Coupled with reduced sales, competition from online agents has left 27% of the UK’s estate agents struggling for business. Property technology is on the rise and even traditional agents are increasingly using digital technology and social media to promote properties. Research carried out by the large online agent Purplebricks revealed that 60% of house buying activity, like bookings and viewings, happens when traditional estate agents are closed. Now, Purplebricks are attempting to expand and take on the complex and highly regulated realtor business in the States.
Opportunities in America
Online agents see great scope for savings in the US due to the convoluted procedure costing up to four times as much as in the UK. The use of online estate agents is still in its infancy in the States, with Redfin, the largest online agent only controlling 0.71% of the market. However, the process of buying a house in America is quite different to the UK. A very personalised system, where a realtor works for you and acts as your representative throughout the procedure, is seen as being harder to replace with a computerised system. Your real estate agent is with you every step of the way, not only helping to ensure you are making the right financial choices to suit your situation but also taking charge of viewings, negotiations and closing deals.
Changes in New Zealand
The situation is similar elsewhere in the world. Estate agents in New Zealand work in much the same way as those in USA, charging large commissions but handling more of the contract negotiations and therefore seeing themselves as taking on more risk. So, although online agents are becoming more popular, New Zealanders appreciate a valuable, personal service that takes them through the whole process of buying a property. Although in the UK, costs for an online estate agent are a set fee, sometimes as low as £500, this does not include the work of a conveyancing solicitor, the cost of which can be significant. However, in a country that charges much more than neighbouring Australia or the UK, some believe changing the New Zealand system is necessary.
Whether online estate agents eventually take off in an increasingly digital world remains to be seen. It looks like they may meet considerable resistance outside of the UK where the process of buying a house is very different. Certainly in the UK they’re here to stay and increasing their share of the market every day.