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Online Estate Agents

Online Estate Agents.

12th April 2016

There has been a 15% increase in the number of traditional real estate agents going out of business in 2015.

According to Moore Stevens accountancy firm, this increase took a jump from 160 in 2014 to 185 in 2015 pitching in the general downward trend in the amount of insolvent companies around the same period.

It says that local estate brokers were last year squeezed out by bigger brands and what it calls ‘no frills’ competitors – online estate brokers.

Moore Stephens says that estate agents’ failures bucked the general tendency, where the national speed of company insolvencies across all sectors fell by 9%, from 16,558 to 15,027.

Moore Stephens also has it that lots of local estate services are being pushed out by larger brands which are out-spending them on advertising, and new online, low cost estate agency services.

Moore Stephens asserts that the fixed rate business structure of the many online agent services had put a lot of pressure on high street agencies.

According to Mike Finch, a restructuring and insolvency partner at Moore Stephens, “The rising number of ‘no frills’ estate agents at one end of the market and modern, highly branded estate agents is posing a threat to smaller traditional firms in a crowded field”.

“Modest high street services, with their high-priced store space and workers can never match the low fees of estate agents online.

If a high street agent had to cut his/her costs to meet with the cost of the online agents, then, they are running the risk of losing out a lot of businesses to big agencies with large budgets.

“High street estate agents had hoped that the fixed-fee business model of online estate agents would be a ‘flash-in-the-pan’ but it does seem to be taking hold.”

“Although the property market is buoyant at the moment, competition between estate agencies is as fierce as ever and many areas are saturated.”

According to figures from The Property Ombudsman, the number of buying agents has fallen separately, from 547 at the beginning of last year to 497.