Traditional agents are being increasingly forced to step in to ensure that chains don’t collapse where sellers have chosen online firms – and are having to take the hit on higher costs of sales progression.
A new report from a firm of solicitors that has conducted interviews with estate agents in its local area says that lack of support from online agents is driving up the cost of sales progression for high street agents.
Regional solicitors Rix & Kay, which covers Sussex and Kent, said that 98% of traditional estate agents agreed that the home buying process is more likely to collapse in the absence of experienced professionals.
The firm said that the most skilled and critical phase of the home buying and selling process was sales progression but that online agents who are paid upfront and not reliant on a sale completing to get paid had little motivation or incentive to support their clients.
Nonetheless, it also found that the public has little awareness of how critical sales progression is and that traditional agents needed to do “far more” to differentiate their services from online rivals if they want to avoid being selected on cost alone.
In the estimation of the agents Rix & Kay spoke to, a total of 84% thought that the public don’t truly understand the role of the traditional estate agent.
Meanwhile, 76% felt they were not doing enough to ensure the public is aware of the differences in service traditional businesses can offer.
The report also recommended that traditional agents consider alternative business models if they wanted to remain profitable.
It found that 70% of traditional estate agents agreed with this idea, whereas only 8% disagreed (with 22% neither agreeing nor disagreeing).
Rix & Kay added that better regulation of the home buying and selling process was “fundamental” to improve service quality, as well as the reputation and credibility of the industry.
Of the agents surveyed, 66% strongly agreed this was the case, with a further 28% simply agreeing.
Not a single agent disagreed with the idea.
And it urged agents to embrace technology to improve their service, and to learn from their online rivals in this respect.
Meanwhile, it warned agents that they urgently need to consider the impact of the proposed letting fees ban, expected in 2019, on the sustainability and profitability of their business.
Zoe Woodward, consultant at John Hoole estate agents based in Brighton, who participated in the survey said: “We’re caught. 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.
“So do we refuse to have any communication with the part(s) of the chain that has paid an online agency? We don’t, because we want a successful completion at the end of the day and our professionalism doesn’t allow us to be slack.”
Tracey Wells, director at Home & Castle Estate Agents based in Polegate, East Sussex, added: “Online estate agents are not a direct threat to most traditional estate agents and 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 because 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 and support the whole process or run the risk of the chain collapsing.”
Scott Garner, head of business development at Rix & Kay and author of the report said: “During the last six months I’ve witnessed unrivalled passion for an industry which has suffered for decades from a tarnished reputation.
“The traditional agents I spoke to have been central to their communities for a long time and their primary concern is helping local people move home.
“The challenge for them is to be seen as a key advisor to the home buying and selling process and not an unnecessary expense. That challenge is now even harder as new entrants continue to de-value the profession and increase pressure on margins.”
Rix & Kay’s survey is small and regional, and so there are significant caveats. It spoke to 14 different estate agents who between them operate 127 offices in the south east for its research.