The Estate Agency Industry Takes Desperate Measures
We've been reading some interesting press releases this week. At first glance, they may not have much to do with each other, but we dug a little deeper and discovered a common thread.
Two stories in particular stand out, the first being January 14th's announcement from the National Association of Estate Agents, telling us that property sales during December 2010 were the lowest monthly figure for the past eight years. The appalling weather - and, of course the festive period - contributed to that drop, but it still means that for every seven properties that changed hands the month before, only four were sold in December.
The other story released that day concerns the drop of over 7% in mortgages granted from 1.3 million in 2009 to 1.2 million in 2010, as outlined in a joint report from the Mortgage Advice Bureau and co-authors the Coreco Group.
Industry tittle tattle then seems to unveil some interesting things relating to estate agency itself...
All local property firms in the London borough of Tower Hamlets have received letters from the council on the subject of illegal "SOLD" and "FOR SALE" billboards. What makes those boards illegal is the excessive amount of time they remain in place after the property in question has been sold, and the fact that many of the "FOR SALE" signs are advertising the agency, as opposed to any property. In short, it's another form of fly-posting and the council isn't having it.
Now, from officialdom to petty bickering: we read in "Estate Agent Today" of some not-so-friendly rivalry between two agencies in Bushey, Hertfordshire. One agency - Imagine Estate Agents - had been advertising themselves as the area's 'Number One Agent'. How true that is remains to be seen, but their competition - Clarets - complained about it to the Advertising Standards Authority. The ASA upheld that complaint, so Imagine revamped and reworded their ads. This time, though, those ads didn't inform the public how good Imagine were - instead, they've been describing Clarets as '... the most unpleasant little reptile we have ever had the misfortune to cross swords with ...' and '... a horrible little weasel.' Entertaining, perhaps, but not terribly constructive.
So how are these stories linked?
It's all to do with the weakness of the property market: with current transaction levels at half those seen in those heady days of 2006/2007, we're looking at an annual rate of 575,000 sales now. For ten years leading up to 2006/2007, the number of sales rose and rose - as did the number of new estate agencies that catered for that rise. High streets throughout the UK suddenly saw flashy shopfronts that looked like winebars appear almost overnight. No Chablis and canaps waiting inside for anyone, though, because behind each storefront was a new estate agency office. That was no problem in the days when one home in sixteen changed hands every year. But when that number drops to just one in thirty, as is the case today, what used to be "friendly rivalry" becomes something completely different, with over 12,000 agencies scrambling over each other in the fight for that all-important commission.
The combination of low sales versus too many estate agency branches is causing ever more stress amongst the shiny suits who, evidently, are fly posting, publicly squabbling and God knows what else in what for many are survival tactics plain and simple. Desperate measures in desperate times.
And the way things stand, it can only get worse - unless the market picks up, and fast. But then again, there is an alternative. It's time for a new approach to the business. In this climate stock levels are at an all-time high (as are most of their prices), and fewer and fewer buyers have less and less chance of a mortgage. And agencies are paying more and more rent for High Street premises. So it's unlikely the traditional model of multiple offices charging percentage-related commissions - however high - is going to last much longer. So watch this space, because this particular alternative been working for quite some time, now, for anything from booking airline seats to ordering the weekly groceries. It's time estate agency went online.
And why shouldn't it work for estate agents? Operating on the internet is a lot less expensive than renting a High Street office that looks more like a winebar from the outside, and that can only benefit both housebuyers and estate agents. They might even pop back into their old office at the end of a busy day for some Chablis and canaps ... because - with any luck - it'll now be a real wine bar.
eMoov.co.uk makes it simple for you to sell your house on the internet. You can sell your home quickly and with the benefit of cheap estate agents fees. All properties are listed on all ten of the busiest property websites in the UK such as Rightmove and Prime Location. Furthermore as online estate agents, their low cost service reaches millions of people 24/7.