Since Purplebricks launched in 2012, digital-first, hybrid and online-only estate agencies have established a major presence in the sector. For obvious reasons, they increased their relevance and prevalence during the COVID-19 pandemic, increasing their total market share to 10% during 2020. In an ever-evolving market, new ventures continue to arrive to disrupt the disrupted – ditching the up-front costs and providing a “freemium” model – offering a basic service for free with optional paid bolt-ons.
All this activity is being driven by a simple fact – digital is now pretty much the default for the property market. 98% of people start their search for a new home online. Streamlining the experience from deciding to sell, buy, or rent to all the way to signing on the dotted line is very much in the interest of estate agents in the digital age.
In this brave new world, how can traditional estate agents compete? Or perhaps the more appropriate question – given they still occupy over 90% of the market – is how do they stay competitive in the years to come?
As the market stats suggest, people are still buying via traditional or high street estate agents. This could be being helped along by the increased use of property portals and marketplaces like Rightmove or Zoopla – between them they bring in around 135 million visitors per month. These portals expand the digital reach of traditional estate agents and enable them to engage with those seeking out a new home online – which we know is almost everyone.
But what about people who are looking to sell?
Online real estate – a seller’s market
The biggest draw of online and hybrid estate agencies for people selling their home is the potential savings. Due to their stripped back operating costs, they are able to offer their services for lower upfront fees – or in some cases (Strike for example) – for free.
We could discuss at great length the different business models such as offering free services versus paid and how it could de-value the core service offering but we’ll save that for another post.
The key benefits for homeowners selling through traditional estate agents include:
- Lower risk – no upfront fees means no need to pay if they don’t sell. Equally, as an agency relying on commission, the incentive is there for you to sell. Opting for online means if they fail to sell, they lose that money, and may have to pay out again if they swap to a different agent.
- Better local knowledge – as an established agent with a physical location in the relevant area, you’ll know doubt have an excellent knowledge of the local area, key amenities, facilities and developments. This can be beneficial to the seller when it comes to valuations – online agencies who lack this local knowledge may provide a lower valuation on a property or not have the niche local insights.
- The time commitment – everything has to be managed by the seller. Unless paying for additional services, the seller has to list and promote their property, arrange and manage viewings and partly handle negotiations themselves. This can be a big one, particularly for people who have a busy work and social schedule and family commitments.
- Sales progression and negotiation – as well as being a potential big drain on the sellers’ time, lack of experience with selling property can lead to problems with progressing the sale, or failure to negotiate a potentially higher price.
Staying competitive, staying relevant
In order to stay competitive and stay relevant in this increasingly digital marketplace, it’s very clear that investing and owning your estate agency’s digital experience is vital. Marrying up an elevated level of service and expertise with a seamless digital journey is the key to keeping up with online and hybrid competitors and delighting this generation of home buyers, renters and sellers.