Rise of online estate agents slowing down and even preventing sales, new report suggests
Traditional estate agents are having to step in to support clients who have chosen online agents to ensure that chains do not collapse and that sales complete, a new report from a legal firm claims.
The result is rising costs for traditional agents and the home buying process becoming more time consuming and protracted, more expensive and more stressful for individuals, according to the report from Rix & Kay.
The findings of the research came from six months of detailed face to face interviews with traditional estate agents across the South East of England and while it is critical of the cheaper options, it also says that traditional agents have to be innovative and embrace new technology to remain viable.
It says that the most critical part of the sales process is the support that an agent provides once an offer has been accepted and this is the most skilled part and without it a sale is more likely to collapse.
Indeed, some 98% of those who took part in the research said that the home buying process is more likely to collapse in the absence of experienced professionals.
The report suggests that the business modelled adopted by alternative online estate agents where an upfront fee is charged and they are not relying on a sale completing means they do not have the same motivation or incentive to support clients during the sales progression phase.
‘We prefer open communication and know that as soon as one of the links in the chain is not informed or keeping us informed, the chain is vulnerable,’ said Zoe Woodward, a consultant at John Hoole estate agents in Brighton.
She explained that some online agent’s business model means that the traditional agents are effectively doing their job. ‘We want a successful completion at the end of the day and our professionalism doesn’t allow us to be slack,’ she added.
Online agents are not a direct threat, according to Tracey Wells, director at Home and Castle in Polegate, East Sussex. ‘It’s not market share that is our concern. What’s more worrying is the strain and additional pressure online agents are bringing to the home buying and selling process,’ she said.
‘They are not concerned about completing a successful sale and are not providing the support that clients need. Unfortunately traditional agents feel obliged to step in to try to support the whole process or run the risk of the chain collapsing,’ she explained.
‘This is not just because we want to get paid at the end of the process but because I honestly believe that most successful agents have a strong desire to really help people move in a way that is as stress free and cost effective as possible,’ she added.
James Baring, principal at Ibbett Mosely estate agents which has offices in Kent, Surrey and East Sussex, believes that the report reveals a number of challenges. ‘There’s no question that that there is a market for the cheaper alternatives, both for online estate agents and volume conveyancing firms, but that comes at a price for the client,’ he said.
‘Ultimately this only serves to slow the whole process down, making it more expensive and more stressful, not just for them, but for everyone else who happens to be in the chain. Our challenge is to educate the public to ensure they are left in no doubt about the differences between services and how important it is to have a skilled agent that will support them from day one right through to completion.
Indeed, the research found that the public do not understand the value and importance of having a skilled team and the differences between services offered by traditional agents and alternative online providers. The upshot is that rising costs mean traditional agents need to consider alternative business models if they are to remain profitable and sustainable.
In particular, it suggests that traditional agents need to embrace new technology to improve their services and adapt to the changing needs of clients driven by the advance of mobile technology and innovation online.
‘The traditional agents I spoke to have been central to their communities for a long time and their primary concern is helping local people to move. The challenge for them is to be seen as a key advisor to the home buying and selling process and not an unnecessary expense,’ said report author Scott Garner, head of business development at Rix & Kay.
‘That challenge is now even harder as new entrants continue to devalue the profession and increase pressure on margins,’ he added.