to show traditional agents’ distaste for articles about Tepilo.
A blog by London estate agency Douglas & Gordon indirectly refers to Beeny in an article called “Money For Old Rope, My A**e” (sic). It says: “I wonder if this person, as an industry expert, actually has any idea of how a market works?”
Sellers can put details and photographs of their homes on Tepilo free of charge, and Beeny says she now has 8,000 entries – still a tiny share of homes on sale across the UK.
She says top-end properties will always require traditional estate agents, but she believes the mass market is ripe for new sales techniques because estate agents have not passed on to sellers the time and cost savings inherent in online marketing.
“When I sell a home, I don’t want an estate agency in the most expensive street in town dressed up like a coffee shop, and I don’t want a liveried fleet of cars. I want good service,” she says.
“Everyone starts a search online and estate agents know that. So you can put your own details on a free website or you can pay £10,000 to an estate agent to put them up. I can think of plenty of better things to do with 10 grand.”
Beeny claims to be undeterred by establishment opposition. “I’m a little surprised at how childish they are. Instead of saying ‘Sarah Beeny’s thick and should get back in her box,’ agents should have explained how good they are, emphasising their services. But no. Their response has been to heap poo on me.”
