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AdamoMucci

High street EAs are going from strength to strength

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https://www.estateagenttoday.co.uk/features/2018/4/property-natter-agents-bucking-the-high-street-downturn

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Maplin, Toys R Us, Carpetright, Warren Evans – what do they have in common? All are well-known high street chains that are either in big trouble, on the verge of going bust or already out of business altogether. 

A few weeks ago Bargain Booze and Wine Rack were brought back from the brink thanks to a £7 million buyout from grocery wholesaler Bestway, which acquired the chains from Conviviality after that firm announced a string of profit warnings and intentions to bring in the administrators.

House of Fraser, Debenhams and New Look are struggling, too, with talk of large-scale store closures and restructuring, while even food and clothing giant M&S is scaling back its high street presence.

HMV’s future was very uncertain a few years ago, before a vinyl revolution and a revival engineered by retail turnaround firm Hilco rescued the company from the abyss. Even now, though, it is far from the dominant force it once was. 

In recent years we’ve seen the total collapse of BHS, once a retail titan, and further back the loss of key high street chains like Woolworths, Zavvi and MFI. 

It’s not just high street retailers, either; well-known chain restaurants are also in a bit of bother. Jamie’s Italian, Prezzo and burger chain Byron have all announced closures, while Oliver’s upmarket barbecue chain Barbecoa recently went into administration. 

What’s this got to do with estate agency? I hear you cry. Well, while major high street retailers struggle amid doom-laden talk of the death of the British high street, estate agents go from strength to strength. Visit any high street in any city, town or even village in Britain and estate agents are prominent – often dominant.

Ours was one of the few industries that thrived after the global financial crisis and, despite Brexit uncertainty, economic concerns and political instability, there is no indication that agency is in danger of going the same way as certain big-name clothes stores, electronics giants, toy specialists or restaurant chains. 

In fact, quite the opposite. Of course, there are always pressures and closures in any industry, but at the moment expansions, acquisitions and new agencies entering the market seem to be outnumbering those closing their doors.

The reasons for this seem fairly simple; while the growth of the internet heralded the death of the high street travel agent and stripped back the demand for high street banks and shops, selling, buying, letting or renting a home is still a very personal process and many still like the reassurance of speaking to a human face-to-face.

Yes, online and hybrid agents are growing in number and influence, and traditional agents are placing more importance on their online offerings, but for the most part actual, physical branches are where it’s at, where the work and transactions get done.

According to recent government research, there are now around 20,000 agents operating throughout the country, and you only need your eyes as evidence that many of these are doing a roaring trade despite increased competition and the same pressures faced by everyone else on the high street: how to remain relevant and necessary in an increasingly digital world.

There is no doubt that, in many aspects of life, there is a slow but sure transition from physical to digital, but certain industries are bucking that trend. Estate agency is one of them, while it doesn’t seem as if hairdressers (it’s hard to get a haircut or a trim online, after all!), newsagents, cafes, independent restaurants, phone shops or supermarkets will be going anywhere for a while yet.

Traditional shops such as butchers and bakeries also continue to thrive despite the issues faced by others, offering a more personal service, a higher quality of goods and a more authentic customer experience. Also, with sustainability and provenance increasingly important issues, consumers like to know where their goods come from and how they’ve been made, to the benefit of those offering a more home-made approach.

Even then, though, it’s the trendy, quirky, niche ones – the ones offering something different – that are thriving the most, which once again highlights that those who are willing to adapt and evolve with the times are the most likely to buck the high street downturn.   

One of the arguments for the reasons behind the troubles faced by high street giants and restaurant chains is oversaturation; in other words, too many shops and not enough demand.

But, again, this doesn’t seem to be an issue in the world of agency. There is, more often than not, too much demand. And it is demand that is concrete, immovable, timeless and ever-lasting. People will always want and need to buy, sell, let and rent homes. 

While that’s the case, and while enough people still require the human touch, estate agency will continue to thrive.

 

Not sure what all the whining is all about then about Purple Bricks and fee bans and increased regulation. Sounds like they are raking it in.

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Its written by an estate agent rag, its gonna out a positive spin on things.

RBS is closing 160+ branches soon, because the high street is dying off - EAs will be no different. The way I see it, a high street EA cant make money selling houses anymore, the likes of purplebricks & doorsteps will crush them. Lettings will go purplebricks way eventually...they charge something like £42pm per property with no finders fee. The tenant fee ban will be interesting...

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Yeah. Would agree. 

A lot of EAs have a taste now for nice new Mercs.

Gone are the days of seeing them driving the worst shitbox on the road. These days its new Mercs BMs or Audis.

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For what it is worth I think they are being absurdly complacent. I do think they are currently and have been recently more profitable than they would like to let on, on the sales and lettings side. That is why there is so many of them. But like so many high street retail sector businesses in the last decade, they have reached peak shop space. They are over expanded now due to herd mentality, and future competition/politics/regulation/economics. High street agencies are at great risk from the online agencies. It does seem EAs have dodged the online threat longer than other sectors, but they are kidding themselves if they think there is going to be a moat around their business model in the form of "face-to-face" contact.

Online agencies are going to take a huge bite out of the high streets market share, its inevitable. There are genuine efficiencies and economies of scale. And there is still face to face contact. They have people in the field that visit properties/clients. I think it is like self employment or franchisees the people in the field that cover each area.

It seems to be somewhat slow right now, but there will just be a tipping point and it will just be normal. Like buying a big kitchen appliance from AO.com. Or getting your energy supplier online. Or insurance, or banking.

Agencies will not even need so many people for viewings in the field because VR will probably become a big thing with the listings and people will get enough of an idea about most properties via VR then just go and see the most promising. On site viewings will go down. And surely the original main reason for having a high street presence was for the shop window. It was to sell its inventory. Photos in shop window versus VR in the comfort of your own home. Who even wants to go to the high street at all any more, for anything? Perhaps the reason for high street presence was also for people being able to make contact in general but there are now more ways than ever to speak to a company.

The high street agency model seems to be fast heading to obsolescence just like so many other high street businesses. I think there will be even more disruption in the next decade than the previous one for many sectors. My mother, four years ago, had never used the internet or any internet capable device. I bought her a cheapish 7in tablet. She still has the same one. She does more online than I do and I have been online since 95. She went from nothing to more than me within four years and she is in her 60s. She gets the weekly food shop online. Big ticket home items. Smaller household items. Clothes, shoes. I am absolutely amazed. I would never have imagined my mother would be doing that. That is how I know the high street has had it. And that is just with todays technology. With drone deliveries, automated electric vehicles, internet bandwidth/software and computer hardware improvement and innovation the high street is just going to become less and less efficient and desirable for consumers.

And if high street EAs think they are immune because "oh its face to face" they are delusional. There is not a single good reason for EAs to have a high street presence. Technology has made it obsolete right now, today. It is just a question of online companies growing out infrastructure and consumers being aware of and feeling comfortable to make the switch. Most people are lemmings and it will take some time for a tipping point to occur. I do not think the tipping point has even occurred yet in consumer electronics. I just think some of these sectors that are shrinking are going to totally vanish. Oh btw I heard a rumour about Tesco and Dixons getting cozy. Anyone heard it?

I really do not think your typical estate agent owner is going to recognise the threats very well or pre-empt them. I have known a couple of owners of these small high street places; they are not the most forward thinking or intellectually curious.

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I think the reason online agents haven't really took over completely is because they are only estate agents and only deal with residential SALES.

 

I think the only reason High Street agents have so far managed to remain doing reasonably well is because the majority of their business is actually from LETTINGS and virtually all their profits come from the lettings fees gravy train.

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2 hours ago, nome said:

I think the reason online agents haven't really took over completely is because they are only estate agents and only deal with residential SALES.

 

I think the only reason High Street agents have so far managed to remain doing reasonably well is because the majority of their business is actually from LETTINGS and virtually all their profits come from the lettings fees gravy train.

This...^^^^^;)

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8 hours ago, AdamoMucci said:

https://www.estateagenttoday.co.uk/features/2018/4/property-natter-agents-bucking-the-high-street-downturn

 

Not sure what all the whining is all about then about Purple Bricks and fee bans and increased regulation. Sounds like they are raking it in.

Is a a pitch for government money - stop the hgih street closing?

'What’s this got to do with estate agency? I hear you cry. Well, while major high street retailers struggle amid doom-laden talk of the death of the British high street, estate agents go from strength to strength. Visit any high street in any city, town or even village in Britain and estate agents are prominent – often dominant. '

Would he like mention why EAs are special. Do the law of rent, rates and interweb competition not apply to them?

Nope.

They are equally fuxed. The only reason why EAs are still going is that their work force is mainly commission based. And scam fro rentals.

 

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2 hours ago, nome said:

I think the reason online agents haven't really took over completely is because they are only estate agents and only deal with residential SALES.

 

I think the only reason High Street agents have so far managed to remain doing reasonably well is because the majority of their business is actually from LETTINGS and virtually all their profits come from the lettings fees gravy train.

Depends on the neighbourhood...in some areas it is still mostly sales business.  One thing that has helped then is the failure of the other businesses on the high street means high street rents are low...lower volumes but at higher prices with lower over heads....

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In my neighbourhood they managed to sell 26 houses in last 5 months. Lettings also doing well because of good schools and families moving in. Depends on area.

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28 minutes ago, Wayward said:

Depends on the neighbourhood...in some areas it is still mostly sales business.  One thing that has helped then is the failure of the other businesses on the high street means high street rents are low...lower volumes but at higher prices with lower over heads....

So if lower rents on high street wht are not more small independent businesses opening up???

Higher property prices does not necessarily mean higher fees, lower percentage fees, there is other competition to sell houses out there.....EAs know that and price accordingly, a lower price.

Landlords would rather an empty shop than lower the rent.....lower rents mean lower valuations.;)

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Strength to strength? Not based on my experience.

for example, yesterday, emailed an agent via Rightmove to make a basic enquiry to clarify a description of a property in Battersea.

within 5 minutes the agents had called me twice leaving answerphone messages and emailed me. 

Within ten minutes I received a cold call from their sister branch in Wimbledon asking if they could assist in selling my current property (Rightmove had supplied the Battersea branch my postcode which they passed onto their Wimbledon branch as a lead).

i gave the guy a bollocking for cold calling me - told him it smacked of desperation. He was very apologetic.

clearly to get this level of response within ten minutes (on a Saturday morning!) shows the market is dead. Two years ago you’d be lucky to get a response from a Rightmove email within a week, if at all. 😂

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5 hours ago, nome said:

I think the reason online agents haven't really took over completely is because they are only estate agents and only deal with residential SALES.

 

I think the only reason High Street agents have so far managed to remain doing reasonably well is because the majority of their business is actually from LETTINGS and virtually all their profits come from the lettings fees gravy train.

 

It has been slower to develop on the lettings side. PB do lettings though, but they are not massively cheaper. But there are others popping up. The parasite118 guy is involved with lettingssupermarket.com which is 5% commission. These absolutely will take off as LL look to offset higher costs coming their way from the fees ban and section 24. Then there is build to rent competition to the PRS as a whole. Rising interest rates at some point will squeeze the PRS too although I think that is further down the line than we would like to believe.

As @spyguy says:

Quote

Would he like mention why EAs are special. Do the law of rent, rates and interweb competition not apply to them?

 

High street EA/LAs are being ridiculously complacent and arrogant if the article represents consensus opinion. The idea that what is happening to the rest of high street retail cannot happen to them is absurd. It is simply a case of it becoming more accepted and normal for landlords. It will take a while but "oh people want face to face" is not a compelling argument. I am sure there will be very real efficiencies and economies of scale for the online guys.

Edited by AdamoMucci

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The lettingssupermarket business looks like it takes care of all the back office stuff centrally then franchises out the "in the field" activities to people in various areas. They will probably be franchising to people already in the industry. A senior negotiator or assistant/branch manager looking to "start his own business". High street LAs will probably lose some of their hungrier business getters.

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7 hours ago, AdamoMucci said:

High street EA/LAs are being ridiculously complacent and arrogant if the article represents consensus opinion. The idea that what is happening to the rest of high street retail cannot happen to them is absurd. It is simply a case of it becoming more accepted and normal for landlords. It will take a while but "oh people want face to face" is not a compelling argument. I am sure there will be very real efficiencies and economies of scale for the online guys.

No, EAs are absolutely safe on the High Street with shop windows full of photographs, paper brochures and face to face contact. Just like travel agents.

Oh, wait a minute....

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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