'Modernising Agency'- a follow up to the panel debate at FUTURE: PropTech by Kristjan Byfield
So, on Thursday 4th May, I was honoured to be invited to take part in a panel discussion on 'Modernising Agency' at the FUTURE: PropTech event in London. For those less familiar with the recent PropTech phenomenon- very simply this is the sector of Property Technology or Technology designed specifically for the property industry.
The panel featured just 3 estate agents: Eric Walker CEO of Northwood (a network with over 85 offices across the U.K.), Alison Nunez the Divisional Managing Director of Lettings & Management at Andrews Property Group (80 offices across the South East) and me. We were joined by 3 tech experts- Richard White of Goodlord, Rob Symes of Rightmove and Matt Robinson of Nested.
I don't wish to recite the discussion (for that please see the article by Graham Norwood of Estate Agent Today who chaired the discussion here), instead I would rather talk on various points in more detail:
Talking on the panel, and talking with a lot of people at the event, what was refreshing & exciting is a collaborative view of the future. Gone (more or less) are the war cries to bring down estate agents with 'disruption'. Many that have tried this approach have either failed already, or are finding it impossible to usurp the industry whilst being financially viable. Instead, there is a broadening respect for agents and a hurry to equip us with the best new tools to give clients & consumers alike the best ever experience.
With online agents struggling to capture more than 5% of the UK market despite enormous advertising spend its time to stop worrying and focus on the 95%. We're not after the 95% (we are happy being a boutique agency- at least for now) but you get what I'm saying. With that said, we also need to give the online-raiders their due for making a (largely) dormant industry wake up, wise up and work harder & better.
Almost unlimited choice
What is clear is that, going forwards, there will be an ever-increasing variety of choices that will enable you (Landlords and Sellers) to work how you want to. Are you a Landlord who is happy to do everything yourself you just need an online marketing solution- there is an offering for that. Are you seller that categorically HAS to complete within a certain timeframe (and you are willing to forego some capital for that guarantee)- there is a solution for that. Want to let your property through Airbnb but want a bespoke management solution for that marketplace- there’s an offering for that. Are you…..you get the idea!
What will be interesting to see over time is, how many of these offerings manage to secure a big enough market share to become a viable business and keep running and growing.
The best solutions solve more than one problem
As an ‘early adopter’ of PropTech in our industry I am lucky to get pitched a lot of new products- either in development or that have already been launched. On average, I would say I probably get at least 2 approaches a week and, as such, I get to see a very broad variety of offerings- both in terms of functionality and quality.
Here are some of the most common issues I come across:
- Product is designed from a single viewpoint- a lot of products I see have been developed because of a bad experience. The ‘solution’ is then developed to solve that ‘issue’ from a singular perspective without any consideration for the other parties. Probably the most common of these are Tenant focused products/solutions that have not considered the wants, needs and requirements placed on Landlords and Agents alike.
- The ‘problem’ doesn’t exist- another common failing is people designing products for our industry that have never worked in it and also haven’t undertaken any detailed research. I have seen products that have been in development for months, if not longer, that are solving an issue that genuinely doesn’t exist.
- Don’t understand the value of agents- another issue (and this is a close follow-on to the point above) are solutions that don’t understand where a (quality) agent adds value in a transaction. I see a lot of solutions that are looking to remove the ‘conversation’ an agent has with a customer in the early stages of a property search. Whilst this may be perceived as a nuisance for tenants or buyers on the hunt, a quality agent who keeps you on the phone for an extra 2-3 minutes asking detailed questions will potentially save you hours in wasted viewings at properties that aren’t right for you.
- Limited lifespan- there are a growing number of companies looking to solve ‘small’ issues. This may be easy online bookings, streamlined admin processes, managed applications and more. Whilst these exciting companies often shine a light on where the industry should be evolving to, once the product has proven itself, much of the functionality can often be replicated by the major software suppliers to the industry. As such, these offerings need to have a ‘product portfolio’ strategy in place with more and more functionality and offerings in the pipeline to keep the company relevant and agile. Doing so will increase the likelihood of acquisition and integration down the line which is much better than being squeezed out by similar products coming to market.
- Data duplication, APIs & integration- with new products hitting the market almost every week, agents are starting to become overloaded with the array of platforms they are working on. As such, you need to understand what a burden this can place on an agent and look to facilitate this as much as you can. Integration of products in to the large industry software suppliers is often the ‘end goal’ ambition of a platform however this may take months or years to achieve- or may never happen at all. As such, give yourself the best chance with open API products to integrate as easily as you can and also look at solutions for batch uploads of data rather than individual record duplication.
- Financial Strategy- you might think approaching a letting or estate agent with a free product sounds great but, actually, this can often be viewed suspiciously. If you are claiming to ‘never charge agents’ then this will raise eyebrows even further. As agents, we want to understand the basics of your income strategy. There are several reasons to this- namely: are you simply using us to create value in the business for an early exit or a sudden (costly) fee structure to be implemented; are you free because you intend to use our data to create revenue (not good); are you still going to be running in 1-2 years; do you intend to compete with additional revenue streams I already have in place (e.g. utility switching, ancillary products & services, etc.) and so on.
Freedom to do more
The best PropTech solutions I have seen to date get rid of a menial and thankless task and free us up to do more. Most of us are not at all interested in a ‘race to the bottom’ where we automate everything and cut back all human interaction, cutting staff along the way, to create a lean, low-fee business with minimal overheads. Most of us also are NOT looking for ways to cut back on staff- we are looking for ways to free & empower them. I don’t want to get rid of a member of staff, I want to free them up to deliver a more ‘hands on’, service-focused offering to our consumers. I am also a business, so if my staff can spend less time doing admin and more time doing deals that’s great too. You can’t put a price on a call to a Landlord or Tenant that is purely to check in with them and make sure they are happy- no selling, no ulterior motive. A better consumer experience is a win for everyone.
Our obsession with fees
Much like the weather, us Brits are obsessed with estate agency fees. This has been a key topic since I started in the industry in 2002 and has been so long before then. However, the UK has one (if not the) lowest fee structures in the world- here are some fees researched by Estate Agent Today in March 2015:
- United States 6% to 10%
- Switzerland 4.5% to 10%
- Spain 6% or higher
- France 6% or higher
- Netherlands 5% or higher
- Denmark 5% or higher
- Germany 5% to 6%
- South Africa 4% to 8%
- Sweden 4% or higher
- Portugal 4% or higher
- Australia 4% or higher
- Mexico 4%
- Argentina 3% (occasionally as high as 10%)
- Canada 3.5% reducing as asking price rises
- Ireland 3% or higher
- Poland 3%
- Russia 2% to 5%
- United Arab Emirates (Dubai) 2% to 3%
- New Zealand 2.25% to 2.95% reducing as asking price rises
(see the original article here)
This averages out, internationally, at around 4.8% which is 4 times the average UK agency fee of 1.2%. When you consider that it is also a ‘no sale no fee’ offering isn’t it about time we moved on from this conversation? It is also for this reason that many of the ‘cut price’ insurgents are struggling to establish a viable profit margin undercutting an industry which only averages around 15% profit.
The future is exciting
One thing is for sure- no one knows exactly where the industry is heading or exactly what it will look like in 10 years’ time. What is great to see is, after decades of stagnation, the industry is changing at a light speed pace. Only time will tell which products, solutions and companies will stand the test of time and will win out overall. What is important, however, is that, as letting and estate agents, we have to continue to look to the future and to look to constantly innovate, evolve and improve to always be better than we were yesterday. We will get some things right and some things wrong but we will get better and the winners, at the end of the day, will be the consumers- and that means eferyone we come in to contact with: landlords, tenants, sellers and buyers.