High
Street
vs
online
Will
robots
replace
estate
agents?
What does the
future hold for
high street agents?
High
Street
vs
online
The Competitive
Situation facing
high street
Agents
Brian Schubert, Head of Marketing
Communications, NFoPP, provides an analysis
of the challenges facing high street agents in
the light of online-only agents.
The Competitive Landscape
There has been much written and talked about
in the media in terms of the demise of the
traditional high street estate agent and how
the basic business model is flawed and will
not withstand the rise of the online-only agent
as commissions tumble.
This article looks at the heart of the real
issues with an objective analysis of the factors,
drawing parallels from different but related
market sectors to assess the challenges facing
our sector now and in the future.
Firstly the really bad news:
• estate agents to be replaced by robots
• s afe professions include acting, firefighting
and becoming a priest!
This is a serious piece of research that
made headlines around the world when it
was published. Oxford University academics
Dr Michael Osborne and Dr Carl Frey
calculated how susceptible to automation
a job is based on nine key skills required to
perform it; social perceptiveness, negotiation,
persuasion, assisting and caring for others,
originality, fine arts, finger dexterity, manual
dexterity and the ability to operate in a
cramped work space.
They produced a research paper running to
72 pages entitled ‘The Future of Employment’.
The research was originally carried out
using detailed job data from the United States
O*NET employment database.
The analysis for UK jobs was made by
adapting the findings to corresponding
occupations based on Office for National
Statistics job classifications.
For the purpose of the UK study,
some US occupations were merged.
In these cases, the probabilities were
calculated as weighted averages of the
probabilities of automation for each US
occupation within the group.
The key findings were that 47 per
cent of virtually all occupations are
at risk from being replaced by robotic
technology.
The killer blow, though, is that out of
the 702 occupations, estate agents rank
as high as 663 (SOC code 41-9021) with
a 97 per cent algorithmic probability of
being replaced by robots.
But if robots don’t get us first there
are other threats:
Doom & Gloom
Secondly The Really, Really Bad News:
• Britain’s home ownership falls
• can traditional agents survive?
• new portals coming along
• what can ARLA and NAEA do to help?
The 'doom and gloom' headlines are
widespread. Examples include:
Do online agents pose a real threat
to traditional high street agents?
PROPERTY REPORTER
Agents: Are you under threat?
ESTATE AGENT NETWORKING LTD.
Estate Agents Face
Property Website Threat
SKY NEWS
How much of a threat are online
letting agents to the high street?
PROPERTY INDUSTRY EYE
The major claim of the online only
agents is that they provide a cheaper
service than the high street sales
or letting agents but provide the
same level of service. The first
part of the statement is partly the
case, but only in some sectors.
The second part is simply not true
as this article will demonstrate.
High
Street
vs
online
profile of
Strengths:
•D
etailed local
knowledge enables an
agent to understand
‘micro’ variations
in regional property
values (either sales
or lettings prices)
n agent's job is
•A
to achieve the best
possible price for the
vendor/seller with
the minimum of fuss
to the client, using
a combination of
experience, negotiating
skills, training
and qualifications,
and knowledge
AEA or ARLA agents
•N
are unique in the
range of advice they
can offer to vendors
and buyers by virtue
of a combination
of Awarding Body
qualifications,
formal training, CPD,
networking, fact sheets,
events providing up to
the minute regulatory
updates, best in
class compliance
and marketing
support, access to
market intelligence,
representation
and consultation
with Government
departments
AEA and ARLA are
•N
market leaders in
the UK professional
property sector and
members benefit
from the decades
High Street Agents
of experience that
support staff have.
No other organisation
in the residential/
lettings property
sector has such good
representation and
links with government
uying and selling
•B
property is a complex
business and agents
are experts at taking
the pain out of this
process for the
customer, especially
via local knowledge.
W e a k n e ss e s :
•T
raditionally sales
and letting agents
have not had the best
of reputations with
the general public.
However, this is
gradually improving as
NAEA and ARLA ‘inform
and communicate
with’ the consumer to
explain the profile of
its members and the
benefits of using the
property professionals
ot always good at
•N
targeting the ‘new’
generation of potential
customers who are
used to interacting with
a virtual environment,
are tech-savvy and
are on the verge of
home ownership
ely on traditional
•R
marketing means
such as local print
media advertising.
Opportunities:
•E
xpert leadership
will drive future
developments which
help our members
understand best
practice, regulatory
requirements and
compliance
•N
ew product
development for agents,
e.g financial services,
legal support and
garden maintenance
• Improving the branding
message to the general
public in a clear, concise
way that is memorable
•P
roviding marketing
collateral for NAEA and
ARLA agents to develop
and promote their own
brands, especially as
a counter to onlineonly agents is vital
•W
hen asked ‘what was
the most important
influence when choosing
which estate agencies
you would invite to
provide a valuation’,
the highest factor
was ‘Impressed by
agent’s reputation’.
(Home Moving Trends
Survey 2014)
•D
eveloping, where
appropriate,
franchise models
•R
egional and national
acquisitions
• Improving marketing
to clients using
database and prospect
marketing, social media,
digital marketing and
ensuring websites
are engaging, easy to
navigate and up to date
• T
he personal touch is
a big selling point. This
is especially important
when complex deals
and multi-faceted
negotiations are called
for and the agent
goes that extra mile.
Threats:
• A
gents try to compete
just on price
• Inability to embrace
multi-faceted marketing
campaigns and
maximise the potential
of digital and social
media technologies
•B
usinesses from
other sectors, such as
supermarket giants
Asda and Tesco,
have already outlined
plans to enter the
property sales arena
•A
gents fail to evolve
their customer
relationship
partnerships.
profile of
Strengths:
online-Only Agents
onvenience /
•C
ease of use
•D
o not offer the onestop package in the
way that high street
agents can provide
this, i.e. accompanied
viewings and other
personal services
rovide a product
•P
that is more akin to a
commodity service
•E
asy to understand
and compare fixed
price 'packages'.
• I nability to suss out
serious buyers from
‘time wasters’
ocus more on the
•F
lower price point
sector of the market
•D
o not offer the range
or in-depth services
of high street agents
igh street agents
•H
will be able to answer
the difficult questions
and provide more
in-depth advice
enerally not
•G
resourced to transact
complex deals
•N
ot as likely to
achieve the right
level of valuation as
a high street agent
ack the detailed
•L
in-depth expertise of
property professionals
that comes from
•L
ow cost in some
instances
• I nnovative
W e a k n e ss e s :
face-to-face customer
contact and an intimate
knowledge of the local
property market
ot as aware of
•N
local nuances as a
high street agent
randing usually
•B
not as developed as
high street agents.
Opportunities:
•F
ocus on the commodity
end of the market
onsider acquisition
•C
possibilities.
Threats:
•L
ong-term become
regarded a minor player
in niche sectors
n-going complaints
•O
with the Advertising
Standards Authority, e.g.
some online agencies
have had to amend their
advertising campaigns
and pricing tactics.
Mark Hayward, NAEA Managing Director, says:
“Our position as market leader means there is never any room for
complacency. We are fully aware that NAEA and its core membership
face increasingly strong competitive pressures and we will always
strive to maintain the quality standards that differentiate NAEA
members from others, while at the same time informing the public
why they can fully trust a NAEA property professional. The industry
has changed a lot in the last twenty years and it will change again;
what’s important is that we compete, adapt and evolve together.”
David Cox, ARLA Managing Director, says:
“The regulatory and legal requirements for the private rental sector are
growing exponentially and ARLA is at forefront of efforts to influence
decision makers in the corridors of power. Understanding these requirements
will be key in a market place where rental property continues to be in
high demand. What’s also important is that as more rules and regulations
are introduced landlords and tenants get the service they deserve. As
long as ARLA is in existence the market will have access to property
professionals that are appropriately trained, qualified and experienced.”
High
Street
vs
online
How The
Crystal ball gazing is a
fraught and contentious
business, but there are
certain trends that can be
seen, hence in part the
explosion in the PRS:
•T
he number of
households in the UK
expands by circa 225,000
per year (due to divorce,
inward migration,
longevity, etc.)
ouse building fell below
•H
150,000 in 2014
irca 90 per cent of rental
•C
units are owned by private
landlords.
With Build to Rent, the
indications for continued
growth in the lettings
sector look strong.
For residential sales key
factors are:
•P
roperty Industry Eye
reports that the large
majority of people who
have sold their home
through a high street
estate agent were either
satisfied or very satisfied
with their experience
•O
ut of 700 people
questioned, 82 per
cent expressed their
satisfaction while just 4
per cent of respondents
had used an online agent
any thought that a
•M
traditional high street
estate agent can add 5
Market Will Change
per cent to the value of
their home
trong growth is expected
•S
in 2016 with indications
of circa 4.1 per cent price
increases.
The 2015 Autumn
Statement crackdown on
the buy-to-let market has
been severe with a 3 per
cent stamp duty surcharge
coming into effect on 1
April which will affect
investors with less than 15
properties.
Combined with the end
to wear-and-tear allowance
for landlords, increased
taxation will put more
pressure on landlords
with a risk to property
standards for tenants.
This is where the inherent
professionalism of an ARLA
agent protects clients.
For the younger
generation, renting is now
the norm and that trend
is set to continue, which
is expected to result in
continued growth long-term
growth for the PRS sector.
Also of relevance are
recent statistics indicating
that online agents
currently have just 2.71
per cent market share
of overall listings. This
indicates that the market
share fell off at the end
of 2015 – from 2.94 per
cent in October and 2.87
per cent in November.
Nonetheless, it would be
naive not to recognise
market changes are taking
place:
• Online competitors in
various guises are here to
stay, but market gain is
expected to be gradual
• The long-term growth
prospects of both the
sales and lettings
residential property
sectors are likely to
attract new entrants
for both high street and
online operations
• Some regional
‘hot-spots’ such as
Westminster, Clapham,
and Wandsworth, parts
of Birmingham and
Leeds already have a
saturation of high street
agents. This will mean
that any new entrants on
the high street, if not via
acquisition, will have to
develop strong business
plans such as combining
property sales/lettings
with other activities. e.g.
independent financial
investment consultancy,
insurance brokerage
and banking services to
attract customers
• Long term, when the
supermarket price wars
have relaxed, expect
a new move to extend
the branding of the
supermarkets to include
property transactions
• Continued mergers,
acquisitions and franchise
building will continue, as
critical mass is sought
by regional and national
chains
• Overseas investment
from the USA and Europe,
where realtors and
foreign property brands
will either operate as
start-up businesses as
brand extensions, or
buy-out existing property
chains. Part of the
attraction for this will be
across-border business,
where UK cash-rich
clients want to develop
a portfolio of worldwide
homes for both personal
use and investment
• We have all seen British
institutions such as
Comet, Jessops and HMV
disappear from the High
Street recently, only to be
replaced by ‘to let’ signs
or pound shops.
Of course, the recession
has played its part in
their demise, but online
shopping has undoubtedly
affected the performance
of most high street
names. Unless, of course,
they have embraced the
competitive element that
The Real
Challenge
To Agents
Any business, large or small, has
to evolve and offer its customers
a competitive and differentiated
service in the context of user
requirements, and of course this
applies to sales and letting agents.
There is a long-term viable market
for high street agents as long as they
are able to:
›› U
nderstand with total clarity what
makes it different from its many
competitors.
›› U
tilise all the NAEA and ARLA
Association marketing and support
services
›› E
nsure staff are highly qualified and
receive regular training
›› E
mbrace ‘routes to market’ technology.
›› D
evelop and manage your database
and pipeline for new customers
›› U
tilise customer feedback at
every stage
›› S
hout about their successes
›› E
volve and adapt!
views from
Industry Leaders:
Estate agency has
always faced
competition, and
we have constantly
needed to evolve
our offering – this
is nothing new. We should be
seeking to learn from innovators in
every sector, including the online
agents themselves. There is nothing
wrong with strengthening our own
comprehensive service still further.
In fact we have always done this –
which traditional agent doesn’t
make use of the internet, for
example?
Jan Hÿtch, Partner at Arnolds
Keys LLP and Past President
of the National Association of
Estate Agents [2013-14]
be a good reason for landlords
NOT to go it alone with online
agents, but instead stick with
their local professional agents.
It's our job to educate landlords
so that they understand how
complex legislation is becoming.
Sally Lawson, Managing Director
Concentric Sales & Lettings. ARLA
Vice President and Board Member
The growth of
online agents is
certainly
concerning,
especially given
their claims to be
saving consumers more than £4,000
per transaction, which is certainly
not the case in the Midlands and
Northern regions. Under inspection
the savings are in fact minimal and
only due to their service being
piecemeal, you pay for bits of the job
to be done for you and take on the
rest yourself, so it’s not in fact a like
for like comparison. Those of us that are hands on
with consumers, vendors and
buyers, know that what they
in fact expect from an agent is
full support in handling their
property sale, purchase or let,
and I can see how the piecemeal
service online agents offer, will
only lead to disappointment.
I feel that one aspect which
is working in our favour at the
moment for traditional agents is
the increase in legislation. We all
know how difficult and complex the
property rental arena is currently
and how much more difficult it is
going to get, and this I hope will
I believe all estate
agents are online
and have been
offing an internet
marketing package
for many years.
Estate agents that are referred to as
'traditional agents' are in my view
complete agents, which offer a
complete package to their clients.
Being an online marketer is only part
of the service. We all know there is
far more to be done.
The challenge to the complete
agent is to ensure their points of
difference are quantified, displayed
and sung from the roof tops.
If the public believe an estate
agent "just puts a property onto
a website" that is all they will pay
for. One thing the complete agent
should keep in mind – onlineonly agents do this part of the
process very, very well. Traditional
estate agents need to ensure
they do online advertising and
communication as well, if not,
better than their online competitors.
Martyn Baum, President NAEA
ARLA membership
has increased
significantly over
the previous 12
months. This is in
no small part due
to the focus on agents’ practices
and fees, and the development of
our approved ARLA Licensed logo
that reinforces the support we
provide to ARLA regulated
members. With continued growth in
the Private Rented Sector (PRS) it is
essential that landlords and tenants
receive the professional standards
and quality service offered by ARLA
agents; which pays dividends for
your businesses.
We will always support members
in order that they evolve with digital
and social media technology and
remain competitive. Fundamentally,
ARLA members continue to prove
their worth by being trusted by
consumers and providing the real
alternative to unscrupulous agents.
Valerie Banister, ARLA past
president, NFoPP Board member
and Head of Lettings – Your Move
I believe that the
reported impending
demise of the
traditional estate
agent has been
much exaggerated. When I look at how Science
Fiction films 30 years ago predicted
we would live, I have renewed
confidence that a quality NAEA
or ARLA agent that promotes
best practice, provides excellent
local knowledge and prides
itself on exceeding customer
expectations, has a bright future.
There has been much noise over
recent years about internet-only
agents. In fact considerably more
noise than impact. The fact is that
they only represent a small, very
unprofitable share of the market.
While there will inevitably be some
greater take up, bearing in mind
the commitment in time necessary,
the majority of customers will
continue to want the helping hand
and full service a good traditional
agent can offer. Inevitably the
internet-only agents will gobble up
the poor service, cheap agents.
Simon Gerrard, Managing
Director Martyn Gerrard
Estate Agents, Immediate
Past President NAEA
Summary
As property professionals, our
members have an inherently
rich market sector in which they
operate by virtue of dealing with
and supporting the general public in
their property transaction options.
It is challenging for agents to
keep ahead of the curve in terms of
the level of service that consumers
expect and can have faith in.
But whether it’s robotic technology
or online market factors affecting
our sector, the challenge for these
and no doubt other future features, is
for any agent to always ask how they
can adapt their business to provide
the very best in customer service.
Understanding and delivering
customer satisfaction will never change
as a recipe for successful agents.
The Government has recently
published its ‘A better deal’ paper
that is an attempt to boost
competition to bring down bills for
families and firms.
One of the elements in the section
entitled ‘Future action to open
up markets’ relates to injecting
innovation into the process of home
buying. The intention is to focus on
real estate regulatory frameworks,
encourage greater innovation and
improve transparency and efficiency
with a process that started with a
call for evidence in the New Year.
As readers would expect we will
be taking a lead role in this process
to reinforce the quality of service
and good practice standards that our
NAEA and ARLA members provide.
Acknowledgements
& References
1. The future of employment:
How susceptible are jobs to
computerisation? Carl B.
Frey and Michael A. Osborne.
Oxford University, 17/09/2013
2. H
ow much of a threat are online
letting agents to the High Street?
Rosalind Renshaw, Property
Industry Eye. 18/09/2015
3. Highly Charged - The
Sunday Times 15/11/2015
4. Home Moving Trends Survey
2014 - Property Academy
5. HM Treasury White Paper – A
better deal. November 2015
6. Contributions from Mark
Hayward, David Cox, Jan Hÿtch,
Sally Lawson, Valerie Banister,
Martyn Baum, Simon Gerrard
Adapted from Property Professional Magazine issue no.14 Jan/Feb. 2016
THE MAGAZINE FOR MEMBERS OF NAEA ARLA
ICBA
Nava APIP