2008 sees the final breakdown of traditional estate agents

Online estate agency is poised for dramatic growth, as has occurred in the US, according to the UK Angel Investment Network.  Traditional branch-based estate agents employ a high cost ‘bricks and mortar' business model and outdated print advertising marketing methods.  It is said that you should lead, follow or get out of the market and OliverFinn has led in Chiswick and is now a major player. Christian Harper of OliverFinn:  “The market downturn, which commenced in September 2007, is the perfect backdrop for our fixed-fee proposition.   We achieved this market share by delivering results and saving clients thousands of pounds. "I ask the question ... did you find your house in a shop window or through a combination of press advertising, a board and the internet?  If the answer is the latter then why are you paying so much more for another agent to do the same as OliverFinn? "Traditional agencies are in survival mode only - with little attention or innovation.  They are raising fees across the board as transaction levels fall which further increases our price advantage,” says Harper. "The practice of raising prices in response to a market downturn almost always represents the death throes of a dying business model.  We believe that 2008 will be seen as the year the traditional agency model finally broke down”. Online search is faster for buyers and cheaper for sellers Similar industries such as travel agency and conveyancing have been transformed by sophisticated online tools, supported by experts in low cost call centres.  This is the future for much of UK estate agency. In the US, the online estate agency RedFin has sold over 1,500 properties and has attracted over US$ 20 million in venture capital funding.  The UK lags behind, but is poised to catch up soon. The market opportunity is huge: £4.3 ($8.6) billion in England and Wales in estate agency fees alone, in a market largely untouched by the economics of e-commerce. Add on at least another £2 ($4) billion in fees for ancillary services such as mortgage, insurance and HIP referral fees. A number of other currents are carrying online agency forwards.  The first generation of property portals often discriminated against online agents in an attempt to stifle competition to favour the traditional agents that set them up. Today's search-based (and free to agents) engines such as Globrix are rapidly replacing the old costly branch-based portals like Rightmove.  (Citigroup reported that RightMove lost 300 branch clients in May 2008 alone).  The second generation portals are much more friendly towards online agencies and the playing field is therefore likely to be level in the future. Traditional agents such as Spicerhaart are now hedging against the future by purchasing online agencies.  Spicerhaart paid a reported £2.3 million to acquire the rights to use the Tesco Property Market platform.