People don’t care for estate agents very much. Many have the annoying habit of taking prospective buyers to properties that are either wildly out of their price range or to houses that show a complete disregard of the specific criteria they are looking for. Then there is the awkward issue of being shown around by someone who is trying every tactic in the estate agent’s handbook to convince potential buyers that the property in question is the perfect fit. Using words like ‘cosy’ in the hope that the buyer won’t realise they have just walked into a matchbox. But worst of all are the extortionate fees.
In the UK, high street estate agents can charge a percentage fee that can range anywhere between 0.75 percent to 3 percent (including VAT), of the agreed selling price for a property. Consider the fact that the average price of a house in London is £350,000, and an estate agent could potentially take up to £10,500 home in commission. Then there are all the little add-ons for services – many of which are not necessary – that can tag thousands of pounds onto the estate agent’s bill. For years, the industry has existed like this. It has had little to no outside interference, with few market disruptions or new entrants to give it reason to change its antiquated business model – until now.
Over the last couple of years, more than $1.4bn has been invested into real estate start-ups, according to the tracking site Crunchbase, with a huge proportion of that capital finding its way into the UK market. Investors clearly see an area to exploit: a number of property companies have begun springing up with the intention of shaking up the traditional high street estate agents, who for the longest time have failed to incorporate technological solutions into their business model.
High street agents aren’t embracing technology, which for any business in today’s world is daft and dangerous
James Black Homes, which is a modern Hybrid estate agent based in Wetherby offering a personal and bespoke approach to selling your home. James Black Homes, is also one of the latest start-ups that plan to take a chunk out of the high street’s market share – James Black, Managing Director, seemed both pleased and shocked that the high street agents have been so unwilling to evolve with the times. “High street agents aren’t embracing technology, which for any business in today’s world is daft and dangerous”. “Over the last five years, consumer behaviour has changed an awful lot.”
In fact, more than 90 percent of prospective home buyers began their search online and real estate related searches on Google have grown by as much as 253 percent, according to a report by the National Association of Realtors. The mass consumer migration online is not a new phenomenon: people have grown accustomed to using technology to help them look at and buy things online, as it provides access to a wide variety of products and services all in one place; making it even more bewildering that traditional estate agents have failed to react to this glaringly obvious trend.
“When I first got into estate agency working in Leeds, it all had to be done by physically taking people to as many properties as you could in one hour or, getting your hands on a poor quality photocopy to show them, which doesn’t really let the buyer see very much”, explained James. “Nowadays people don’t want to waste their valuable time traipsing around, especially when they are used to accessing everything all online. And as soon as they’ve seen it they will make a snap decision whether they want to view the property in person or not.”
So far, the high street chains – which still hold the lion’s share of the property market – have only recently adopted online portals, affording customers the opportunity to at least view pictures of the properties that they have on their books. Technological solutions have been around for a while now that would grant their customers increased flexibility, but there has been little movement to adopt such solutions.
The inaction of many high street agents in this area comes down to a number of factors. For starters, many are locked into long-term leases and are burdened by large numbers of staff dotted around offices all over the county, which is a situation that is extremely difficult to untangle.
Adopting a more tech-based business model would leads to a huge reduction in staff. Making large swathes of people redundant is not only an unpleasant process; it is also a costly one. The sector has grown complacent due to the lack of new entrants into the space for many years – leading to an ‘if it ain’t broke, don’t fix it’ mentality among the local high street chains.
“There is an inherent problem in as much as that if you read any of the estate agency forums, anything that makes the business more efficient – and I mean literally anything – is met with pushback”, continued James. “A real fear of technology has manifested itself all throughout the industry, which is really sad because… it ultimately deprives the customer of a good service.”
It is this reluctance to change with the times that Hybrid estate agents like James Black Homes are hoping to take advantage of. This new breed of estate agent aims to provide prospective buyers, sellers, renters and landlords with increased levels of choice, control and value.