Estate Agencies | Operating in both digital and physical locations

Overview:

In the real estate market, the need to operate in a digital location trumps that of a physical location. So what are opportunities and challenges each location faces and what are the benefits to operating in both?

Expanded reading on the opportunities of operating in a digital location:

(1) One of the most visited sites in the UK, Rightmove dominates the UK property portal industry, attracting 139m visits per month and featuring more than 20,000 advertisers (estate agents) displaying 1.2 million properties. While by no means do estate agents HAVE to be on this platform, not being a part of this digital location is, quite simply, commercial suicide.

“If you’re not on Rightmove, you’re not on the market.”

Further reading on the juggernaut that is Rightmove can be found here.

(2) Because the digital location has no borders (even advertising and selling properties overseas), estate agents utilising digital locations such as Rightmove, OnTheMarket and Zoopla are able to help clients and field referrals in areas beyond their physical offices. For example, my father lives within the local area for Paisley Properties but has investment properties in the city of Leeds. Because of digital locations, he is able to list his properties for sale some 20+ miles away, knowing his properties will be viewed by the same potential buyers, regardless of where the estate agent is based.

(3/4) While Rightmove, Zoopla and OnTheMarket may be the digital property portals for property listings, Facebook Business allows businesses to engage with consumers, creating a community and target potential new customers and homebuyers through targeted advertising not possible with just a physical location. “Facebook’s approach to ads has been transformative for businesses, letting them expand their advertising options significantly. Just as the internet helped millions of people find others who shared their interests and hobbies all around the world, Facebook made it easy for businesses to advertise to large numbers of very specialized audiences. That power has created many new opportunities for businesses.” – The Conversation

Expanded reading on the challenges of operating in a digital location:

(5)  As seen from the screengrabs below, the average fee for selling your home with an online agent is below £1000. A more detailed breakdown of the UK’s largest online estate agents can be found at which.co.uk. “A new report forecasts that the growth of no-branch agents over the next five years really will prove deeply disruptive for the industry as a whole.” – Property Industry Eye

Property portals such as Rightmove and Zoopla have paved the way for online estate agents which in turn has had a huge impact on the fees hight street agents are able to charge. For example, Paisley Properties has had to introduce a third fee option, designed to match those offered by online agents.

Below is a breakdown of the three fee options provided by Paisley Properties. While they clearly benefit from the additional exposure digital locations offer, it is clear the increased competition from online competitors has impacted their business model.

Source: Paisley Properties

(6) A great article on demand for 24/7 access of consumers can be found here.

“The rise of millennials and globalisation means businesses need to operate 24-hour globally, in order to remain competitive.”

(7) Below is a screengrab from Rightmove where information is listed for Paisley Properties. Other than a company logo there is no personalisation, nor company contact information. The phone numbers listed on Rightmove are not even the company phone numbers, ensuring every phone call made through the portal is directed through Rightmove and consumers found via the site remain connected to the website.

(8) With the average Rightmove fee to Estate Agents having risen by 397% in the last 11 years … are they worth the money?

Expanded reading on the opportunities of operating in a physical location:

(1.1) By operating from a physical location, the opportunities to provide services and advice to the local community are endless. Hosting Q&A’s with mortgage brokers for clients, organizing events around home staging and the top 10 tips to selling quickly, as well as meet and greets for buyers who have moved into the local area. With a physical space within a community, there are many options available to estate agents to maximize on their location and standing within a community.

(2.2) Estate agents operating from physical stores, rightly or wrongly are still perceived as having an in-depth local knowledge which online competitors struggle to match.

“To start with, their so called Local Property Expert was neither “local” nor an “expert”. So far as Purplebricks claiming that they have “local property experts” in your area who know your market because they have lived and sold homes their for years, that is not the case in many areas.”

Expanded reading on the challenges of operating in a physical location:

(3.3) The costs involved with leasing or buying a retail space, personalising, decorating, staffing and maintaining high street store is exponentially higher than simply running in a digital location alone. An article in The Guardian last summer quoted a study by accountants Moore Stephens that found “more than 150 estate agency firms went insolvent last year and as many as 7,000 are at risk as high street operators face the triple whammy of online competition, a sagging property market and cuts to letting fees.” You can read the full article here.

To summarize, while it may not be essential for estate agents to operate in both digital and physical locations, those agents who can absorb the costs of operating from a physical location in addition to digital locations, if utilized well, can benefit from the additional exposure. That is until the real estate market as a whole becomes more technologically advanced and then we will see more high street agents shutting their doors. For more information on my predictions for the future of real estate in the UK please check out this blog post.