Amazing isn't it? One of the oldest industries in the country is finally on the brink of change. But will we actually see change in an industry that is ripe for disruption?
Over the last 3-4 months, we have been bombarded with stories of investment in 'online estate agency' and some real 'big-hitters' entering the space. To be honest, 'online estate agency' is nothing new, but the levels of investment are. So will this change the estate agency industry as we know it? From someone who has been at the forefront of online estate agency from the start in 2005, here's my view on it...
Much has happened in the last 4 months. The first to announce investment was Emoov in December 2013 when they received investment from none other than that famous dragon, James Caan. Already one of the biggest online agents in the country (they claim to be the biggest, not sure on what basis, mind you), Emoov has now secured one of the most recognisable faces to help grow their business.
Even before this, we had Sarah Beeney announce that Tepilo, her own private sale portal, was going to convert to an online estate agency. Not much sign of an investment here, but a celebrity name nonetheless.
So, the market was already getting interesting back at Christmas. And then, out of the blue, we had probably the biggest announcement of the lot; Sir Stelios, yes, the one and only Stelios of EasyJet, announced that he was backing his own version of online estate agency - easyproperty. An obvious step for someone who has made his millions from disrupting an industry.
Most recently - just in the last couple of weeks, we also received a barrage of press about how both EstatesDirect & PurpleBricks were going to change an industry. Both have significant backers with the former having involvement from none other than the founders of both DatingDirect, who sold out to Match.com in 2007 for £30m, and the high street household name, Poundland.
PurpleBricks was next to come forward and is headed up by former estate agents at Burchell Edwards, who sold to the Connells group in 2011, and seem to be throwing a huge amount of backing and money at it.
So it looks like it could be an interesting time in the world of estate agency. But who's going to come out on top? One of the aforementioned new online agents? One of the more established brands like my own business, Hatched, or Housenetwork, or maybe Housesimple? Or will it all wither out and die with the traditional agents 'teaming up' to thwart the rise of online estate agency?
For me, you have to look at the ones that have experienced 'estate agents' running the show. So I'm afraid that rules you out, Stelios and the founder of Poundland... Flippant, I know, but estate agency is about much more than just throwing a heap of cash at Google Adwords, newspaper adverts and leaflet drops.
Estate agency is about trust and people. And building that trust when you are hundreds of miles away in a call centre is hard work. Even with 'people on the ground' it's difficult. Those people on the ground aren't going to have an office, or any history for potential clients to see. And simply throwing millions upon millions of pounds is no guarantee of success.
Anyone remember WOWProperty? No? Thought not. But they were the very first online agents to get a great big investment back in 2008 and disappeared without trace just a year later. Sure, the market didn't help, but with a whopping £1.75m at their disposal, you'd have thought they could have come through the downturn. But they got so many things wrong. Other, more established online agents started between 2005 and 2010, so why did WOWProperty fail in amongst all the other innovators who are still going strong today? They had no history. They thought they could buy both trust and history by chucking £1.75 million at it. It didn't work.
At Hatched and all the other online agents that have been going for 5 or more years, we've had to build that trust, not buy it. It's taken 8/9 years for the oldest online agents to build that trust. These guys with pound notes falling out of their back pockets will have to see a return within 8 months, not 8 years. And that's going to be tricky to do.
In fact, you could see that the money they invest only strengthens and helps the original online agents who have already got the history and trust of many thousands of former customers.
Of all the current 'big 4', 3 of them came from having previously working on the high street as estate agents. And that, as mentioned above, is the most important factor for me. So, with that in mind, that leaves us back with the 'big 4' - Emoov, Housenetwork, Hatched & Housesimple. Plus PurpleBricks.
And Purplebricks, I think, are the most interesting.
They are headed up by former high street agents who have 'been there and got the t-shirt'. They have the recently retired chief executive of Capita, as well as other significant investment houses taking a stake. So they certainly look the part. The only stumbling block could be their fees. The reports are, that they will come in at around £600. All paid up front. Now, the very nature of the business we work in, means that people are looking for the lowest possible fee. And their 'cheapest' fee, will be the most expensive by a long way, of all the more established online agents.
And this is just the estate agents who are threatening to change an industry. But there is a whole other monster who could have a lot to say about how the estate agency market evolves over the next 5-10 years; the property portals. In my view, this could be the biggest threat to all types of estate agency over the next few years. I'll try and explain...
When agents feel under threat, they tend to get together and then stick together. The industry has been like that for many years and it will be like that for many years to come. When I worked on the high street, the agency I worked for, basically put the local newspaper out of business, by starting a 'consortium' with the other high street agents and setting up their own newspaper so that they could control the cost of the adverts they were taking out - criminal really, but it's happened for years. It's the only way that agents can protect their exorbitant fees. And now, with the age of the internet, this is no different.
So, early in 2013, a group of the most recognisable high street agents got together to talk about starting up a new property portal to offer an alternative to Rightmove and Zoopla to the estate agents up and down the country. The project is currently named 'AgentsMutual' (though this is not believed to the name of the upcoming portal) and it is gaining significant interest from across the board. They have a rule though; if you list with 'AgentsMutual', then you are only allowed to list with one other portal.
The scenarios are endless if enough agents decide to jump ship and go to 'AgentsMutual'.
But one of the most obvious scenarios could play out like this:
One, or both Rightmove and Zoopla could lose significant membership with agents switching to 'AgentsMutual' and ditching them. Not only because of their 'one other portal' policy, but also because 'AgentsMutual' are telling agents that they will not accept listings from 'fixed fee agents'.
So if PurpleBricks, for example, start to make serious inroads to the market, you could see more high street agents get upset with the likes of Rightmove and/or Zoopla for accepting online agents' listings, which could then, in turn, drive even more agents to 'AgentsMutual', thus reducing the number of agents subscribing to Rightmove and Zoopla because of their 'one other portal' policy.
And that might, just might, force Rightmove and/or Zoopla into a corner. And the most obvious thing for them to do, in my opinion, to get themselves out of said corner, would be to start accepting private listings from sellers directly. This in turn could have a cataclysmic effect on the property market.
Rightmove, specifically, is synonymous with finding property. AgentsMutual can certainly attract agents to list with them, but do they really think they are going to attract buyers away from a website so engrained in the psyche of the Great British public to search for property.
Rightmove has always said they wouldn't do it, but never say never. They could blow the market apart tomorrow, by simply accepting listings from sellers directly. They wouldn't do it tomorrow, because agents pay them such large monthly fees, but at the end of the day, they are there to produce results for their shareholders. And if enough agents decided to leave them, then they could quite easily flick the switch.
So whatever happens, it's going to be an interesting few months and years, and I for one, cannot wait to see how it pans out - there will be a few winners and many losers in my opinion and if you were to put a gun to my head for a prediction, then all I would be confident in saying, is that 70% of high street estate agents won't exist by around 2018 and online estate agents, including Hatched, will dominate the market.Suggest a correction