10 March 2016
Fading Icons- Agents of Change
by J.R.Thomas
In one of the odder reversals of sentiment of modern times, residential estate agents have become eternally grateful to bankers. For years and years the most embarrassing thing that one could possibly admit to at the neighbourhood cocktail party or the school gate was that one’s employment was in estate agency. Apart from, of course, being a traffic warden. And then along came 2008 and all those so-grand and self-preening bankers were suddenly shown up to be the sharks and charlatans they really were.
Each month came some wonderful new revelation to destroy the reputation of the pinstriped ones. Not just the total destruction of their own balance sheets, to say nothing of the British economy, whilst lecturing their customers on prudence and caution, but appalling bad behaviour in the office (bullying, sexism, and extravagance on the scale of Louis XIV) and out of it (dwarf throwing, £50 notes stuffed in suspender belts at Peppermint Hippo, gross champagne drinking at Chelsea Football Club). Closely followed by revelations of misselling of life insurance, and of stuffing innocent customers into inappropriate interest rate protection products, and even of gross manipulation of the LIBOR rate, that fundamental governance of the interest rate markets.
Meanwhile the estate agency profession, so long reviled by the public as a bunch of pushy salesmen driving red Golf GTI’s and selling the best bargain bungalows to their chums for redevelopment, began to be reappraised as lovely people, young, well groomed, polite, and with the help of new technology, actually likely to send their supplicant clients to see the two bedroomed flats they wanted to buy, rather than the four bedroomed terrace they could not possibly afford.
Ah, yes, technology, that is the key as to what has gone on in the selling of houses. Technology has changed the estate agency world to an unbelievable extent – especially unbelievable to those estate agents who said that selling houses was a highly personal business. Never catch on, they said; needs the personal touch, people making life-time decisions need the guiding hand of experienced professionals, take out that human touch and where would we all be? Well, where we all be is downloading vast amounts of fairly reliable information from the web. Filter exactly what you want – two bedroomed first floor flats are what will appear on your screen, if that is your desire. Dozens of photos of every room from every angle? Of course. Floor plans with room measurements? Here they are. Details of nearest schools, aerial photographs, proper maps? Naturally. Want dozens of particulars of every similar property within a fifteen mile radius? Just press that button. Now the public is in control, they can get what they actually need, and the market has become hugely better informed (made even more so by various handy bits of estate agent targeting legislation that have made fibbing or dealing with mates illegal).
The odd side effect of that is that the public perception of agency types has also changed. Now that we can get the service we want, and all we need from the agent is the making of appointments to view and a bit of proxy price haggling, we have come to think of estate agents as quite sweet. And of course, they have got time to be sweet as the public is doing so much of the work for themselves. No more sitting at desks with expensive coffee machines gurgling away whilst grumpy married couples contradict each other as to what they really want, followed by endless pointless inspections of properties that face the wrong way, are in the wrong catchment, are on the wrong floor. Estate agency has finally become an esteemed profession and concord rules between clients and agents. There is just one fly in this agreeable ointment…
For the path of commerce never runs that smooth. And in the world of the estate agency – or indeed any commerce – the ointment needs to contain one vital ingredient. Money. Those high street premises, replacing the cheesemonger, the bookshop, and (somewhat gleefully) the local branch of NatMidBarclays, cost a lot of money; as do the mobile phones and those Golf GTi’s. Most of all, eager young or old experienced, the high street agent needs his pay and rations, or more accurately, pay and bonus, based of course, on the number of houses sold.
The internet is in so many ways a different and much cheaper way of doing things. Huge numbers of houses and flats and bungalows can be loaded up for interrogation by eager clients; and, whilst the cost of setting up sophisticated systems is not cheap, once they are up and running infinite expansion has practically no further expense. The brand names, once established, “onthemarket.com” or “rightmove.co.uk” or zoopla.com “are easily recalled by the public. The agent wins the vendors instructions, measures and photographs with hand held devices, and loads up the detail. In come the calls, looking for exactly that, ready to go viewing. Everyone can do. Everyone, it must seem, is doing it. New agents have sprung up all over; estate agents window displays and IKEAesque desks occupy every other local shop.
The result financially is inevitable – sales commission has dropped from 2.5%, or even 3%, of the selling price, to just 1%. Even less if the high street is jam packed with agencies, and for high value houses with vendors able to negotiate between several agents. Salaries are been cut to the bone, bonuses are well down – a good agent used to think of 1% of what he got as a bonus, not what the business got for selling a house – and costs are been slashed. The Golf GTi’s are well on the way out – a Polo1.2 if the agent is lucky, and even then it will have the agency name branded on the side – not quite the thing outside the hip wine bar. Though, inside, the 2016 agent is more likely to be staring glumly into a Muscadet rather than celebrating his latest sale with champagne.
Indeed, it seems unlikely that the high street presence will last much longer. The coffee machine has gone, the carpets are thin, the desks aging. The only reason they really exist now is that the agency still needs somehow to source those vital selling instructions from those looking to sell their houses. Oddly, house buyers seem happy to do their searching for their dream homes on line, but houses sellers need the reassurance that the estate agent has a smart(ish) shop on the street. That won’t last much longer; even the more conservative vendors are latching on to the fact that they can electronically ask the agent to call on them for the instructions. Soon residential agency will be entirely on-line, the agent’s high street premises as rare as a bookshop.
Bad news for the high street; estate agencies have been in recent years one of the big takers of space at the cheaper end of the street. Bad news too for those of us whose Sunday afternoon walks, whether at home or away, often end up wreathed in dreams as our noses press against the local estate agents window, sighing over what might, could, ought to be, our dream cottage. But maybe not total bad news for the agents. With the costs of their premises gone, and a need to keep those brand names in the public eye, maybe the branded hot hatchback will once again be a perk of the job. After all, a GTi is a GTi and will hurtle cheerfully round the streets, no matter how gaudy the agency colours on the side.
Please click here if you would like a weekly email on publication of the Shaw Sheet
