UK estate agents have been grumbling for some time about the high fees big name portals extract from them.
Henry Pryor has formed the Estate Agency Buying Group, to band together smaller estate agency firms in order to negotiate the best terms possible for 2009 with property portals.
These smaller agents are facing “unprecedented falls in sales and therefore a significant loss in income and many simply cannot afford to spend as much as they once did”. And it’s proved a popular idea with over 3,000 agents making inquiries and 1,572 offices now signed up to the Estate Agency Buying Group.
Following Henry Pryor’s lead, some large UK agents, including Hamptons International and Rightmove PLC shareholder Countrywide, have grouped together in an attempt to negotiate fee reductions with rightmove.co.uk, primelocation.com and other portals.
Henry Pryor spoke to propertyadguru.com about the EABG and issues affecting agents and portals.
It’s no secret that UK estate agents have been grumbling about the fees big name portals charge them for some time now - was there any particular event/issue that led to you setting up the EABG?
The Internet actually provides excellent value for money and for many years I have been encouraging agents to move more of their advertising budget online. My beef with the portals is that this is a market when a business that breaks even is having a good year. Agents need to continue the partnership that has been built up with the portals and at present that means help with overheads. Portals must trim their profits or they will end up with no clients. They won’t just have left in disgust, they will have gone bust!
What are the key challenges estate agents are facing at the moment?
Staying afloat! Many have reserves of just six months or so. Unless things pick up then by next summer there will be queues at the dole office. It’s hard to exaggerate just how tough it is out there and agents will not forgive any supplier who tries to profit from their pain. Many other suppliers have stepped up but the pay-to-list portals haven’t even acknowledged there is a problem.
Are you happy with the numbers of agents who have made inquiries or signed up to the Estate Agency Buying Group?
So far the response has been most encouraging. Having been ironically involved on the edges when primelocation.com was being formed I know that getting agents to move in one direction is a little like herding cats.
Were you already in negotiations with thinkproperty.com before they announced they would be going free, and do you expect others to follow their lead?
I am very fortunate to have had a very good relationship with all the portals and most of their principals. The owners of all the pay-to-list portals will require exceptional management to navigate the months ahead as the landscape changes. The Guardian (owners of thinkproperty.com) are no different.
Are you aiming your negotiations just at the Big 4, or other portals too?
Agents need help from where ever they can get it. I have no mandate as such to do this - something that helps I hope when arguing my point but any overhead is being scrutinised at present and if there is something that a group can buy better than individuals then I’m sure agents would want to look at it. It’s something that I’m sure the big membership organisations like NAEA and RiCS are looking at.
What kind of a deal are you hoping to achieve for agents?
I calculate that even if rates were to halve, the portals would not be loosing significant sums. We all hope that this ‘crunch’ is short lived and when transaction volumes rise and life returns agents will have the luxury of deciding what they actually value.
Mark Milner CEO of DPG has been said to have spoken against agents banding together to lobby for lower fees, saying that DPG’s pricing took into account the circumstances of individual agents. What kind of reaction have you had from the portals/groups you’ve approached?
There has been and will continue to be reports of what people may or may not have said. The management of all the portals are extremely bright and I appreciate the commercial pressure that they all operate under. They are all answerable to shareholders whose first wish is not always charity. All the portals have been very courteous and professional in their dealings with us thus far. I don’t see any benefit or advantage for anyone in a slanging match. This is far too important for everyone involved.
Do you think that there are things other than pricing that could be addressed make it easier for agents and portals to work together?
Yes, I think everyone accepts that it would be in their interest if agents could more readily measure and value the response that they get from the internet - not just from Portals. Rightmove Plus has proved just what an effective tool the Net can be and I expect to see many more products that help agents to demonstrate their knowledge and expertise to come forward. We have already seen the likes of Agent Analyser and Vizzihome for example.
Do you think that free sites like globrix.com and propertylive.co.uk provide real alternatives to pay-to-list portals, and do you think agents will look to them more now that times are tight?
As someone who has been involved in similar, more modest projects I obviously see the merits of these free-to-list sites. The consumer has no brand loyalty when it comes to buying or renting a property. They want all the properties in one place but these ‘free’ sites have to make their money from somewhere and competing with well-established brands is never cheap or easy. Agents will need a balance and the Internet provides huge possibilities for the property market - many are yet to emerge.
What do you see happening down the track with property portals?
The property portals are magnificent distribution platforms helping agents (and others) get their product in front of the consumer but the market is always evolving and just as free-to-list has come along Mr Murdoch is backing both a pay-to and free-to-list model (globrix.com and propertyfinder.com) so the next generation will arrive almost certainly looking different from whatever we think we recognise today. However, without some help, my greatest fear is that there will be few surviving agents who will necessarily have to pay more per head unless the cost of Internet advertising falls significantly in the short term. What the landscape looks like in a years time is not the problem we have today. Whether there will be anyone left to admire it is far more critical!
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