United Kingdom – The core principles of estate agency are timeless: a friendly, efficient, reliable service has always been at the heart of the industry, and the old adage of ‘know your customers’ still rings as true today as it ever was.
But have the expectations of buyers and sellers remained constant?
Over the last 20 years, the estate agency sector has certainly undergone its fair share of changes and disruption. House prices have risen dramatically while wages haven’t kept pace; PropTech solutions have arrived, offering increased automation, more effective marketing, and improved customer insights; and the internet has brought in entirely new business models, with online and hybrid agents.
What impact, if any, has this had on customer demands and expectations, and what can we expect in the coming years?
Technology driving more informed customer decisions
David Jacobs, co-founder of online estate agency, Yopa, argues that with the current technologies available to customers, there’s a new demand for things to be faster, more convenient, and easier than ever. “One of the biggest unmet requirements for both buyers and sellers is for faster transactions, and technology has already and will make further, significant improvements over the coming years.”
For Lisa Simon, Head of Residential at the estate agents, Carter Jonas, the real impact of tech has been in driving more informed customer decisions. “Many people now initiate their own online search up to a year before they wish to move, gathering information and refining their requirements before they officially register with agents.”
Jude Greer, CEO and co-founder at deposit replacement scheme, Reposit, takes a similar point of view. “Buyers will be more informed thanks to property data becoming more accessible. This will move the balance of power from the agent who previously was the only real source of information. Buyers are not the only ones that will have access to more and more data. Sellers will benefit too.”
Changes to customer purchasing power
Marcus Bradbury-Ross of buying agency The London Resolution, says that one of the key emerging transformations in customer behaviour is due to the changing purchasing power of buyers. “Borrowing is hard. You need a good deposit and these are hard to accrue – many first time buyers in London are now mid-30s or older, and so the rental market is much larger than it used to be. We are all living longer. The bank of Mum and Dad is drying up; they don’t even have the money now and they are now considering their retirement as they don’t have final salary pensions anymore.
Bradbury-Ross sees a kind of two-tier sales market being established. “Huge prices being achieved in central London – new builds in Mayfair at £7,000 per sq ft – versus – good quality second-hand stock at say £2–3,000 per sq ft.”
Ashley Osborne, Head of UK Residential at the global real estate and investment management organisation, Colliers International, claims that government regulation will be vital in combating the emergency of this kind of tiered system. “Governments are having to increasingly grapple with the wealth divided between the haves and the have-nots and the housing market is where the rubber hits the road.
“Increasingly, governments will introduce regulatory, taxation and incentive-based schemes that will seek to dissuade buy-to-let investment and encourage both owner occupation and first-time buyers, whilst trying to maintain housing delivery from the private and public sectors to provide multiple types of housing.”
Changing customer demographics and representation
One changing customer demand might come as a result of the changing ages of customers, with the average first-time buyer now seven years older than in 1960, according to Keepmoat Homes. Mark Hayward, CEO of NAEA Propertymark, the professional body for estate agents, sees this trend continuing. “Interestingly, when looking at the profile of homeowners, more than 50 per cent of all housing will be owned by those over the age of 65 in 10 years’ time.”
Richard Barber, Director of Residential Agency at real estate services and investment management company JLL, offers another interesting example of a customer demographic shift – the rise of international buyers in London. In step with this demand, Barber notes an escalating need for experts on the ground that know the market.
“From the buying perspective, the emergence of the property buying agent has led to significant changes in the way we do business with purchasers. Approximately 65% of our buyers are now represented by intermediaries compared to around 30% 10 years ago.”
Minimal changes to the needs of buyers and sellers
But not everyone agrees that customer needs or expectations are shifting in a dramatic way.
Patrick Franco, COO at London estate agent Foxtons, says that despite tough market conditions and the decline in overall property transactions, customers are still looking for the same fundamental qualities from their agent. “Customers want now, more than ever, to deal with knowledgeable, experienced and committed people to help them through the complicated process of selling or letting a property.
“Regardless of how the estate agency landscape evolves, offering a high-quality service will remain crucial to meeting whatever the changing demands of buyers and sellers will be over the next decade”, he adds.
Simon Gresswell, Director at west London-based estate agency Finlay Brewer, agrees. Buyers “instruct an agent to deal with the whole process with minimal effort on their part,” he says. “Some want to be involved in the photographs and want to add their own words to the description, but others trust their agent to deal with the whole process. Sellers expect to be shown the ideal property based on their criteria. They don’t want to be dragged around a number of unsuitable homes.
“These ‘demands’ won’t change; smart agents already recognise the importance of building a relationship with the seller. The more time an agent invests in getting to know the buyer and what they want the easier it is to find them a home.”
Other agents argue that while the nature of customer needs remain the same, those needs will expand, as the market becomes increasingly competitive.
“Buyers and sellers will demand greater professionalism, speed and efficiency,” says Sam Butler, founding partner at Cotswold Property Specialists, Butler Sherborn. “Despite prop-tech, client care and personal attention will become increasingly important. Estate agents will be on notice to demonstrate how they earn their commission, so making the buyer and seller experience an even greater one will become imperative.”