Will Online Agents Ever Beat the Traditional?
We are often asked what we think about online agents and the threat they pose to so called traditional agents like Sawyers. Afterall, think what brands such as Amazon have done to the High Street with their combination of cheap goods and convenience.
But is estate agency the same?
To an extent perhaps.
Buyers will purchase from any agent who has the right stock and there is no doubt that some sellers are tempted by the low fees of firms like PurpleBricks or Sarah Beeny’s Tepilo.
Online currently has around a 5% market share, but as we have seen with other online or IT offerings, the growth can be exponential once it gets going, look at Google versus Yahoo or the iphone versus Blackberry.
The two problems we think the big online corporations will have to crack is the fact that what they offer in terms of competition to the local agent can only ever come down to their fee. I have never heard of a single seller using online for any other reason, after all every estate agent in the land is online, but the traditional ones also offer an office chucked in for free.
The other issue is buyer and seller trust. Ask yourself this…
If you were a buyer wanting to secure a dream home which was on the market with two agents which one would you book a viewing and offer with? Agent 1 who is online only, has probably never met the owner and doesn’t know about the area or property, other than what they read on screen, or Agent 2 who has been to meet the seller, knows the background, their requirements, the area and house itself?
Who would be more likely to agree the sale and actually get it through to completion?
If your answer is Agent 2, then (for the time being at least) more buyers – more reliable buyers – will come via the local agent. The benefit of this could be a faster, less problematic sale and possibly a higher price.
So what’s in store for the future?
Our guess is this – the market share for online will increase quite a bit, perhaps to 10% or more. A few of the less well performing traditional agents will go under due to the pressure but there will be no home selling revolution that many have been predicting (remember Tesco’s Estate Agents in 2010?).
Then the online corporations will hit a brick wall and won’t be able to expand more. Their only market share will be sellers who only worry about cost.
So they’ll innovate.
And decide that they could do much better with local representation.
So they’ll start opening offices.
Just like estate agents have always done!