The impact of digital on the estate agency business

The Digital Brew : Episode 3. We chat to Tom Bloomfield about how digital has changed the way that people buy and sell houses.

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In Episode 3 of The Digital Brew, I went to see Tom Bloomfield of Bloomfield Grey and we chatted about how digital has changed the way that estate agents go about their business.

On the surface, it would appear that digital has completely changed the estate agency business with the portals such as Rightmove and Zoopla being the Google of property searches.

Surely all you have to do now to sell a house is get a photo on Rightmove? Who needs estate agents? Or… does a good estate agent offer skills that can never be replaced by a machine?

***Apologies for the tinny sound – the technical gremlins that are determined to prevent all going to plan on the sound front were back in force and the sound recorder failed midway through our chat, so all sound is from the camera mics***

View video transcript

Joe: Hello and a warm welcome to the third episode of digital brew. I’m here today with Tom Bloomfield of Bloomfield Grey and we’re here to talk about the way digital has changed the estate agency business.

Tom thanks a lot for your time it’s great to talk to you. You’ve obviously been involved in the estate agency game for quite some time , do you want to give us a quick introduction to you?

Tom: Yeah, ok, thanks Joe. I started in 1999 straight out of uni and in that time I’ve worked in most of West London, I’ve sold farms in Suffolk working for a multi-disciplined firm and I’ve run my own companies, in the last year I’ve set up this firm, Bloomfield Grey.

Joe: Well yes we’ll talk about Bloomfield Grey specifically later on but I think property… we’re obsessed by it. A little bit like the weather, we all love talking about property; Rightmove is now like the ‘house porn’ we’re all addicted to. I think the obvious view is that digital’s changed it entirely without Rightmove – everyone’s so focussed on Rightmove and it’s the bigger portals the Rightmove, Zoopla – just a seismic change in the way estate agency happens – for me actually the interesting thing – and this is where I think your input is so interesting – is the actual nature of running an estate agency itself. And I think we need to look at the buyers and sellers separately I think –

Tom: Yep.

Joe: I think as a buyer, there’s no doubt you go to Rightmove, you know, I think very few people wouldn’t do that. And I don’t know whether you have people who just come to your website and find properties they haven’t seen on Rightmove, or is Rightmove the key driver of most of your traffic, from the buyer?

Tom: From the buyer’s perspective? Yeah, yes it is. And as I understand it there’s some regional variations – some cities Zoopla does better – but generally speaking, as of about five years ago no one was confident enough to challenge that 95% figure. And that was five years ago. Certainly my experience was – well is really that Rightmove is pretty much the housing market now.

Joe: Yes, I agree. But that’s only for buyers, not I think for sellers… looking at it as a buyer I don’t really care who’s selling that house. Although, and we’ll go onto the Purple Bricks of the world, maybe there’s a perception that if a house is being sold via one of the new models – that’s an interesting thing that we could perhaps explore.

As an estate agent you require instructions and you require houses; you require stock that you need to sell…

Tom: Yes.

Joe: I think what traditionally has dictated the selection of an estate agency… so if I wanted to sell my house, what are the traditional factors that sort of make or break an estate agency?

Tom: Yes, so just going back to, in terms of buyers, yes most of the time the brand name that’s next to the house they want to buy is of no real concern…

Joe: – It’s irrelevant.

Tom: … they have some issues with what may come later in terms of service, but it’s the house they’re there for.

Joe: Yes.

Tom: And if it’s the right house, it’s the right house. The way that homeowners choose their estate agent strangely hasn’t really advanced anything like as fast as buyer behaviour has.

Joe: Right, OK.

Tom: Which is odd when you think that buyers are normally sellers as well.

Joe: Yes, that’s a good point actually.

Tom: Yeah I mean, if you look back buyers – homeowners really choose the estate agent to sell the house principally on whether they are the specialist in their type of house so really they’ll look at…

Joe: Price brackets, perhaps location….

Tom: … Yes so if you live in an old rectory in 10 acres then you will go to one of the three or four brands that specialises in that.

Joe: Got you.

Tom: And if you live in a more normal house like most people do then you’re probably choosing on location. You know, have they got lots of activity in our area or an office nearby – you know, something like that. So you’re either choosing on specialism or location. What’s interesting about how that plays out is – if we use the old rectory example – is that when that vendor speaks to those three agents, they’re there to get access to the source of buyers that they think will buy their house. And you know, wind back 20 years you had to go to those agents, because that’s where the buyers were, there was kind of no other way of doing it.

Joe: Yes, they were the ‘gatekeepers’.

Tom: Precisely, all charging broadly the same price then, you know, you had to pay them 15 thousand quid – well, I guess to kind of understand the difference now with what Rightmove has done is to say well, if every buyer is available to every agent, then that same homeowner can theoretically go and list it is with an agent based 400 miles away in a call centre for £200 and access the same audience.

Joe: Yes.

Tom: So, although in my view fees are coming down at quite a slow pace in spite of all that.

Joe: Right OK.

Tom: Yeah, it’s kind of odd, its because the vendors are tuning into this quite slowly, and I think a lot of agents are doing quite a good job of playing down the internet in order to justify the fees they charge. But everyday it’s changing and it will be noticeable… it already it noticeable as fees have come down a bit.

Joe: Yeah I’d say the average percentage – because I’ve moved house quite a few times in the last few years… it seems to be aggressively price competitive and I personally – I might be wrong – but we’re going through a phase… perhaps coming out of the phase of price dictating selection. And I think the more people get burnt through bad service, you know we’ll talk about what makes a good estate agency business, I think actually people are learning that perhaps, it’s a false economy. Yes, you can save money but, if you then get let down, that can be fairly brutal and it can lead to real problems. How is it then that the new Purple Bricks – and there are others but Purple Bricks is probably the best known perhaps – why are they so cheap? You know, which bits are they sort of cutting out of the service and which bits are they keeping? Are they basically advertisers of properties on the boards…?

Tom: They do more than that …

Joe: OK.

Tom: … and I suppose the matching of a person to a house – which use to be done by negotiators making lots of phone calls – has been commoditised. It’s now done by Rightmove, you have to pay them 1000 quid a month and you just do it. So that inevitably, once it gets commoditised… the value goes. So what are you left with? You know, if you’ve got a place where a homeowner can put their house there and find all the buyers, then what use is an estate agent? Well, you know, I think there are things that an estate agent can do to justify their existence and their fees.

Joe: Absolutely.

Tom: They’ve got to add value, it’s as simple as that. You know, if you’re charging £5000 you’ve got to either save the client £5000 of their time or add £5000 to the sale price of the house. It’s as simple as that. And I guess, broadly, there are four areas where you can see an agent adding value. Valuing the house to begin with…

Joe: … Actually getting the number right.

Tom: Yes, predicting the asking price and there’s 100 subsections just within that!

Joe: … Sorry, just to interrupt you on that point, do you find yourself in a situation now? Because, you know, it’s very easy to access sales data as a vendor, do you find that most people have a preconceived view of what they want from their house? You know, they’ll look up land registry data very easily available. They’ll know that Mrs . Jones didn’t have any problem that was £550k, Tim the year before that was £525k, we’re going to be looking at the high £500k’s. Do you get that kind of conversation coming at you?

Tom: Definitely.

Joe: Yeah OK. Is that a problem sometimes? Is it over-inflated? So they may see a house advertised at £550k, they haven’t actually looked at the sale value, it sold for £480k or you know… does that happen?

Tom: Yes it does, that’s right. Vendors are better informed but obviously they can misinterpret that data… and often do. Sometimes that’s compounded by an agent who… just getting it wrong, because they’re not experienced enough.

Joe: …the city might take one for the business!

Tom: Yeah! *Laughs* I’ve heard it said! So you know, and little things like ‘no longer advertising at 99’ – things that just don’t make sense in the digital world for lots of reasons and, you know, there’s more transparency and more information for vendors, but then there’s more of a problem…. Valuing houses isn’t still far harder when it’s a little old rectory in 10 acres because comparables are harder to find and there’s more variables that both the agent and the owner can take an optimistic view of. But certainly if you’re selling more of… it doesn’t necessarily mean low value, you know, terraces in West London are valuable but there are many more obvious comparables.

Joe: Yeah OK, so valuation is one of the key areas where a good estate agent adds value.

Tom: Yes.

Joe: Other areas… ?

Tom: Presentation of the house. So, we know we can hit all the buyers but that’s easy to do. But actually really having an understanding of what it takes to present a house well. OK, so most agents now are doing professional photography and editing and they should be, particularly on a house with a lot to offer, you know, a lot to be photographed. But it goes way beyond that, you know, the way you write written descriptions now – you have to think about where you put the information….

Joe: … the online position.

Tom: Yeah exactly.

Joe: It’s very different. And a brochure’s very different to Rightmove alerts on your mobile phone. Short, sweet and punchy normally works rather than a verbose… selling the dream all the time.

Tom: Yeah because actually on Rightmove and Zoopla you have your short description with a couple of pictures and you still see agents – you get 300 characters in a short description – you’ve got to ram that full of things that are going to suck people in to see the full details. And you still see agents filling that with, you know, ‘We are proud to present…’ and all that stuff. It’s just not understanding digital business. So, presentation is key. And agents have got to know how to do it better than their clients, critically, and some instances invest in doing it better if they have to, you know, outsourcing. And then there’s just the sort of nitty gritty of dealing with sales…

Joe: Yeah, progression. So progression – you know, I’ve been on the receiving end of bad estate agency where a sale fell through so… *Laughs* It wasn’t you! And that just really drove it home for me personally that actually that sales progression , it’s so key, and the nature – the whole model of estate agency where most agents, you’re taking a risk on that sale. It’s in your interest to push that through to completion because that’s when you earn your fee.

And I think there are some models where there is an upfront cost and that’s fine but I think when you know you’ve got someone championing your cause and pushing that sale through, I think that’s a service I think there should be a premium for. But you know, maybe as I’ve been burnt, whereas the online header saying you sell your house £399 all in, if you’ve got a £750,000 house that’s a considerable saving you can see why that happens I think.

Tom: Yeah.

Joe: In terms of the mechanics of how… so Bloomfield Grey is a new estate agency and I think that you know, you’re an interesting model in terms of you’re an interesting, lean and mean and intelligent about the way you do things. What are you doing today with Bloomfield Grey that you weren’t doing back in 1999 perhaps? What things are you specifically doing digitally to help your business?

Tom: OK, I think building a brand for an estate agency you’ve got to look at digital. Cost is the main thing, you know, producing big magazines, hefty advertising in Country Life and things like that it’s massively expensive and you’re not just advertising the houses but the brand as well.

So you know, in this firm we’re getting quite into Facebook now, boosting our posts and kind of learning how to do that …

Joe: Yeah, are you doing that just for your brand or are you doing specific properties? Are you going – what kind of level of granularity are you using that for?

Tom: Erm, we’re doing both, really mixing it up. I think it’s kind of easy just to stick every house on Facebook and assume that’s helping when it’s not really. So it’s trying to find an angle. So we advertised a house the other day in a specific village, so we boosted the post to people that live in and around that village.

Joe: Yep, OK.

Tom: We’ve kind of put some interesting content about that village first.

Joe: Brilliant.

Tom: You know, talking about the pub and all these sorts of things, just trying to engage our brand with that location and then, oh and we’re selling a house here. So, the value is it’s a great place to live in, and here’s the house we’re selling. So that’s – Facebook isn’t where buyers are finding houses it’s where estate agents can build brand awareness.

Joe: Absolutely and you’ll probably find some buyers will see it. You know, perhaps they’re interested in it, Facebook will also join the dots and they’ll know you like village ‘X’ and bang if you start getting hit with it.

Tom: Well we have done occasionally, we’ve made one sale where the buyer found the house from Facebook before she got it from Rightmove.

Joe: Excellent.

Tom: So, you know, it can happen.

Joe: Yeah you know and that’s the beauty – you know, my interest in digital, that’s highly targeted advertising at very low cost. You know Facebook particularly their pricing is incredibly cheap I think in terms of overall value, so you know that’s nice to see that it does deliver rather than a false promise.

So do you still – traditionally, I think, estate agencies have had this mindset that you have to be in the local press. And that’s probably, again, driven by tradition. You know, my parent’s generation, they like to wait for the Thursday edition of the local paper and they sit with their cups of tea… that’s what they like to do. They wait a week, I’ve seen that generation, they wait for Thursday. If there’s a house that’s become available on the Monday you need to see it on the Tuesday morning in a hot, vibrant market where stock is short.

Tom: Absolutely.

Joe: Do you advertise in the press? Are you still doing the traditional print advertising for Bloomfield Grey?

Tom: We took a few adverts when we launched.

Joe: Just to say, ‘we’re on the map’?

Tom: … Precisely. And then we stopped. And you know, I said to my clients that we were using their houses. And I made it very clear to them that this is….

Joe: … for their own benefit!

Tom: *Laughs* Yes! For their own benefit, you know, it won’t do any harm but sure enough, three pages in three pretty sizeable local papers.

Joe: Yeah, but I think, you know, the traditional £5,000 monthly spend on local press gets you an enormous amount of traffic online, and arguably more targeted. I mean, yes, people reading the property section s are interested in property but I’ve seen that for myself. I’ve seen the data and it’s wholly convincing, I mean it’s a miracle. It amazes me – well actually it doesn’t amaze me when you hear the press struggling for advertising revenue because it just doesn’t stack up. I think for a new estate agency, I know you do retargeting so if you get people onto that site, you can then follow them up and keep your brand at the front of mind. As you say, it’s probably a buyer who got drawn into the site and saw the property, but as you quite rightly said, buyers are also normally seller because there is a food chain there.

Tom: I think the – the opportunity that estate agents have, which I think historically they’ve not been great at doing is that when a buyer registers they want to give you their email address; you don’t really have to ask. Because they don’t want a phone call, they want an email quickly and the software that pretty much all agents use these days will just automatically do that and matching. So it’s slightly ahead of Rightmove by a few minutes but,  you know, it’s still nice for clients to get that. But then of course, you’re building up a client database so my business has only been going six months and we’ve got 7-800 email addresses of people who – they might live out of area but they’re trying to live here. Well project forward s 10 years that’s going to be a sizeable amount of data and, you know, you can communicate with people not just about the houses that are coming on but about what you’re up to, what’s going on in the housing market… provided the content is valuable and interesting that’s how you can keep your brand going.

Joe: Yes and I think that matchmaking that would have taken the negotiators’ time to sort of do their own matchmaking process getting on the phone and that takes time. So in terms of your efficiency as a business – and I mentioned the kind of lean and mean – you know, you’re keeping it a lean machine that’s just brutally effective. There’s no real dead wood in the way you operate because you‘re embracing the new opportunities that weren’t really there before.

Tom: Make no secret of it, our negotiating it done by websites, by Rightmove, and this particular firm – and I think there’ll be many more like us in the future – we are not engaging in any kind of marketing, including our own business, that is either expensive or that doesn’t at least promote our clients’ houses. So for example, this is our office. We don’t have passing trade but it is a very cheap place to be.

Joe: Yep.

Tom: It’s efficient, it’s close to all the main roads, and that works really well. And as a result of that our fees are a little bit less which means we can compete in that online sphere. So for us it’s about kind of making sure we do the things that are important well. Advertising the clients’ houses as well as we can, the working parts behind the scenes, you know, making sure we’ve been to the houses, answering the phone quickly enough… good basic stuff.

Joe: Yeah exactly and that sounds pretty obvious but it’s just doing what you should be able to do and doing it really well, better than others.  

And that’s why it’s interesting for me coming in at a digital angle because there’s no real… the progression bit once you’re answering the phone, pushing things through, that’s not a digital thing so you can live without digital at that point absolutely. But to get to that point, digital has become so important. There are very few industries where it hasn’t affected it and it’s sort of become really quite crucial. Luckily for us! You know, it’s almost an industry where you can’t live without it but there are aspects of your business where, if you rely on it too much, perhaps with the Purple Bricks where it’s all automated, they’re really just booking agents. You know, there’s no viewings, there’s no service around that so, yes, you can see why they’re cheap. But they are quite efficient as well, you know, you can mechanise that process, whereas, I’d like to think and I’d like to hope that there is still an appetite for good service. I think there’s a real danger across any industry let alone estate agency that people just go for the cheaper option and quite increasingly you’ll see people going full circle and saying ‘we need full service’ and, you know, we understand that comes at a premium but it’s a cost that’s right and relevant for the service that’s being given.

Tom: Sure, so I think that … for a decade there’s going to be a spectrum of different agency types that work, and there’s plenty of opportunity for agents that are more traditional now to evolve, they’ve just got to think about how they function really.

But Purple Bricks in some respects, they are the more successful, online agent if you want to call them that, but in reality they’re charging a lot more than the online agents that would have emerged over the last sort of ten years.

It just comes down to two things: quite right, they have the buyers that any agent has,  but you’re going to have one member of staff for, I’m estimating, 150 houses for sale for example.

Joe: Yes, and I’d argue that – yes, they’ve got buyers – but Rightmove has all those buyers and I think as long as you’re visible on Rightmove I’d suggest anybody has also got access to those same buyers – it might be five minutes before or whatever it might be…

Tom: Yes, how efficient can they be at dealing with those leads? You know, at this firm, we’ve made a commitment to dealing with every single Rightmove lead inside an hour. We’re trying to do it in 15 minutes, we’re trying to do it inside a minute; if a Rightmove lead comes in I want to be on the phone in a minute , so that’s someone who’s been in that house there. You know, I’d suggest one of the issues that’s going to come from high volume agencies is that a proportion of the leads that are coming in just aren’t going to be dealt with…

Joe: Yes, they’ll just sit in a pile…

Tom: … Potentially.

Joe: So that’s hard to scale that for you, isn’t it? If you’ve got more and more coming in then that becomes a challenge. A nice challenge to have…

Tom: Well, yes we’re kind of a boutique agency here so, for us, I think that’s something that we can commit to but, again, it just comes down to a ratio of people to property and I think if you’ve got enough people then you can meet those standards.

Joe: No, that’s good. Is it an urban myth that a ‘Sold’ sign is your favourite form of advertising? The amount of times I’ve been told that, is that a complete fallacy?

Tom: No, I think it’s massively important for – it’s been hugely important for agents traditionally . If you work in a concentrated area, in a town, and you’ve got a board on every street that says ‘For Sale’ or ‘Sold’, add up the hits on number of sets of eyes…

Joe: It’s a lot.

Tom: …it must be huge.

Joe: And you’ve got to get a ripple effect – as long as you’re good at your job – you’ll get a ripple effect down that road or within the immediate vicinity. They… you know, perceive trust. Again, Mrs Jones she used Bloomfield Grey to sell her house and she said it was great – you’re going to get in and, again, that’s totally divorced from digital. Digital has nothing to do with that particular journey.   

Tom: I think perhaps the ‘For Sale’ board is perhaps the one bit of traditional marketing that still makes sense. And that’s only because it’s incredibly cheap. You know, it costs £5 to put a board up and £5 to take it down and they get a lot of views, just offline. And I can’t imagine a time when that’s not going to be good value. So, you know, love them or hate them, they’ll be around.

Joe: Yeah, well I mean, certainly in Colchester, you see that every school fete… they’re all sponsored by estate agents and I think, ‘Oh I didn’t know they’ve got their house for sale’ but it’s not at all it’s just… and you think, there must be a reason they do that.

Cool. Tom, it’s been great to speak to you, thanks a lot for your time and good luck with Bloomfield Grey, onwards and upwards!

That’s it for Episode 3, hope you enjoyed that. We are always looking for anyone that wants to get involved so please do share your feedback and get in touch if you’d like to be involved. Thank you very much.

A big thank you to Tom for his time, for sharing his thoughts and for a mighty fine cup of tea.

As always, we welcome your feedback on The Digital Brew so please feel free to leave comments below. We are always on the lookout for interesting topics for future episodes, so please do not hestitate to get in touch if you would like to be involved.

 

 

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