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Is the market disruption dream of online estate agencies over?

Agencies like Purplebricks and Strike used to grab all the headlines, but their high street competitors are catching up.

Richard Murray

ricahrd veco estate agencies

High street agents continue to see off their online rivals when it comes to market share for properties sold. The percentage of homes sold by online and hybrid agents remains low, at below 7% of overall market share.

The online agent market is dominated by Purplebricks, Yopa and Strike (70% between them) but despite an increasing number of instructions, the online market share is well below what was forecast – around 50% within five years.

Since its launch in 2012 by brothers Michael and Kenny Bruce, Purplebricks has shaken the property industry but at 4.5% its market share is still some way off the 15% predicted by JP Morgan in in 2002.

But high street estate agents remain the preferred method of selling a home. Their local expertise is a crucial differentiator and even online agents with regional representatives may find it difficult to compete.

High street estate agencies also know exactly what to look out for, what to ask and the signs to pick up on during a viewing. According to the Guild of Property Professionals, when vendors opt for a high street agent, they opt for experience.

The most obvious advantage of choosing a high street agent, is the personal service vendors receive for their property and situation. High street agents have teams that work closely with vendors providing constant reassurance as opposed to someone online. Viewings are also conducted by the agent, or accompanied by the vendor, whatever is their preference.

While online agents offer lower fees, providing vendors with significant savings, they often use online data to value a property, rather than sending around a ‘local expert’ to provide a valuation.

Low fees can be attractive but online agents have a poor track record actually selling properties. Research from The Advisory, an independent consumer advice group for house sellers, reveals that online agents are reliant on the portals to find buyers. High street agents achieve more viewings, more offers and in almost three-quarters of cases, a 5% better price than online-only firms.

Competition

But to compete it is crucial that high street estate agencies deliver technology and services which make them stand out from the competition. For example, providing access to information, documentation and statistics, via a client portal. This gives the perception of a 24/7 operation which those vendors who considered an online agency might expect.

Also, offering non-standard technology such as voice search may help differentiate your agency from others. Automating some of your communication can also present the perception of a ‘never closed’ agency. Regular update notifications about marketing activity will ensure that clients understand the amount of work which goes into a full-service agency sale process and help justify the associated fees.

Richard Murray is chief executive of property software provider, Veco.

One comment

  1. If true that online agents are reliant on portals to find buyers, it’s no surprise their market share is so low. They have the perfect opportunity to build an audience online with inspiring content – instead, the less than inspiring message is “we are cheaper”.

    Of course, producing that content and building that audience takes time and money. Neither of which are in plentiful supply if the fee is so low and profit is important.

    The online agency will work, but not with the default dead strategy used by most high profile cash-rich disruptors that aren’t yet disrupting.

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