3 Reasons The Internet Will Ruin High Street Estate Agents
“Snake-oil parasites providing below average services for extortionate rates”
(propertyinvestmentproject.co.uk)
Harsh words, but it’s a growing consensus on the internet. Some blogs seem to have personal vendettas against the estate agents, but their comments aren’t the biggest threat to traditional estate agents:
1. Growth of Online Estate Agencies
Online agents are growing at an alarming rate, soon they’ll cover a large percentage of the property industry. Agents such as Hatched.co.uk, Purplebricks and OpenRent have been in the media spotlight with nationwide advertising campaigns. The adverts are clear attacks on high street agents, mentioning how much money they could save landlords and buyers.
Nearly half (47%) of the 400 participants who responded to Smith & Williamson’s annual property survey said that ‘the online estate agency model will eventually eradicate high street estate agents’. Participants included investors, developers and professionals in the property industry.
Adam Day, of Hatched,co,uk, forecasts that by the end of 2015 online agents will have between 10% and 15% of the market share, and this will rise to between 60% and 70% by 2020. He says that this signals the demise of 7,000 high street branches.
2. The Price is too damn high
More and more buyers and landlords are using cheaper online agents/portals to advertise their property, why? …you got it, the price is too damn high. For an average value home of £184,000, an estate agent will charge between £2,208 and £5,520. Online agents like Purple Bricks are offering an alternative service for under £600!
No more high street office, no more company cars, no more ugly advertising boards, by stripping the overheads and providing clients with the bare minimum, online agencies are able to charge much lower prices.
3. Home Owners Are Changing
Mark Zuckerberg is now 30 years old, that’s also the average age of first time buyers in the UK. This is a new generation buyers, the internet generation. People are more comfortable with online communication and do everything online, why should renting, letting, selling or buying a house be any different?
Our Prediction
We predict that online agents will take over the property market. Eventually the property portal market will become more and more competitive. Prices for these portals (like Zoopla and Rightmove) will drop. They’ll begin to target property sellers directly, allowing sellers to have cheap personal listings. High street agents will see a large drop in profits and the majority will either drop prices and go online or DIE.
We’ll still have traditional agents, but expect to see a few more empty shops on your high street as people turn to the internet.
I agree with the other comment. Look how Purple Bricks share price has shot up as Investors look to the future.
I agree wholeheartedly with this article. Although the timing and speed of the collapse may be a bit optimistic… or pessimistic.. depending on your view! I am an estate agent and can see it happening around me. Here is a reply I put on another website which was trying to downplay the seriousness of the situation:
I think you might be missing the point somewhat! Nearly every industry has felt the effects of online marketing over the past years. Our high streets have been decimated. From travel agents to national retailers, the shape of our high streets has been reduced to a collection of pitiful independant retailers struggling to make a living from the elderly and internet illiterate. Banks and building societies are closing branches everywhere (so much for that personal service). The only big players left on the high street are those that have increased their internet presence and now rely heavily on that presence to remain competitive. The on line estate agencies are adapting to the criticisms that have been levelled at them such as offering viewing packages etc. They will continue to adapt and make the whole process of selling your house as streamlined and customer friendly as possible… I am a n estate agent and I can see the writing on the wall. The amount of investment going into on line agencies from major sources is staggering and big hitters such as Stellios (whats his face?) starting up their own on line brands. Either you are blind or just in denial about what is happening in this industry. 10 years from now (possibly sooner) people will be considered idiotic to pay 1.5% to 3% of their property value to sell their home. You completely over estimate the value of ‘face to face’ sales.