Desperate Times Call for Desperate Measures in the Estate Agency Sector

By Russell Quirk

We’ve been reading some interesting press releases this week. At first glance, they may not have much to do with each other, but we dug a little deeper and discovered a common thread.

From an overall perspective, two stories – both dated January 14th, stand out: the first being the announcement from the National Association of Estate Agents that December 2010 saw the lowest number of property sales for eight years. Of course, Christmas and the weather conditions had something to do with it, but for every seven properties sold in November, only four changed hands in December.

On the same day a joint report by the Mortgage Advice Bureau and broker Coreco Group stated that home loan approvals in 2010 fell to 1.2 million from 1.3 million in 2009. A drop in mortgages granted of over 7%.

Industry tittle tattle then seems to unveil some interesting things relating to estate agency itself…

All local property firms in the London borough of Tower Hamlets have received letters from the council on the subject of illegal “SOLD” and “FOR SALE” billboards. What makes those boards illegal is the excessive amount of time they remain in place after the property in question has been sold, and the fact that many of the “FOR SALE” signs are advertising the agency, as opposed to any property. In short, it’s another form of fly-posting and the council isn’t having it.

Now, from officialdom to petty bickering: we read in “Estate Agent Today” of some not-so-friendly rivalry between two agencies in Bushey, Hertfordshire. One agency – Imagine Estate Agents – had been advertising themselves as the area’s ‘Number One Agent’. How true that is remains to be seen, but their competition – Clarets – complained about it to the Advertising Standards Authority. The ASA upheld that complaint, so Imagine revamped and reworded their ads. This time, though, those ads didn’t inform the public how good Imagine were – instead, they’ve been describing Clarets as ‘… the most unpleasant little reptile we have ever had the misfortune to cross swords with …’ and ‘… a horrible little weasel.’ Entertaining, perhaps, but not terribly constructive.

So what do these four stories have in common, then?

It’s all to do with the weakness of the property market: with current transaction levels at half those seen in those heady days of 2006/2007, we’re looking at an annual rate of 575,000 sales now. For ten years leading up to 2006/2007, the number of sales rose and rose – as did the number of new estate agencies that catered for that rise. High streets throughout the UK suddenly saw flashy shopfronts that looked like winebars appear almost overnight. No Chablis and canaps waiting inside for anyone, though, because behind each storefront was a new estate agency office. That was no problem in the days when one home in sixteen changed hands every year. But when that number drops to just one in thirty, as is the case today, what used to be “friendly rivalry” becomes something completely different, with over 12,000 agencies scrambling over each other in the fight for that all-important commission.

The combination of low sales versus too many estate agency branches is causing ever more stress amongst the shiny suits who, evidently, are fly posting, publicly squabbling and God knows what else in what for many are survival tactics plain and simple. Desperate measures in desperate times.

Unless the market picks itself back up again, and fast, we’ll be seeing more and more of that kind of story. But could there be an alternative? Very possibly. When record stock levels are priced out of reach of fewer buyers who might not be able to get a mortgage anyway, the old model of multiple offices paying ever-increasing rental charges while charging their customers percentage-related commissions is starting to fail. One alternative has worked for other High Street businesses, from travel agencies to supermarkets, so there’s no reason it shouldn’t work for estate agents. It’s time they took their business online.

Maybe most of those ‘wine bar esque’ shop fronts will have to transform into actual wine bars?

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Topics: Selling | Comments Off

Tags: agency, agent, agents, cheap, cost, estate, fees, home, house, internet, Low, Online, prices, sell, Selling

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