Worse than useless
That traditional English phrase might appear tautological on second thoughts; after all, what can be worse than being useless?
Online “estate agents”.
The inverted commas are there for very good reasons (don’t do it with fingers in the air please). They’re not estate agents in the colloquial sense. They lack offices and window displays and particularly, they lack enough resources to perform the function of an estate agent.
There is of course a growing expectation that this business model will capture something like half the UK residential market within 5 years. The same was said 30 years ago when banks, building societies and insurance companies bought into estate agency chains. We’re still here; most of them are not.
There is not usually too much difficulty in finding someone who will agree to buy a property and the internet has made marketing a relatively simple proposition (assuming one has access to the major property portals to list it). The key, as it always was and always will be, is what we call sales progression. It’s getting the deal over the line, continually chasing progress, liaising between parties and their solicitors, lenders, brokers, surveyors and removal men. It takes hours. We have staff who do little else. So do our competent competitors.
As a result we (and our competent competitors) have a low rate of fall-throughs (when a deal falls out of bed or collapses). One of my peers told me last week that he’d checked on a prominent online agent, and found they had a relatively short marketing time, i.e. were “selling” quite fast, but a very high abortive rate.
It’s obvious to me, thinking about it. They’re not vetting offerors fully, hence the short marketing. They’re wholly inadequate at chasing sales progression, so deals fall through. We have first-hand experience of all of this and like some of our peers, we have been in chains where we’ve had to go below an online agent in the chain in order to get our client’s deal over the line. In other words, we’ve done their job for them.
In my surveying job, I dread being told that a property I’m to inspect is handled by any of these firms. Information is minimal, response slow and numb and follow-up non-existent.
Buyers to whom I’ve spoken hate them. One told me that it took 3 weeks for the “agent” to send the sale notification letters to solicitors, without which nothing starts to happen. Ultimately, there’s one simple, fundamental principle behind all these shortcomings and ironically it lies in the great USP; pay no commission. Pay a flat fee, upfront, non-returnable. Maybe pay a bit extra for the bells and whistles like accompanied viewings and so on, but pay an apparently modest amount upfront and owe no more.
Our traditional model has always been predicated on commission, a percentage of the sale price, due on exchange of contracts but in practice paid after completion. If you don’t sell, we don’t get paid.
Which model is likely to keep the agent interested?
To return to my premise; worse than useless, because all the hyperbole and massive advertising clearly makes the house seller believe that they can get a full estate agency service for less money and by the time the omissions and shortfalls are identifiable it’s too late.
Do consumers pick dentists on price alone? Why do consumers entrust the biggest single financial transaction of their lives to a kid working from his mam’s back bedroom?