With the exception of the introduction of the internet, history will show that covid-19 did more to change the estate agency industry than anything else.
A bold statement but one that I believe will prove to be true as we all go through a paradigm shift in our thinking and in how we operate.
In 1996 I was running a region for Connells and I personally acquired the www.connells.co.uk domain name. I started putting property on the internet but couldn’t, at that time, persuade the Board that this was the future. Four years later when I was a main Board member, we were one of the founders of a portal, that I’m sure you’ve heard of, called Rightmove!
In 2000 I completed an MBA at Reading University with a dissertation research project on the internet and its likely effects on the residential estate agency industry. This was at a time when only 61.5% of the respondents to my survey had internet access and 53.7% of those without, had no plans to obtain it!
The research concluded that the internet would become a driving force in the estate agency world and also predicted the emergence offerings such as Purplebricks, non-High Street operators and DIY execution only, commoditised services. Indeed, 53.5% of respondents said that they would be interested in a buying and selling service that removed the need to visit offices. Interestingly, at the time, and perhaps unsurprisingly, the over 55 age group were the least interested. It is now 20 years later and the younger age groups are now mature home owners and the older age groups either retired or sadly, no longer with us.
In 2003 I set up Integra Property Services and ran, what would now be called a hybrid agency. We had an office (non High Street) and covered a wider than usual territory from one location. Hindsight shows that I was too far ahead of the curve, it took longer than I anticipated for the change to occur and I was also under resourced. I ended up selling the agency part of my business to a “traditional agent” in 2008 to concentrate on mentoring, training and other support services to the industry.
The internet however has changed estate agency. It has created a 24/7 world, made the cost of entry lower, the ability to punch above one’s weight greater and has allowed new operating models to emerge, particularly reducing the need for expensive premises. However, the over reliance on the portals and CRM software systems, the reduction in interpersonal skills and blandness of offerings by many are by products that are simply creating room for those that can stand out from the crowd, differentiate and use technology to underpin their businesses, handle the “heavy lifting” but freeing up people to do the business generation, hand holding and interpersonal elements.
Some of you will know that I am a Director at teclet, the lettings platform. It compliantly automates the majority of processes in lettings and management and allows customers and clients to interact, agree actions, buy products and upload documents etc. Nearly 45% of those interactions take place outside of traditional working hours. 365/24/7 is becoming part of the “new normal”
Which brings me to Covid-19.
Everyone around the world has been caught out by the emergence and life changing severity of this terrifying pandemic. Everyone has been forced to readjust their lives and make changes in how they live, work and play.
Covid-19 will, in my opinion, be the biggest driver of change in the estate agency industry since the emergence and acceptance of the internet.
In the world of estate agency a new set of Seven Ps are emerging.
People, Premises, Portals and Proptech are four key areas. They represent the four highest areas of cost in a business and need to be made to “sweat” harder to deliver the right answers for a business looking to survive and then thrive both now and into the future.
People. How good are they? How well trained? How well rewarded? Is your current employment model the right one, particularly in a 365/24/7 world? The emergence of “self-employed” models based on “lifestyle”and “personal branding” is accelerating with covid-19 acting as a catalyst for many to change.
Premises. Are they necessary? Is remote working a possibility? Can you adapt your management to cope? I have a number of clients who, pre-Covid, made decisions to move to a hub model, consolidating several offices and creating operating efficiencies as a result. They weren’t anticipating Covid-19 but are now reaping the rewards of their decisions. Covid-19 will focus minds and accelerate a trend that was already underway.
Portals. The pages of the trade press have been dominated by the arguments and viewpoints of those that feel the major portals are “fleecing them” financially. There may be an element of truth but there has, as yet, been very little churn and many agents still promote themselves and their property registers on two, three or more. We are also seeing many new entrants (some have been around a while) – Homesearch, Boomin, Proptyle, One Dome, OpenBrix and others – they all purport to offer something different, most based around better use of data and the need to engage and monetise with the 99% plus of portal traffic that currently does not transact. Which one’s are you going to back, none, some, all?
Proptech. It is getting easier to change but it remains a big decision. Many of the existing software platforms are tired in technology terms and are over complicated, add very little to the process, do not improve compliance or good business practice and are not well enough understood or used by agents. They survive largely based on inertia. Very few provide interaction with customers and clients and most do not join up the processes and facilitate seamless working with the range of suppliers most agents currently choose to work with.
Moore’s Law effectively says that the capability of technology doubles every two years and the cost halves. What is happening in your business?
A thorough review of all four Ps is likely to result in change, a paradigm shift, and now is the time to make those moves.
Virtual viewings is a case in point. Most agents started producing videos during the lockdown period but many have resorted to just sending them to applicants and passively waiting for a reaction. Good agents use them to run accompanied viewings online as a key part of their sales funnel and are reaping success in terms of managing volumes and resources and improving results. They treat them the same as actual viewings and by accompanying them, they obtain direct feedback, build relationships and close more effective physical viewings. They also keep sellers happy by reporting outcomes.
The market is currently active and this means that many agents are likely to slip back into working the way they did pre-Covid19. That may be OK for a while but these businesses will slowly slip behind the new entrants and those that embrace change.
It is vital that looking at the four Ps leads to two new Ps. Proposition and Productivity. A proposition that differentiates you from your competition, most of whom are currently operating in a “sea of sameness” and an increase in productivity which means efficiency and effectiveness and, ultimately leads to the ultimate P. Profit!
There is, of course, an eighth P. Planning.
All of the above requires setting aside some time with a clean sheet of paper to come up with the vision and actions required to bring about the paradigm shift I refer to. Most of the above was already happening pre Covid-19 but the speed of change is undoubtedly accelerating.
Change is always difficult. Machiavelli in his epic book the Prince said: “There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success than the introduction of a new order of things, because the innovator has for enemies all those who have done well under the old conditions and lukewarm defenders in those who may do well under the new.”
The fact that change is challenging is not a reason to ignore it. History is littered with the corpses of those businesses who didn’t adopt, adapt and improve. Kodak, Nokia, Blockbuster and many others are examples of those who failed to make the paradigm shift.
I wish you well and I’m here to help if you’d like to talk.
Michael S Day MBA FRICS FNAEA FARLA
Managing Director Integra Property Services
Founder Member Agents Together