Why online estate agents need to change their tune if they want to make an impact
Online estate agents have been around for a number of years now but still only have about 5% market share. Clearly their message is not getting through to the home buyers and sellers of the UK, who are still happier dealing with traditional high street estate agents.
Obviously if you are in business and customers are not responding to your marketing then you need to change your tune. As the saying goes "only a fool repeats the same thing and expects a different result".
I will tell you what I think needs to change later but let's look now at how online agents have developed over the years.
The development of online estate agents
- when online estate agents first appeared they were just a cheap alternative to the traditional estate agent
- an upfront fee was payable for a very basic listing service with nothing payable on completion
- unlike traditional estate agents, a fee was paid whether the house was sold or not
- as time went on online estate agents offered a broader range of services from conducting viewings to progressing sales, as well advertising on property portals
- also, a variety of fee options were offered with both upfront fees and completion fees available depending on the service chosen
- now online estate agents offer a similar service to traditional estate agents but the upfront element still remains in most cases
So where do online estate find themselves now?
- as mentioned earlier online estate agents have taken market share, but it is still only at 5%
- they have developed their proposition to be more like the broader service offered by traditional estate agents
- they are now offering a variety of options both on service and cost
- sellers could still save money but only if their property sells, take your house off the market and you have lost your upfront fee
- because their market share is low the number of properties they list is low and therefore not seen as a 'go to' place for buyers
Why online estate agents need to change their tune if they want to make an impact
In my view the biggest issue with online estate agents is that are marketing themselves totally on price. The problem with this approach is that customers rarely purchase things on price alone. Customers are always looking for value, but this seldom results in them always choosing the cheapest.
As an example look at the recent changes in food shopping. Yes, the low cost offerings from Aldi and Lidl have made a great impact but shoppers are now doing their shopping in a variety of ways. They visit the discount shops to get the cheap deals, they shop online for the main shopping and go to stores such as M&S and Waitrose for their premium offerings. Looking for value for money not just the cheapest offering
Another issue regarding online estate agents' fee structures is that they nearly always charge an up front fee for their services. Of course sellers lose this fee if their property doesn't sell, therefore acting as a subsidy for those lucky homeowners who are fortunate enough to sell. Asking a customer for a fee before they have tested your service is asking for trust before you have earned it. Let's face it, would you pay a restaurant bill before you tasted the food, I think not.
What online estate agents should do if they want to make an impact
- sell on service not just on price
- share your sales results to prove how effective you are
- get personal, show you are more than a website by starting a blog and building relationships on social media
- if you have started a blog make sure you are giving buyers and sellers useful information and tips, not just rehashing existing property news
- become an authority on property by engaging with journalists and other authorities online
- review your fee structure and offer no upfront fees and rely on your results to create your income
- stop knocking traditional estate agents and engage with them instead
Conclusion
I think there is room in the market for both traditional and online estate agents to prosper. I do think, however, that both camps need to look at how their proposition stacks up in the modern world. Ask yourself, are you putting the customer first in all you do. If you are then you will be successful and this success will come without necessarily being the cheapest. If you are not then you need to change and quickly.
