Threat from online and rising costs
Estate agencies following list of high street casualties
A sharp increase in failures among estate agents is providing further concern for Britain’s high streets, as they succumb to online competition and high business rates.
Across the UK 2,446 estate agency businesses have gone bust, including 265 in Scotland over the last five years, according to new research.
David Alexander, who runs an agency in Scotland, says there is an expectation that the sector will experience the same High Street disappearing act as retailers and casual dining outlets.
“The internet has undercut much of the High Street in the retail and other sectors over the last five years and this is likely to continue,” he says.
“The generational and cultural change is enormous. For most people under 40 the idea of wandering from shop to shop in city centres’ is alien to them and they conduct many of their purchases on their phones, tablets, or computers.
“Rents and business rates have also played their part, which is why this downturn is also affecting casual dining, so it is a combination of issues which is causing so many business closures.
“More clients and investors [are] looking online seeking a one stop shop for their legal and financial advice along with property management as well as marketing and selling.
“The loss of the High Street estate agent does not mean less service, in fact it means more, with a greater focus on the needs of the client.
“The online client is simply using a different method of accessing the housing market, but their demands remain as high, if not higher, than before.
“But the market remains buoyant for those offering clients an up to date online service fully catering for all their needs from initial advice, consulting, managing, advertising, and promoting with their key legal and financial needs met.
“It is a brave new world but one in which estate agency will continue to exist but not in the way it has in the past and these failures are a sign that there will be closures along the way as the market adjusts.”
Ben Di Rollo, director at Coulters which is looking to expand its bricks and mortar outlets, struck a more optimistic note. He said: “There is a place for virtual, office and shop front locations.
“The business is developing and we are focused on growth and enhancing customer service. We are investing further in technology and client interaction throughout the selling process.
“We take the stress out of buying and selling by offering the associated legal services under one roof, and other services such as walking the client’s dog as part of the service.”
A number of surveys have noted an acceleration in the move online, although the experience for clients is not always beneficial.
Average high-street commission as of February this year was £3,350 but vendors pay a fraction of that with online or “hybrid” agents such as PurpleBricks.co.uk, eMoov.co.uk, Tepilo.com and Hatched.co.uk.
Typical high-street commission for an estate agent is 1.3% of the sale price. Most online agents charge a one-off fee at the point of instruction, or, allow the client to defer this for several months.
However, agents that offer to do this will always collect payment, regardless of whether the property sells. With only 55% of the homes that come to market selling, it means 45% of homeowners who choose to pay upfront (or defer) can end up paying for a service that doesn’t necessarily lead to a house sale.
A handful of online agencies offer a no sale, no fee service.