Portals, Agents and the Declining Property Market
February 2, 2009 by Emma Sorensen
![[image: flickr/filtran]](http://www1.propertyportalwatch.com/wp-content/uploads/2009/02/propertymarket_filtran.jpg "propertymarket_filtran")
propertyportalwatch.com welcomes a guest post from Michael John Osborn on the intertwined relationship between UK portals, agents and the recent property market decline.
Mike is an online property consultant and owner of brightmove.co.uk.
Mike poses an interesting – and potentially controversial – question in this post, and we welcome your comments.
These are testing times for Estate Agents. With a limited number of buyers and a good choice of properties on the market, only exceptional or cheap properties are selling. Properties which are both exceptional and cheap are also in demand. So what happened? Leading up to Summer 2008, buyer confidence slowly eroded away particularly after Northern Rock ran into difficulties and after all the unsettling events which followed. Before that, Estate agents had enjoyed a boom period with buyers and investors clamouring to purchase property on the hope of good rents and a continually rising market. We were told by the Government that there was a huge shortage of homes in the UK and more would need to be built. Now the bulldozers are at a standstill and building projects remain unfinished. There have been mass redundancies in the construction and related industries. Could Rightmove be partly to blame for the decline in the Property market? Rightmove has been in operation now for 9 years having started business in Autumn 2000. Rightmove’s aim was to be the place for all UK home movers to find details of all properties available to buy or rent. Rightmove was set up as an Internet Property Portal, a joint enterprise between The Skipton Building Society, who own the Connells Estate Agency Group, Halifax, Countrywide PLC, and Royal & Sun Alliance. Royal & Sun Alliance later became Sequence owning brand names such as Fox & Sons. Sequence is now part of the Connells group.
Rightmove soon opened its doors to all High Street Estate Agents although at a cost. The initial uptake was low, however with a very clever press and TV marketing campaign an excellent brand awareness was soon established with the house buying and selling public. As a result, vendors were actually insisting that their chosen agent belonged to Rightmove. Membership of Rightmove increased dramatically. Selling property all of a sudden became simplicity in itself. All an Estate Agent had to do was to sign up Vendors with those valuable sole agency instructions and market the property with an appealing description and photos on Rightmove. There will always be those buyers and sellers of course who do not use the internet or computers. However, Rightmove produced a sufficient number of enquiries from those Internet savvy buyers who found Rightmove appealing, user friendly and straightforward to use. The result – more Estate Agents set up in business on the High Street on the back of Rightmove. The large corporates also expanded. Whole streets in some towns and cities turned into complete rows of Estate Agents offices. This may be regarded by some as a good thing as it allows the consumer a freedom of choice. Now almost every estate agent in the land displays a Rightmove sticker in their window confirming that Rightmove really is the Number One property website and the Internet is the most effective media for selling houses. The concept of one web site for all Estate Agents really seemed to work. A combination of good timing, the correct marketing mix in promoting the website and the user friendliness of the site meant that Rightmove had a head start and any competitor would be left well behind.
It is true that Estate Agent commissions in the UK are amongst the lowest in Europe and the rest of the world mainly due to competition between the large number of Estate Agents in every UK town and city. Many Estate Agents depend on a constant turnover of sales also referred to as churn. They may also depend on the sale of subsidiary services such as mortgages, Home Information Packs, and conveyancing services. If money does not come in through the door then the wages, advertising and Rightmove subscriptions cannot be met.
Now it is culling time for Estate Agents. Perhaps those very same Estate Agents who promoted Rightmove to fantastically dizzy heights have in effect shot themselves in the foot. The one big website helped to promote the sale of property and may have enticed buyers to pay prices they couldn’t really afford. Now buyers are naturally hesitating, pent up demand is the result and the majority of those buyers are waiting, expecting prices to drop even further. No longer are sellers moving on a whim. The website that tempted agents to open and expand and helped to push prices up may have a lot to answer for.
By Michael John Osborn
Online Property Consultant and owner of brightmove.co.uk.
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Really struggle to find a link to blame the dominant portal
We had a boom ,artificial in some ways created by a US generated global bubble economy.
Lots of agents opened shop.
Lots made money,
Now the volumes dropped the boom time players will go bust if they arent up to the mark or undercapitalised.
The UK situation is worse becuase hundreds of thousands used the bubble economy equity gains to leverage up and buy in Spain,Italy,Greece,Bulgaria etc now its all collapsing.
Rightmove will most likely survive and benefit IF they can manage their costs ,and perhaps assist the quality agencies that helped them build their business.
Interesting article, although as the above poster says, there’s more behind property price inflation in the UK than just RightMove.
Smart agents would do well to put their eggs in more than one basket and not forget to market their properties internationally. Everyone knows the UK economy will bounce back and with it so will property prices. It’s just a question of how quickly. With the sterling/euro parity now and plenty of money in new economies, foresighted overseas buyers will use the current situation to get in now and benefit later.
Rightmove was a fantastic tool, which gained support from agents for the fact that it worked, it came at a time when the web was ripe to exploit in such a way pouring in sacks of money that agents alone couldnt do. Hats off to Rightmove they made the most of a customer need and created a once great property media tool. In recent months RM could have (to their cost) have been fairer to agents. Their fees are these days way too high.
John at Brightmove has created a portal, and as a portal owner would no doubt be very thankful if one day he made a fortune, is this any different to RM. My gripe with RM is that agents years ago should have prepared and created their own site and gone back to working together, rather than pouring a tremendous amount of money into the RM shareholders pockets, at one time namely the corporates.
Is RM responsible for the inflated market. NO. They merely created a media platform no different in principle to a national newspaper.
Thanks for all the constructive comments so far. There now appears to be a new breed of Estate Agent emerging – the lreally low commission Estate Agent working at really unprofitable fees on the back of Rightmove. Rightmove would do well to close their doors to this type of Estate Agent who are usually unqualified and enticed to the business by the taking up of a franchise or worse still a licence. There are a lot of gullible people out there parting with their redundancy money to set up perhaps unwisely as Estate Agents with fantastic promises from the directors of such firms that there is a lot of money to be made by this type of business proposition.
True
But also a lot of gullible people investing money into portals that have no viable business model as well.
Its a democratic society and if people choose to throw away their money they can.
Thanks Snoop – I too would question spending money on a portal with no substance. Of course the more activity there is on a good branded portal, the more chance there is of results. This is definitely a chicken and egg situation. Fortunately or unfortunately depending on how you look at it, Rightmove came to roost first and I can tell you from personal experience that they do not take kindly to opponents whether they are Crusaders or not. If you ever have doubts about a property portal which may just be viable – you could always ask for a free trial!
The One Big Web Site model for all properties is an excellent concept. Agents will continue to subscribe to Rightmove. Rightmove is too far ahead of the competition who have been left standing well behind. Rightmove will not amend their pricing structure for UK properties as they have no need too. The property market is showing signs of recovery and Rightmove will continue to be an essential tool for any Estate Agents wanting to keep ahead in the property market. An equilibrium point will soon be reached where just the optimum number of Estate Agents will co-exist in UK towns and cities. The competition amongst other property portals will give Rightmove the incentive to keep abreast of the competiton. There is no standing still in this market.
Good read, lets all hope that the Turner review doesn’t go ahead. This would significantly effect a lot of property value.
We offer a comprehensive list of commercial property, ranging from offices to warehouses – and have found that online advertising is in strong demand as sellers/agents seek a better ROI.
Rightmove is restructuring and there have been recent depatures of directors. Rightmove are trying to devise new marketing angles to retain their subscribers. I doubt the continued viability of the really expensive membership model property portals.