The death of a house salesman?
By Jim Poulter on Thursday, 3 March 2016
For as long as I can remember when it comes to selling or buying a house, UK consumers have turned to estate agents. Yet the Veracity Index from Ipsos MORI indicates that only 25% of people trust them. Despite more than 95% of all new residential property searches starting on sites such as Zoopla and Rightmove, less than 5% of house sales are made online. These sites currently act simply as digital shop windows with the actual sale being carried out by a traditional estate agent, at a traditional average commission of 1.6%.
But could the consumer shift to DIY and automation do for estate agents what Uber has done for cabs and Airbnb for hotels? Investors seem to believe so, with shrewd names investing in online platforms such as Neil Woodford who owns 25% of Purplebricks (valued at £240m). These investors are betting that the combination of a slick, intuitive digital platform and the certainty of a fixed fee (£1,158 inc VAT in my postcode) will be a game changer and allow for rapid take-up. They're betting that price and platform will outweigh the downsides of doing more of the legwork and admin myself, forgoing the added value of real property expertise and a dogged approach to driving the highest price that I can get from a number of estate agents not 500 yards away.
Are they right? Well as the traditional financial advice model is finding with the advent of robo-advice, there are a number of consumers for whom price is the single most important selection criteria. And the higher the differential between the traditional option and the online alternative,the larger that number seems to be. However, wealthy consumers seem to still prioritise service and knowledge, recognising the value in expertise while handing over the part that most find hardest - negotiation. For them, the additional value generated more than offsets the additional cost.
What is clear is the parallel between provision of advice whether for property or in financial services. Increased choice makes evidencing value crucial in this new landscape. Service vs price. Never changes does it?