In recent years many High Street stalwarts have disappeared at the hands of ever-growing competition from the Internet. First Travel Agents vanished, and now everything from record stores to second-hand car dealers are having to fight against the mass absorption of technology. Could Estate Agents be next in the firing line?
There’s a common thread between many of these High Street industries that have fallen way to the digital age – they all relied on the old adage that ‘knowledge is power’. For years, with only primitive systems in place, you had to trust various professionals’ opinions on price, availability, variables et al because there simply was no easy way of finding out this information for yourself.
In 1980 if you tried to book a Mediterranean holiday without a Travel Agent you wouldn’t know where to start. Sourcing flight schedules, room availability, transfer routes, or indeed which hotel to stay in would have taken weeks of finding phone numbers, ringing around many different companies and several trips to the bank to make complicated international payments. As a result, Travel Agents had an extremely firm grip on the market.
These closed, linked systems not only aided, but also protected the very industries that they worked in. Over time, however, bit by bit the Internet undid those systems. Suddenly you could look up flight times or view different hotels and easily browse, book and pay for everything yourself online. Once the stranglehold of information was broken, so was the industry. And so became the death of the Travel Agent.
Very much the same thing is happening in the housing industry. Once properties were advertised solely through signposts in gardens and newspapers. Nowadays, the Internet has taken over and with it brings a wealth of information and tools to help you sell your house without the need for a professional. As such, are Estate Agents the next to fall?
Everyone loves to hate Estate Agents, it’s one of those no-win jobs. Being commission-based, they are constantly trying to drive the best deal for both sides of a negotiation, resulting in no-one being fully happy with the result. They act for the seller, but at the same time have to be seen to fulfil all the buyer’s needs. And taking around 1.8% commission on average (that’s £4,500 for a £250,000 house) sellers expect to get their monies worth. It’s certainly not easy.
But the flip-side is that, unfortunately it’s an industry that’s rested on its laurels far too long, able to get away with terrible selling practices that are now becoming exposed. In addition – in striking parallel to the local print media industry in which it often advertises – an arrogance derided from the once monopoly of the marketplace has led to it shunning away from technology when the rest of the world is embracing it.
In truth, Estate Agency is an antiquated profession that now, quite rightly, finds its back against the wall.
In a nutshell you can break down the role of an Estate Agent into three jobs, all of which are now becoming increasingly redundant:
1. Value your property
One of the most common misconceptions with selling a house is to go with the Estate Agent who gives the highest value. This is derived from a natural human instinct to think something is worth the price you place on it. It’s not. Your property, like any other object, is worth what somebody is prepared to pay for it, not what an Estate Agent says it’s worth.
So do you need an Estate Agent to value your property? No, of course not. There’s several websites which offer this service already, and with growing algorithms and analysis will only continue to become more accurate.
Naturally, there will occasionally be bespoke cases where professional opinion is needed. You might live in a completely different style house to the rest of your street, or the condition of your property might make comparing it to others difficult. But this should be treated as an add-on bespoke service, not something you have to pay for regardless.
2. Advertise your property
The Estate Agent industry has given one small concession to technology, mostly in the form of a single website. In addition to the age old practises of “For Sale” signs, newspaper advertising and shop window details, Estate Agents now largely do one thing to sell your property – put it on Rightmove.
Of course, many Estate Agents have their own websites, but these are usually terribly designed, outdated and cheap-looking, clearly either made on a shoestring budget or not revamped for years.
So they turn to Rightmove, which does virtually all the work for them. All Estate Agents do is fill in the correct details, take photos and upload them. So how do they get it so wrong? How many times do you see horrendously framed, badly shot, or even low-res images of a property? There’s even a whole website devoted to it.
And where’s the forward-thinking? Why not have video tours of properties or interactive mini-sites? Why are the floor plans always tiny pixelated images and not fully rotatable vector-based plots linked to Google Earth? There’s so many ideas that could be done, but we’re stuck in an era of cheap digital camera shots from a guy in a Burton suit stood on a chair in the corner of a room.
So what’s to stop you advertising yourself? Nothing, there’s plenty of websites that allow you to do this. But unfortunately, there’s one rather important one that doesn’t: Rightmove. In fact, quite the opposite – it actively discourages you. The reason why is simple – Rightmove is run by huge property agents for smaller Estate Agent industry to thrive.
Rightmove was created in 2000 as a joint venture between four of the UK’s largest property agents: Halifax, Countrywide plc, Royal & Sun Alliance, & Connells (via Wikipedia). By maintaining a policy of allowing no private sellers, put simply, it’s one final attempt to keep a stranglehold over the industry. It’s fair to say this is one of the last major threads holding the Estate Agent business together.
3. Communicate between the various parties involved
This is where property gets slightly trickier, and the other reason that Estate Agents are still clinging on to their jobs.
Because of the high value of a property purchase, there’s always going to be the need for an intermediary between buyer and seller. People are rightly scared of such a valuable transaction going wrong. Most people would flinch at buying anything over £500 on eBay, let alone someone else’s house.
In addition there are often small issues that need ironing out, or chains of deals that need to be coordinated concurrently. The Estate Agent – and there are some that are very good and skilled at this – acts as a middleman to help all these run smoothly.
But it’s not something that couldn’t be changed. Much like the Travel Agent industry before it, there’s lots of deliberate smoke and mirrors in Estate Agency to make you think they are doing very complex actions that need years of training and connections to make them happen. But they aren’t, far from it.
Indeed, the majority of the legalities and paperwork are actually done by solicitors and conveyancers. It just so happens that in between the buyer’s solicitor and the seller’s solicitor sits the Estate Agent, so most of the communication seems to come from them.
The blurring of lines here is deliberate – and has been for many years – from a profession that knows it’s on its knees. Take this ‘Editors’ Pick’ from a BBC article about selling your own house:
“I am an Estate Agent & in my opinion selling a house isn’t where we earn our fee. Many people under estimate the work that goes into financially qualifying buyers, checking a chain, liasing with solicitors to get the transaction through to exchange & having to renegotiate price should anything go wrong e.g. down valuation on a survey. Think twice before bypassing an agent to sell your home.”
It’s pure scaremongering, and in fairness to this particular individual is a result of something that’s embedded in the industry more than their own personal view.
Re-read that quote and look at it again and remember all the technological advances in banking and communication in the past few years. “Financially qualifying buyers” can be done in an instant, mortgage applications are all electronic now as obviously are all bank statements; “Checking a chain”, again calendar checks and communications happen immediately nowadays, appointments and times can be scheduled with the touch of a button; “Liasing with solicitors” (sic) is nonsense, solicitors can and do liaise with each other without the need for a middleman; “Renegotiating price”, again no reason the parties can’t do this directly with each other.
‘Location, Location, Location’ – the long-running Channel 4 property programme – has a part that beautifully illustrates the issue; near the end of each episode Kirsty or Phil sits down with the house hunters (usually in a cosy local pub with a ‘cheeky’ wine or ale) and calls the Estate Agent to make an offer. The agent then calls the seller (off camera) and the couple wait to hear. The phone then rings and the agent comes back with an answer, usually a counter-offer. The couple then make their own counter-offer and call back the agent. And so it goes on.
Now, being TV this is often cut down to two minutes of will-they-wont-they, but the reality is that this process can take hours, if not days. But ask yourself this: Why can’t a prospective buyer just talk directly to the seller? Why have the need for the agent at all? You are just adding another layer of friction to the process.
This perfectly sums up the antiquated ways of the property industry. Unnecessary layers of complication, kept in order to give a reason to exist to a profession that needs to change.
It is true that all property transactions do need an intermediary driving force that pushes the transaction through. But is that same person best equipped to taking photos of your house? Or showing people around a property they’ve only set-foot in once before? Or drawing up innovative marketing material? Or truly valuing a property when it directly affects their commission? Almost certainly not.
We live in an age where we can now piece together things for ourselves. We don’t have to go to one local shop for all our kitchen needs; we can buy a bowl from John Lewis, a spoon from Amazon and have flour and eggs delivered within the hour from Tesco Direct. We have choice and independence and the world is a better place for it.
To survive, Estate Agency needs to get smart, quick. The days of the all-in-one monopoly are over. But, as with most things in life, to conquer a problem you first need to admit there is one.
The difficulty at the moment is there isn’t a single standard method for how these things should work and as such the old fashioned, out-dated ways just about survive, aided by the fact the industry is so anti-change itself. But it won’t be very long before a new solution is provided. The answer isn’t directly obvious, and whoever cracks it first will probably become very successful.
But as with Travel Agents before them, Estate Agents are on the ropes; technology will soon leave this industry obsolete and there will be many people rejoicing when it finally does.