If you want to start an argument, or maybe even a fight, ask property people about “online estate agents”. The term is wide-ranging, from budget websites where vendors upload their own pictures and handle all aspects of a sale, up to experienced agents who conduct surveys and viewings in person, but simply do not have an office.
Whatever the interpretation, the notion of online-based house sales tends to bring out the inner extremist in property professionals.
In one corner is Ian Springett, who is working with old-school, high-end agencies, including Savills, Knight Frank and Strutt & Parker, to launch the Agents’ Mutual portal in 2015.
He calls online agents “parasitic” and “a bit of a con”, and has banned them from his portal.
In the other corner is Sarah Beeny, who set up private sales website Tepilo in 2009 with a prediction that “estate agents will be extinct in 10 years” and adding: “No one books holidays on the high street – they do it online. The same will happen to estate agents.”
Such stridency is surprising, given online’s negligible impact so far. Most analysts agree that such sales account for only 5% of transactions. Even the downturn failed to push many vendors to try cheap internet sales.
Beeny’s own site flopped and has been relaunched. Owners may still upload images but pay extra for brochures, “for sale” boards, Rightmove promotion and other services. It all sounds a bit like the high-street model she once derided.
However, online estate agency is bouncing back with high levels of investment. Ex-Capita executives have launched Purplebricks.com; Poundland founder Steve Smith is making his small-scale EstatesDirect.com into a national service; and investment by TV Dragon James Caan has paid off, with his eMoov.com claiming sales worth £600m.
Now, in a blur of orange and white, easyJet king Sir Stelios Haji-Ioannou is starting up easyProperty.com this autumn, initially for online lettings and expanding to sales next year.
So is this really take-off for online? We asked three protagonists for their views – one for, one against, and one who has studied both business models.
For: Robert Ellice, chief executive, easyProperty
“Online is happening now because the stars have aligned,” says Ellice, a former traditional estate agent operating in the Home Counties who has worked in the industry for more than 20 years.
“Firstly, small agents have established the online principle. Secondly, many areas now have fast broadband. Thirdly, so many other industries have moved online. Fourthly, a huge surge to mobile technology has happened.
“And finally, the high street generally is declining as retail activity switches to the internet.”
Ellice says easyProperty will offer every element of a traditional lettings and sales agency – valuations, energy performance certificates, property management – apart from an office.
“We will do it more cheaply by using pay-as-you-go expertise,” he explains. “We won’t have agents spending hours in traffic during the day just to handle two appraisals. We will use people in the area.”
And the future? “People want choice, so traditional agency won’t die,” says Ellice. “Why should it? But within 10 years, the majority of sales will be happening online.”
Open mind: Matthew Dabell, director, Aspire agency, London
“Five years ago, I seriously considered setting up an online agency. It would have been possible, but I decided against it for two reasons,” says Dabell, who runs south-west London agency Aspire.
“Firstly, without an office or local contact, you only get known through marketing and PR spend. That costs a large fortune.”
Secondly, Dabell says his personal modus operandi has always been networking and building relationships. “It sounds old-fashioned, but that doesn’t happen online, it happens when your offices are in local areas,” he says.
To prove the point, Dabell says that while 45% of his sales come initially from Rightmove and Zoopla and 24% from his agency’s own website, 20% come from personal recommendations.
“That latter category is less likely to happen if people haven’t met you, known you, trusted you,” he says. “It’s harder to build that relationship communicating only digitally.”
And the future? “Online will grow, but it’s best suited to lettings, not sales,” he says. “More landlords are prepared to show tenants around and an unseen and possibly inaccurate valuation is less risky on a rental unit than on a house that’s for sale.”
Against: Ed Mead, director, Douglas & Gordon agency, London
Mead accepts that “there has always been a cheaper model for selling”. In the past, “for sale by owner” vendors used small ads in newspapers, and canny sellers have always played agents off against each other to get a cheaper fee. “But cheap doesn’t mean good,” he insists.
“Two words explain why there’s been so much interest in online agency recently – bull market. Now the market’s on the turn, let’s see how many survive,” says Mead, an agent for 35 years, mostly in central and
south London.
“If a typical home costs £180,000 and an agent’s commission is 1.25%, you pay £2,000 in fees – but only when or if the agent sells the property,” he says.
“Most online agents charge £500 to £799. Then you pay more for a board, a valuation, photographs, and so on. How much do you really save? Also, their fees are payable up front and are non-returnable.”
Mead says 20% of his company’s sales, even in London and in a digital age, are from people who walk into branches, register and eventually buy.
And the future? “Of course online agents will grow and today’s 5% may double,” he says. “But ultimately people want a service and will pay for it.”
Online’s big weakness
Online agents claim it is easy for vendors to calculate an asking price by using comparables on portals, while some online agents themselves offer valuations without physical visits. Frequently, they use Zoopla’s free valuation tool.
But their accuracy is disputed by Aspire’s Matthew Dabell, who has revealed to Estates Gazette the findings of a test he conducted on one south London property.
An online agent valued it, unseen, at £650,000. But in Dabell’s opinion – based on knowledge of the property and the area – it is worth £850,000. He says data easily available on the internet shows that similar homes nearby have sold at close to that figure.
Although the online agent’s automatically generated valuation email proclaims that the owner could save up to £7,000 in agency fees, Dabell believes the seller risks losing up to £200,000 through an unseen valuation.
His verdict? “It really is a joke.”
