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The Virtual Agent
Online estate agents mean business, B
says Andrea Kirkby – so don’t get complacent! Michael Banks of online lettings agency
ack in the early days of the portals, a number of websites tried to challenge the rule of the high street estate agent and let buyers
sell their own houses. It never happened. Today, though the portals have made a huge difference to the way estate agents market their properties, the ‘for sale by owner’ (FSBO) sites have made almost no impact at all. But estate agents shouldn’t get complacent.
There’s a new generation of online agents out there – and they mean business. After all, 90 per cent of all house sales are now initiated through the internet, so that as Chris Sargisson of House Revolution says, “Every estate agent in the land is an online estate agent!” Rightmove and other portals deliver buyers to high street and pure online agents. And the government appears to be backing
the online sector, with the Office of Fair Trading encouraging new entrants to the sector, which it sees as ripe for change. Michael Banks of online lettings agent Upad agrees with the OFT. “There are approximately 15,000 lettings agencies, and the vast majority have the same business model,” he says. “It’s absolutely homogeneous across the board,” with every agent offering exactly the same service. Whereas a car buyer, for instance, has a huge selection of cars available from the Rolls Royce or Lotus to a VW Golf or Ford Ka, a lettings agency has a single product – a bit like Ford used to be, “any colour as long as it’s black,” as Henry Ford said.
A CROWDED SECTOR So what’s happening in the online market? James Cole of
Thebigpropertylist.co.uk tracks the sector, and says it’s very crowded; he has a list of as many as 200 agents, and while many start-ups have folded, others have started. He says many former FSBO websites have moved into agency to get properties listed on Rightmove; they are prominent on the Web, but their infrastructure in some cases doesn’t support full agency operations, and some are dying off. On the other hand, a number of HIP
providers have changed business models and moved into agency and some conveyancing firms are now adding agency to their services. These firms have better infrastructure, as do firms coming from a digital marketing rather than property background.
20 l April 2012 l TheNegotiator
Upad also tracks the competition, and says, “We’re seeing new online agents starting up every week. Some sink.” So it’s a sector that’s very much in flux. Though there are some interesting new ideas around, not all are succeeding;
thepropertybid.com, for instance, lets potential tenants bid on a property, a bit like eBay – but it currently only has three properties on its site. And many agents remain small, despite the potential scalability and national reach of an online model; only 77 properties show up on Movestart’s site, and 63 on Monster Homes, an Essex based lettings agent. Until recently qualifications were sparse in
the online sector – in 2010, James Cole says only a third were NAEA members, and only three out of the top 22 he looked at were part of traditional agency businesses. That’s also beginning to change, though. For instance Upad belongs to ARLA, while House Revolution, The Little House Company, and London agent Fishneedwater are NAEA licensed. (It’s interesting that both Upad and House Revolution have been created by entrepreneurs from the online sector and not the agency sector. Chris Sargisson, for instance, worked in online insurance before cashing out, and starting up House Revolution.) Online agencies are certainly taking market
share in both lettings and sales. For instance Edinburgh based Citylets saw last year’s traffic increase 22 per cent on 2010, and enquiries to agents rise 21 per cent – with both lettings agents and private landlords using its services. It says traffic now is three times what it was four years ago, and claims it has now become the most visited lettings site in the UK. However, it doesn’t offer true agency services. Upad, which does handle lettings administration as well as simply advertising properties, says its figures show growth of five times in the eighteen months to January 2012, and will double this year. Meanwhile, its property listings have grown from 500 to 2,600 over the same period.
“Some former FSBO sites have moved into agency to get their properties listed on
Rightmove.” James Cole, Thebigpropertylist
www.the-negotiator.co.uk
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