Here at BriefYourMarket.com, we’re fortunate to have one of the most accomplished and recognised figures in the estate agency world as part of our non-executive team. We briefly caught up with former LSL director – David Newnes – to get his thoughts on the state of the current property market and UK estate agency.
David, what are your views on the current market?
“Well, let’s be honest, it’s been a really tough time for agents over the last couple of years. At present, even though the market is performing unusually well thanks to recent government initiatives to encourage moves, I’ve got to be pretty objective and say that I don’t see an immediate light at the end of the tunnel for agents.
2021 is shaping up to be a very competitive year in terms of gaining market share. So, for me, it’s more important than ever that agents make as much as they can from every penny they have got to spend. Equally as important, they need to make sure that they are spending it in the right way; on people, on effective marketing; on every process that makes their business run more productively on a day-to-day basis.”
What is the greatest threat to overall market performance right now?
“It’s a broad term, but I’d say uncertainty. Uncertainty in the UK economy overall is the biggest headwind in terms of the property market; it always has been. As agents, we can sugar coat the current high level of demand and rising house prices right now, but we can’t ignore that there is a genuine fear of what is going to happen in the future.
Look, the global coronavirus pandemic is a world apart from Brexit, so i’m certainly not saying that the impact is remotely the same, but let’s not forget that the population has been living under a cloud of uncertainty for a long time now. First it was the uncertainty that Brexit would have on the market back in 2018 and 2019. Now, further compounding this, is the worry of our health, prosperity, and impact on the day-to-day ways that we all live our lives.
People are worried more than ever about job security, earning potential, livelihoods, and the overall UK economic performance in general. Confidence in these underpin the impact on house prices and whether people choose to buy or sell now or put the brakes on. Of course, there are those who will always need to move, but I would certainly expect that a significant proportion of people will chose to wait to see what’s around the corner in 2021, especially with further lockdown restrictions on the horizon.
Uncertainty is just part of the territory when it comes to the housing market. Yet, with uncertainty comes opportunity for agents. Those that are ‘geared up’ and ready to take market share in uncertain times, which they’ll have to be if they going to remain competitive.”
Have your views about the online model changed at all?
“They aren’t as far ahead as I thought they would be, but look, there is no doubt about it, online has done a great of taking market share. Yes, they have forced a downward pressure on estate agency fees. Yet, on the flip side, there are more ‘traditional’ model agencies opening their doors too. So there is a smaller cake for everyone to go at, and a smaller portion of that cake available at a lesser value.
The whole market from a fee-structure point-of-view has moved down, making it very difficult for most agents to achieve a big, ‘full fee’, as used to be the case. The consumer has seen the choices out there; the £20m or so advertising campaigns on national television have, from the point-of-view of the consumer, basically told them that they can sell their house for next to nothing. That is a very tough order to fight against. So you need to everything in your power to prove your worth.”
Is it training that is the problem in terms of fees then?
There probably isn’t enough training done in terms of getting higher fees, but that’s not through lack of knowledge in terms of how to achieve it. Generally, it seems agents are concerned about charging higher fees in case they don’t win the instruction, because if they don’t win the instruction, they clearly aren’t going to earn money.
So, agents are choosing to charge a lower fee to win the instruction. At this point, it’s about all the things that go with that instruction. How do you claw income back if you have dropped your fees?
You need to offer every customer a full service. The larger, well-established agents were historically quicker to see the benefits of doing this. Now the rest of the market is catching up with that; with more agents beginning to reap the benefits of offering the full package in terms of conveyancing, insurance etc., but many still don’t, and that’s a shame because it’s mutually beneficial for them and the consumer.”
Finally, what separates good from great in estate agency?
“I’d say strategy and tactics of the senior management teams make a big difference. However, it’s the execution of these at branch level that is really vital. So finding the right people to foster your culture in-branch is paramount.
Brands must also keep diversifying, keep evolving, and find new ways of doing things by creating new income streams for themselves, being more efficient in terms of process, and keep fighting for market share with the most effective ways possible.”
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