The recent £1 billion flotation of property portal Zoopla has certainly caught the attention of investors around the world and prompted an array of questions. There is no doubt that the introduction of the Internet has changed the way in which we live our daily lives and indeed the property market has been particularly affected. There are growing concerns that property portals such as Zoopla will effectively replace the traditional estate agent of yesteryear leaving the market dominated by a relatively small number of companies.
Is this just scaremongering or is there a real threat to the estate agent market and the way in which we buy and sell property in the future?
Exposure, exposure, exposure
The simple fact is that companies such as Zoopla have used the Internet to maximise their exposure which then offers customers the chance to obtain the best possible price. This is not rocket science, it is something which many companies have used to their advantage to give them significant market share and potentially enormous profits. However, it is worth noting that many estate agents are now using the Internet to their best advantage and even some of the smaller players in local markets are able to obtain exposure they can only dream of.
Quote from PropertyForum.com : “Despite the fact that the EU has no direct jurisdiction over the UK, an EU report out this week warned the UK government that they need to take action on an “overheating” UK property market. Was the EU right to issue the warning?”
At this moment in time Zoopla is better than most property related companies at using the online arena but there is no reason why estate agents cannot fight back.
The Internet has attracted an array of pricing models which are basically stack them high and sell them cheap. In some ways Zoopla has taken advantage of this particular trend offering relatively cheap listings although attracting enough volume and turnover to make significant profits. In simple terms Zoopla is operating on wafer thin margins, with potential add-ons, while increasing volume on an ongoing basis. In many ways estate agents cannot offer the same type of pricing model but then again they have much more to offer than the very straightforward, cheap and simple service offered by Zoopla.
You get what you pay for
While Zoopla will appeal to those looking to sell their properties with fees as low as possible, estate agent will always have a role to play in the marketplace. In simple terms, the ability to literally walk down your street to your local estate agent, discuss your concerns and ideas is worth the additional cost to many people. Whether you are looking to buy or sell a property the chances are this will be the biggest transaction of your life and many people will want their hands to be held from the start to the very finish. These are not necessary services with Zoopla and other property portals will offer although they do team up with complimentary service providers.
In many ways companies such as Zoopla have changed the public face of the UK real estate market but the fact remains that estate agents will always be required by a significant number of buyers and sellers. The ability to talk through ideas, concerns and discuss any questions you may have could be priceless at the end of the day. The stack high and sell them cheap low margin services offered by many property portals are not for everybody.
On the plus side, the introduction of various property portals could put pressure on what many see as skyhigh estate agent fees which could result in a win, win situation for all involved. Estate agents get to maintain their customer base, customers get more affordable charges and those with the confidence to sell without the fallback of an estate agent have the opportunity to use property portals such as Zoopla.