Disruption in property market gathering pace

In his excellent book “What would Google do?”, published as long ago as 2009, Jeff Jarvis said: “The real-estate business is ripe for disruption”. The reason was that as an industry it was focusing on its own needs rather than those of its customers and was not delivering the level of value it thought it did.

In 2013, the Dent Consultancy conducted some research on the UK property market which bore out Jarvis’ point of view. We focused specifically on the process of buying and selling a home and the role played by estate agents in the process.

The results were underwhelming in the extreme and much of the problem was dramatized by the quality of their websites. The research looked at websites of 20 estate agents, some national, some local, and respondents were shocked at how poor they were. Many looked quite nice, but the sites didn’t seem to understand the needs of people looking to buy or sell homes. It was unclear where to start or how to navigate the sites, much of the desired information was missing, the language was riddled with self-congratulatory clichés and there were very few reasons to want to make contact other than the lack of other options and the fact that other estate agents’ sites were no better.

As one respondent put it: “If they can’t market themselves, how will they market my property?”

This dissatisfaction had already brought about the first stages of disruption with online property specialists such as Rightmove and Zoopla felt to be miles ahead of the bricks and mortar brigade online.

Three years later, we have just conducted similar research, again with people who have sold a house in the last 5 years, and it is fascinating how the disruption is gathering pace. It’s still early days, but there are now quite a few companies looking to break the traditional estate agency model, amongst which number Purple Bricks, tepilo (Sara Beeny) and emoov.

Their market share is still small, but it is increasing, disruption that is likely to get more significant, as people reap the benefits. In the words of another respondent: “I sold through Purple Bricks and although the service was poor, I saved a fortune so would do it again.” This is particularly damning as it places in sharp focus the perceived lack of service from traditional estate agents.

People understand what’s going on and the way things are moving. There was general agreement to one person’s view that:

“Eventually Google will do it.”

More worrying from the point of view of the existing estate agency model was not only that this could happen, but respondents felt that it would be a great improvement on the current situation.

Inspired to think about different options, respondents talked about how they could sell their home themselves, on websites such as Ebay, Gumtree and Loot. Then Facebook was mentioned and the discussion became even more animated.

If this sounds worrying for traditional estate agents, it should. However, there is also a potential opportunity to be grasped. To return to Jeff Jarvis:

“If you’re the smartest, most competitive agent around, you should want to leapfrog your cozy competitors, disrupt their business, and exploit the new opportunities online brings. Or a newcomer will.”

Look at John Lewis. Their digital offer is very good, but their customer service is simply excellent, hence why they are doing so well. Then take Amazon. I use Amazon because they are generally as cheap as anywhere else, but I know, if anything goes wrong, they will call me back immediately and sort it out. And they do.

There are so many things that house buyers and sellers are crying out for property companies to do and this represents a huge opportunity for companies that choose to move with the times, rather than fight against change.

It will be fascinating to see what happens and to see which companies fall by the wayside like Blackberry, Blockbuster and Kodak or adapt, thrive and lead, like Apple, Fiji and Netflix. Interesting times ahead!