Blog by Richard Murray, CEO of Veco™
Research from property data company TwentyCi shows the market share of the hybrid or online agents for exchanges in the second quarter of 2022 was 7%.
The market share of hybrid and online agents has increased slightly, but they are still struggling to break into the higher value markets of London and the South East of England. The data shows that this represented a small increase quarter on quarter, but is still significantly down from the high of 8% in 2020.
It is clear from these statistics that whilst instructions can be gained, it is far harder to complete the sale under such cost constraints. The full service local agent will know their territories better than someone covering a wider area, as seems to be the case with the online agents.
Even online agents with ‘local property experts’ often aren’t local enough to know individual areas and a particular road well enough to value it accurately. They will likely value properties using online data, but don’t have the local expertise a high street agent has.
Conducting the viewing themselves rather than outsourcing, or leaving to the vendor will give the full service agent an advantage because they will be more knowledgeable than an outsourced partner and less emotive than a vendor. Sales progression and all that behind the scenes chasing and coordinating is a thankless task, but crucial to get the sale over the line.
In most cases vendors have to pay online estate agents up-front – rather than on completion of their sale. If their property doesn’t sell and they switch from the online estate agent, then they lose their money.
So how incentivised are the business models operating on an upfront fee basis to progress sales?
As we have seen from the market share gained from Purplebricks by Strike, the consumer who wants to use this type of service is predominantly price driven. The cheapest online estate agent in 2022 will market your home for no charge (Strike) and the most expensive (Purplebricks or Yopa) charge £999 including VAT (although charges may be higher in London). It was interesting to see that Michael Bruce put his home on the market recently but chose to give the instruction to a full service agent. This is not to say that he doesn’t believe in the concept of online estate agency, but it is a good example of a particular property which was more suited to a full-service agent.