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way to go before it’s continuously profi table. How much impact are the online agents making on the market? In terms of size, they’re still fairly small; House Revolution’s 200 houses sold last year compares to NAEA fi gures for January this year showing agents selling 6 houses per branch, an annualised 72 properties, though of course seasonality also needs to be taken into account. So that’s the equivalent of two branches, though without the same level of cost – a good start, given the fact that the business started in 2006, so it’s been operating in a downturn for most of its life, but not yet making it a major player. Michael Banks claims online lettings agents
now have 2,400 properties live on Rightmove, a ninefold increase in the last 20 months since Upad started tracking them. “The sector is growing quickly,” he says, “but it hasn’t hit critical mass.” If it carries on growing at the same rate it would reach 20,000 properties with online agents by the third quarter of 2013, or almost 15 per cent of the market. Upad itself let 3,500 properties last year, but focuses only on professional landlords who don’t currently use an agent at all – about 40 per cent of the buy to let market. Chris Sargisson thinks it will take at least 4
to 5 years for online agency to become mainstream; vendors are highly risk-averse in the current market. He points out, too, that it’s currently diffi cult for traditional agents to
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www.propertydrum.com 22 ● April 2012 ● TheNegotiator
www.the-negotiator.co.uk
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“If you’d said to insurers, ‘Your sector will be dominated by a dog and a meerkat’,
they’d have said you were crazy...” Chris Sargisson, House Revolution
consider launching an online brand, as they would be cannibalising their existing business, and in his view they need higher fees to support their branch networks on the lower volume of transactions they’re currently experiencing. SpicerHaart seems to be the only major agent to be hedging its bets by moving openly into the online sector with iSold, launched in 2010. James Cole agrees that the current market
hasn’t helped. “I think the slow residential sales market in the last few years has kept the lid on estate agency moving online,” he
admits. But, he says, “If I had invested heavily in a high street chain, I would be looking very closely at how the internet has aff ected business models in other industries, and asking myself some fundamental questions about the future of my business.” Could the online agents take over? Stranger things have happened, Chris says, “If you’d gone up to the insurance companies and said, ‘Your entire sector will be dominated by a talking dog and a meerkat in twenty years’ time’, the insurers would have said you were crazy. But they would have been wrong!” ●
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