E-state Agents Move with the Times
Simply defined in the Oxford Dictionary, e-commerce is ‘commercial transactions conducted electronically on the Internet’. Companies such as Blockbusters and Woolworths have fallen foul to the e-commerce trend, not keeping up with the times and seeing their businesses fail. But the contrary e-commerce success stories do not just apply to the retail industry.
E-commerce for estate agents
Online and hybrid estate agencies using aggregation websites have been consistently doubling their market share year-on-year recently. This is expected to double again in 2016 and, according to “Sell My Home”, reach 17% by the end of 2017.
Promising excellent service levels, online companies have low overheads and in turn lower fees and competitive pricing. Boasting national coverage compared to their High Street rivals, who are restricted by location, they also operate with higher profit margins nearing 70% compared to High Street estate agents who earn profit margins of around 10%.
The High Street estate agent used to be unrivalled in its knowledge of a local area and its property market, but with the advent of Rightmove and Zoopla even the most amateur among us can obtain a good grasp of local market trends and dynamics, eroding the power of the afore-mentioned local estate agent.
Russell Quirk, founder and chief executive of eMoov, says “I like the famous Gandhi quote to explain how things are playing out: ‘First they ignore you, then they laugh at you, then they fight you, then you win’. That’s the way I see things going!”
Countrywide and YOPA
Embracing technology and adopting a new business model seems to be the way forward for Countrywide to capture new markets. Following the 37% drop in operating profit announced earlier this year, due in part no doubt to digital disruption, just a few weeks ago Countrywide launched their online offer. Headed by CEO Alison Platt, Countrywide’s online fees start at £795, considerably lower than the more usual 1.5%. This new initiative is being piloted in four areas of the UK.
In addition to already-established Purplebricks, eMoov and easyProperty there is a new boy in town: YOPA. Advertised on ITV and in the national press, they offer fixed fees for as little as £780 - for a £250,000 house sale YOPA can save you £5,220 compared to a 2% fee. The process is simple, and YOPA promise step-by-step support with 24/7 service, a quick sale, best price, full control and payment options. YOPA are rated an Excellent 9.7 on Trustpilot by 164 customers.
Is it for me?
The pros for sellers seem clear. In addition to lower fees, an e-commerce agent’s trading platform will list detailed information plus quality photographs, plans, drone videos and interactive maps. There is no need to leave your home or trawl estate agents negotiating fees.
For the property hunter a convenient, clear insight into an abundance of properties is available online at their fingertips - no wearing soles thin scouring estate agent windows. Whilst the need to inspect a potential new home will always be a necessity for many, it is actually feasible to choose a property just from its online tour.
Solicitors can handle their side of the transaction without meeting either party and all compliance, payments and paperwork can be completed electronically.
Zoopla reports an average 3% increase in house prices across the UK over the last year, and in the first week after Brexit the prices in London saw a rapid 38% rise due to interest from overseas investors taking advantage of their currency exchange rate improvement against the pound. This is another positive towards house-sellers adopting a fixed fee rather than agreeing to pay a percentage of the sale price to their estate agent.
The reactive increase in house prices is not expected to last though, and combined with the anticipated interest rate slashing in this week’s Bank of England monetary policy meeting, that will be music to the ears of purchasers and mortgagors.
In conclusion, e-commerce within estate agency is a fast-growing marketplace, providing a neat connection between seller and buyer. Old-school High Street estate agents have invaluable knowledge about their (restrictive) local area but they need to stop resting on their laurels and get digital in order to keep up.