By Matt Hoy, Director of Estate Agency
In a world where everything seems to be going digital and online, and the emphasis on cost savings by doing so, online estate agencies can be seen to offer an attractive proposition – but are online estate agents ready to sell your most valuable asset?
Over the last decade the internet has become increasingly accessible for people, and the vast majority of the population in the Western World now has a mobile phone in their pocket. Mobile devices provide the quick and convenient ability to review and address things that previously would have required a phone call or face-to-face conversation.
Consumer group “Which?” reports that 2,900 high street banks have closed in the past three years alone, and this is set to continue at a rate of around 70 per month. Most administrative banking tasks can be now performed on the device in your pocket, and footfall through branch doors has plummeted as a result. It makes sense for high street banks to consolidate their offerings into fewer premises, and it’s no surprise that online only ‘challenger’ banks are emerging to compete within the industry.
Similarities can be observed within the estate agency industry. LSL Property Services is the second-largest estate agency chain in the United Kingdom and has featured heavily in the press recently. The firm closed 124 high street branches, reducing 404 branches to 280 – a move that came shortly after they reported a 4% increase in revenue year on year.
Online estate agencies haven’t escaped the press either this year, with leading online agent Purplebricks losing £100m of its value in a single day after issuing a profit warning and parting ways with UK and US bosses. Emoov recently went into administration, reporting losses of £3m per month before doing so, shortly after the £100m merger with Urban.co.uk and Sarah Beeney’s Tepilo. LSL also hold a 14.7% minority shareholding in Yopa. LSL's previous carrying value of £20m for Yopa has been written down through reserves by £12.2m to £7.8m to reflect the Board's assessment of fair value – a drop of 61%.
It’s certainly a changing time in the industry, though not one of complete negativity as some press outlets may have you believe - the good news on the increase in LSL’s yearly revenue was completely overshadowed by the news regarding their branch closures. The high street it seems, is outperforming the online agents.
It’s no surprise that customers are drawn in by the claims that online agents make, the promise of saving thousands of pounds is going to be an attraction for most people facing the already expensive task of moving home. The vast majority of buyers are now finding homes through online portals such as Rightmove – it makes sense to do everything online and save money at the same time – but all may not be as it seems.
Selling a home is not an administrative task and not something (such as moving money into a savings account or cancelling a standing order) that can be completely simplified into an app. Agents need the localised knowledge and within a town to accurately value and comfortably sell homes.
Telephone enquiries from new buyers still outweigh email enquiries by nearly 2:1, and that first point of contact is vital to converting prospective applicants into viewers. Having initial enquiries fielded by a call centre hundreds of miles away can be detrimental to viewer numbers which ultimately has a knock-on effect with the time taken to achieve a sale for your home and the overall value achieved. The thousands of pounds ‘saved’ in commission fees can quickly be eclipsed by value shaved off your home as a result of using an unsuitable company to make the sale. TheAdvisory offers independent expert advice for house sellers and reports, on average, that a local high street agent generates 48% more viewings and 64% more offers than their online counterparts, resulting in a 5% average uplift in sale price.
A happy medium must be established. Too many high street offices can be detrimental, but a strong presence in key towns within a region is still crucial for providing the best advice and securing the best result for your client. Is selling your most valuable asset really something you want to do on the cheap?