It is undeniable that technology disruptors are positively influencing our lives.
We are also seeing a rise in the dominance of online hubs, with one in particular often regarded as a major disruptor to the property industry: online estate agencies. The debate of bricks vs clicks rages on.
Approximately 90% of people look at properties online; this highlights the potential space for online agencies to grow into. However, only 4% of properties were sold last year using online agencies.
There is a gap between those who want to use the internet in their house search, most likely to gain an understanding of what is available on the market, and those prepared to use an online agency for the entire process.
One of the biggest barriers to using online estate agencies is the lack of a personal touch. For most people, a house will be the biggest-ticket item they will buy in their lifetime. Therefore, customers appreciate the personal interaction and the local expertise - in essence the feeling of assurance. Customers want to know the issues affecting their neighbourhood.
Whether these are schools, crime statistics, transport or demographics, they are all important considerations in the buying process, and work towards empowering the customer.
Once online estate agencies work out how to enrich the experience in this way, then many barriers will be removed. If they can create the right level of customer satisfaction, they need only wait. We live in a world where technology is embraced; if the model is correct, the customers will eventually come.
One key advantage that online agencies have over traditional models is the sheer amount of investment available to them. The likes of Purplebricks, easyProperty and eMoov have already raised significant amounts, and Purplebricks successfully listed on AIM with a market value of £240.2m.
They also have a business model that better suits their clients. Traditional high-street agencies apply a fee of circa 1.5% of the sale price, whereas online agencies charge a fixed fee that sits in the hundreds. Expenditure wise, online agencies are a huge threat to traditional agencies; they don’t have high overheads such as rent, and can pass these savings on to the customer.
Furthermore, a poll by YouGov suggests that almost a third of people would use an online estate agency if selling tomorrow, showing the enormous future potential for online agencies.
The inherent issue is that the property industry can often be very traditional and very wary of technology, regarding it as a threat or disruptor.
This is where online agencies are finding their niche, looking to capitalise on the slow adoption of tech by traditional agencies. Perhaps if traditional agencies more enthusiastically embraced the potential of technology in terms of efficiencies in the buying process, they would be able to mitigate some of the risk of lost market share to disruptive online counterparts.
The perfect storm/ecosystem exists for online agencies to thrive. However, you can’t replace the local knowledge and personal experience of traditional high-street agencies.
It is an interesting time for the industry. The next year will be very telling - perhaps we will see the emergence of a true hybrid agency that truly answers all its consumers’ needs. Only time will tell if it will be online or traditional brands that adapt first.
James Morris-Manuel is CCO and co-founder of Virtual Walkthrough