This article was originally published in November 2020.
It’s all change in the residential property market as estate agency business models are reshaped and players come and go. Who will emerge as the winners?
A paradigm shift in the way business is conducted is racing ahead, and plenty of innovation – largely proptech-driven – is emerging to add choice or confusion, depending upon your viewpoint. In the short term all this change is muddying the waters, but this will settle down and the winners can hope to reap the rewards of greater market share and increased profitability.
The structure of estate agency is also changing. A seemingly endless flow of individual agents, perhaps surplus to requirements at established businesses, are now entering self-employment – often under the umbrella of American-led operators such as eXp Realty and Keller Williams, with the promise of a better work-life balance and greater rewards. These operators are making a lot of noise about their growth but much less about their sales performance. Individual agents are very good at promoting the umbrella operation, but it must be remembered that they are rewarded for doing so in a pyramid-type scheme whereby they earn from other agents they attract to the network. In reality, they will all need to perform well or they will be taking a slice of very little.
I have written here before about the potential benefits but also the downsides of these set-ups. Certainly, I expect churn among this group to be substantial, as not all will be able to realise their dreams or adapt to this new way of working. For the parent operators this is less important since, provided they keep loading the sausage machine at the top, some sausages will appear at the bottom – and will do so without the huge costs of an employed workforce.