Why Traditional Estate Agents are Winning the Online War
Traditional estate agency is an artform that’s been around for decades. There’s a reason for that - It Works. As the first decade of the millennium drew to a close, Online agencies muscled their way into the market in a blaze of flashy websites, and headline-grabbing fees so low they made your eyes water. Nearly ten years on, eyes are still watering … for all the wrong reasons. Dedicated Online estate agencies are starting to disappear from the market. Here, we explore why that might be.
Demise of the Online Pretenders
Okay, so ‘pretenders’ might be a bit harsh. Online estate agents have their place, if - and this is a BIG if - a seller is willing to do most of the legwork in their house sale. But let’s be clear about exactly what that means.
Under a basic Online service, the estate agent will usually:
- Provide a locally-based agent to offer a valuation
- Take photos and create floorplan
- Provide a sales board for outside your home
- Advertise your property on the major property search websites
- Provide you with an Online portal through which you can view interest in your property and manage viewings
So far so good, but this essentially means the seller is generally left to:
- Manage viewings
- Arrange an EPC and any other relevant reports
- Negotiate a deal
- Arrange legal representation
- Massage the sale through (this one can be massively time-consuming and challenging)
- Deal with anything else that may arise during the transaction
In addition, sellers are often left to their own devices in respect of mortgages, removals, finding and engaging tradespeople if work is required to secure a sale, and so on. And they also miss out on all those hidden value-adds that come from Traditional agents, such finance checks on buyers, years of experience in ‘reading’ clients, and training in negotiation techniques that help them secure the very best deal.
Once sellers either consider (or are exposed to) this reality, they tend very quickly to develop a fresh appreciation of the services offered as standard by a Traditional high street agent, and opt for this as their preferred route instead.
Online offerings were initially new, exciting, apparently cheap … and enticing for all those reasons. But the appeal of saving money quickly dissolved once sellers realised just how much time and effort is involved in selling a property. And the novelty soon wore off.
The effects of the reluctance to use basic Online services became brutally apparent in September 2018, when Connells, a national high street agent, announced the closure of Hatched, its expensive but ultimately fruitless foray into the Online agency model.
And in December 2018, EMoov, which merged with Tepilo in 2018, also returned to its shell as it went into administration. These were two of the most celebrated and famous Online agents in the UK, and had enjoyed massive financial investment to get them up and running. Yet still, it wasn’t enough.
It remains to be seen what 2019 brings in the basic Online agency market, but it’s clear something has to change if they are to succeed. And it seems the only way that can happen is if they modify their services to more closely resemble those of a Traditional agent.
Doesn’t that tell you something?
Those Online estate agencies with a more finely-tuned business nose saw what was coming a while ago. They made some early subtle changes to their business models and, for now, have managed to keep the wolves from their doors.
Adding things like basic pre-qualifying finance checks, help with negotiation, and sales progression to their services edges them closer to the Traditional model, but they must still quickly gain the trust of enough clients to make it work long-term. Emoov went down this route, but for them it was too little, too late.
As Hybrid reputations grow, we predict that those that have survived so far will experience a more settled period where buyers try on this remodelled Online service for size.
But there is no escaping the fact that lower fees mean you receive a streamlined (lesser) service - that’s basic economics.
Not only do you often have to pay upfront (instantly removing any incentive for your Online agent to work hard on your behalf) you only have to look at the cost of some of the add-on services before you realise the ‘huge saving’ they promise against Traditional agency fees isn’t, perhaps, that ‘huge’ after all:
Recent research online told us that one Online Hybrid agency charges £85 for an EPC report. Another will sting you £300 for accompanied viewings. And a third will even charge you £60 for your sales board. It pays to do your sums.
The ultimate question is, are sellers really ready to step into the shoes of the Traditional estate agent, and work tirelessly throughout the sales process to ensure success?
Our experience at Penrose tells us not. The vast majority of our clients who have selected our Online service have ultimately converted to our Traditional one.
Online or Hybrid - these models both lack the depth of personal touch you get from a Traditional agent.
And trust is what it’s all about.
So Why is Traditional Estate Agency Better?
When you engage an estate agent at a Traditional level your fees are buying so much more than marketing. You’re buying into the face-to-face relationship that starts the moment you meet one of our team.
When we first opened Penrose, the idea of online estate agency services was still generating a lot of interest. We always put our clients first, so we responded to this market demand by creating two distinct services for our sellers - Penrose Traditional, and Penrose Portal, a basic Online service.
Our Traditional service effectively offers everything you’d expect from a high street agent (and so much more). Put your sale in our hands and we will love it through to completion and beyond, taking care of all aspects of the process - many you know about, and a whole bunch of stuff you don’t. And these are the little things that make a big difference.
Our Portal service allows sellers to take a more hands-on approach to selling their home, and save money on fees in the process. We provide an accurate valuation and craft a fantastic marketing package for you. We get your property online in all the right places, will actively promote your property to any client for whom it could be suitable, and will guide you in your negotiations. But just as with the service offered by dedicated basic Online estate agents, our Portal offering means you are responsible for pretty much everything else.
Our Portal service exists because we know some of our clients want it, and it works brilliantly for them. And that’s fine. But we don’t pretend it’s something it’s not. We offer the ability to transfer to our Traditional service at any time, because we know that many of our clients who try the Portal for a while will ultimately wish to move over to a more comprehensive service.
None of that Half-Hearted Hybrid nonsense here. At Penrose we uphold the values of Traditional estate agency to the max. When you engage with us in this way, we don’t make you pick and choose or pay for add-ons. Our fees cover it all. Just like they should.
The Numbers Don’t Lie
If you’re still wondering about the relative merits of Online vs Traditional, then keep these statistics in mind:
- In early 2018 data company TwentyCi reported that Online estate agents still only account for 7 per cent of the market (despite chipping away at it for nearly ten years)
- In December 2018 The Advisory (which offers independent expert advice for house sellers) reported the following findings based on their extensive independent databank of property sales data. They found that, in comparison to basic Online agents:
- Traditional agents deliver around 48% more viewings
- Traditional agents deliver an average of 64% more offers
- Traditional agents generate a more secure, or higher value sale in 73% of cases
- Traditional agents typically secure a 5% higher sale price
At the end of their extensive study The Advisory concluded:
‘It is fair to say the best internet only estate agents are just as good (even a little better) than your average high street estate agency. However, the best high street agents provide the gold standard when it comes to achieving the highest ‘walkaway figure’ from your sale.’
Penrose have consistently been the biggest seller of property from a single office in Luton over the last year, and in the 2018 UK Estate Agent of the Year Awards (the ESTAS) we received the silver award for Best Estate Agent in the East of England region, and the Best in County award for Bedfordshire.
All that adds up to demonstrate how the Traditional estate agency service offered by Penrose, along with our Online Portal service for those who choose it, delivers fantastic value and service to our clients.
The numbers don’t lie. And the awards are very shiny as a result.
A Mini Case Study
As dedicated Online providers have fallen, independent Traditional agencies like Cauldwell in Milton Keynes have thrived. We keep a close eye on the wider market to see what works best for our clients, and we think this Milton Keynes team have hit the nail on the head.
Established in 2004, Cauldwell is a hugely successful Traditional estate agency that has weathered the Online onslaught and come out smiling.
Note: we’re not talking about a national chain here, and that’s important.
Their business model is strikingly similar to our own. Cauldwell was started by three local agents with rich experience in their local market - just like our Directors, Richard, Ben and Adam. This independent hands-on approach means the owners are deeply invested in making a success of their business - it’s personal. And that comes across in every transaction they are involved with, as it does with us at Penrose.
One of the recurring themes of our testimonials is how much we care about our clients. And we do. We want your property transaction to be a smooth and stress-free experience. Yes, we’re in business, but it’s not all about the money - it never was.
We established Penrose as an agency that would shatter the idea that estate agents are uncaring, ruthless and only interested in snagging a quick, profitable deal. And the feedback we receive on our comprehensive Traditional service proves our dedication to that idea time and time again.
Cauldwell have been successful because they focus on offering Traditional estate agency service values, with a modern and imaginative approach. They understand what their market needs and, crucially, listen to what their clients are telling them - that Traditional estate agency remains the service of choice for their clients. At Penrose, this all sounds very familiar.
As part of their response to client demand, Cauldwell work out of a single, central office in which all elements of their Traditional service offering are gathered and managed. We’re delighted to see that this model, which we’ve embraced from the outset, works on a large scale. It leads us neatly into …
The Penrose Property Hub - Traditional Estate Agency at its Best
In last month’s blog we talked about the Penrose Property Hub that will be opening in Spring 2019 at Round Green. Yay!
We’ve been planning this move for a while, and one of the primary driving forces behind our decision to scale-up our operation and create a more visible presence is the clear and continuing preference our clients have demonstrated for our Traditional estate agency services.
The Penrose Property Hub will be a one-stop shop for all things related to your property transaction. We’ve always offered this, but our new site will give you more visible and accessible access to our entire range of expertise, and all under one roof. Our experience will not be diluted over multiple sites - the Penrose Property Hub offers the opportunity for us to tackle all your property needs together, every time you walk through our door.
Now that’s Traditional estate agency at its very best. Contact us today to see how we can help you now, and watch this space for more news on the Penrose Property Hub very soon.
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