Are the days of high street estate agents numbered?
Wed 04 Mar 2015
TV property expert and Tepilo founder Sarah Beeny predicts the number of traditional agents to fall
Digital disruption has now reached the most established of bricks-and-mortar industries property. Thanks to
online-only estate agents such as Purplebricks and Tepilo, as well as the reliance of traditional agents on
advertising portals such as Rightmove and Zoopla, buying a house could be the next service to become
Entrepreneur and television property expert Sarah Beeny, who launched Teplio in 2009 as an advertising
website before relaunching it as an online estate agent in 2013, says: Selling is all about knowing where the
buyers are and the buyers are no longer going into estate agents offices on the high street, so they are becoming
She concedes that the industry has been very slow to catch on to consumers shift online, just as bookshops
were initially blind to the rise of online sellers such as Amazon.
WH Smiths and Waterstones could have taken that ground just by clicking their fingers, but they didnt move
quickly enough because they were stuck in their ways, she says. And its a similar story for traditional estate
agents who she believes have got their fingers in their ears are just hoping it will all go away.
One of the major pulls of online estate agents is the huge difference in cost. Using Teplio, home owners can sell
their property for 495 plus VAT, which includes a personal sale manager to organise viewings, negotiate offers
and complete the sale. Meanwhile, Purplebricks, which was founded by Michael and Kenny Bruce who owned the
Burchell Edwards chain before selling it to property giant Connells, charges 665 plus VAT, and assigns sellers
with a local property expert.
Singling out London estate agent Foxtons for comparison, Purplebricks marketing director James Kydd says:
Foxtons is pretty adamant that it doesnt negotiate on fees. It charges 2.5% plus VAT for sole agency and 3% for
multiple agency, so if you sell a property for 2m youll shell out something like 60,000 in fees whereas we
would charge under 1,000. Foxtons declined to respond to the comments.
Kydd believes this huge gulf in fees is the reason traditional agents have been so reluctant to embrace digital, as
it would mean they could no longer justify what he calls the obscene amount they charge, particularly if aspects
of the sale process were automated.
Traditional estate agents are fighting back though. John Waters, a partner at upmarket estate agent Knight Frank,
agrees that the first place people now go when looking for a property is online, but he is not threatened by the rise
of digital agencies.
Most people I deal with in prime central London have neither the time nor inclination to [handle the sales
process] themselves, he says. He admits it may be a different story outside London, however, as many vendors
already host their own viewings.
It is the online property advertising portals Rightmove and Zoopla that he believes are having a bigger impact on
how agencies operate, so in order to claw back some of the control Knight Frank and other agencies including
Savills and Chestertons have combined forces to launch their own online portal called On The Market, which is
being backed by a TV advertising campaign.
It dawned on us that were providing all this data and information for other people when frankly theres no need
to do that, says Waters. We all run our own websites that are much more sophisticated than they used to be so
the capability is there to run our own portal too.
On The Market is effectively run by estate agents for estate agents so it costs them far less to list a property than
on Rightmove or Zoopla. However, the fact estate agents have to drop one of the other two big players if using
On The Market has created some hostility in the industry, as many feel the agencies behind it do not have sellers
best interests at heart, particularly as the reach of the new portal is smaller than competitors.
Its not saving the customer money or giving them a better service, its trying to ensure high street agents dont
have to pay [Rightmove and Zoopla] as much as that its hitting their profit margins, says Beeny, who is further
angered by the fact On The Market has banned online agents from using it.
On the Market CEO Ian Springett responds that it is a much needed competitor to Rightmove and Zoopla and
that the site has been designed to attract serious buyers, rather than people who are casually searching.
Not all traditional estate agents are feeling the pressure from online players, according to Beth Hilson, marketing
director at Marsh & Parsons, although she admits it may sound nave.
There are so many industries that have gone online so we have to accept that it could happen [but] we separate
ourselves from the companies that rely purely on using the web to generate their business and their enquiries.
Thats part of it but its not the whole picture, she says.
Even though Marsh & Parsons uses both Zoopla and Rightmove, which Hilson admits do generate leads, she
claims we actually get more enquiries direct from our website because were constantly investing in getting
people to come to us.
She also warns that while there are some reputable online agents, because sellers are paying a flat fee upfront
there is no incentive for those businesses to get people the best price.
While many have predicted the demise of the traditional estate agent not least Beeny, who says she would be
stunned and amazed if the number of high street chains doesnt fall Hilson says Marsh & Parsons is bucking
that trend, having just opened a new office in Shoreditch with plans to open a further three later in the year.
Were not preparing for any drastic change in how people sell property, she adds. Quite the opposite. We are
absolutely committed to growing and being on lots more London high streets.
Compared to high street estate agents fees, homeowners can make savings by using online estate agents to sell