After the recent story on HuffingtonPost.co.uk with our predictions for 2013, we have had a few people asking how we came to the figures mentioned. Specifically how we can suggest that for every online agent that opens, 9 high street agents branches will close.
It is fairly simple really. Let us explain.
By our reckoning (and that is using experience from working on the high street for a combined 35 years), an average high street agency deals with around 180 new properties (instructions) on the market each year, or 15 new instructions per month.
At Hatched, we have streamlined all of our systems; we don’t have a window display or newspaper adverts to constantly update. We text and email viewing confirmations and viewing feedback, saving a huge amount of ‘phone time’. We also automatically chase solicitors whilst a sale is going through – again, saving a huge amount of sales chasing, but still getting the desired updates via automatic emails that go out a specific times throughout the transaction.
We also don’t waste time ‘valuing’ houses that are never going to come on the market. We only go and ‘value’ properties that are definitely coming on with us – this is probably the single most important part of our process.
In May 2012 (when we had one office) we took on 165 properties. And we were at full tilt - we literally couldn't have done any more! So, based on a more 'do-able' figure of 140 new instructions in a month, our single online estate agency office dealt with 9 times more new instructions than an average high street agent branch.
This is one of the reasons we decided to open regional branches around the country - our single office couldn't cope with any more instructions once we got to 140 a month. Our regional branches cover vast areas - miles more than a one office high street branch. Typically a high street agent will cover 15,000 - 20,000 'chimney pots'. At the moment, each of our offices cover millions of chimney pots, however, we believe that in the future an online estate agency office will be fully operational, reliable to customers and profitable by covering 200,000 chimney pots. Again, using these figures, it would actually take between 10 and 13 high street offices to cover 200,000 chimney pots, whereas it would only take one online estate agency office to cover this territory.
Fast forward to 2014. If we take a figure of 2,000,000 new instructions in total coming on to the market in 2014, and online agents taking 10% of the market (as predicted), online estate agents would be taking on 16,667 new instructions per month in 2014.
Based on how we work, we would need 119 online estate agents offices to cope with this level of instructions. (16,667 new instructions in a month, divided by 140 instructions = 119 online estate agents)
Using the same figures above, it would take 1,111 high street branches to deal with this level of new instructions each month. (16,667 new instructions in a month, divided by average level of a high street agent of 15 instructions, which equals 1,111 estate agency branches required to cover this level of business)
It stands to reason that if one online agent, i.e. us, can deal with the same volume as 9 high street agents, then those 9 high street agents are at risk.
We are not in any way saying this is going to happen imminently, but certainly if online estate agency becomes more commonplace and other online estate agents adopt similar systems and marketing techniques, it looks a possibility at some point in the future.
We believe the hard part for other online estate agents will be to use systems similar to our own. Our systems are bespoke and we have invested a large amount of money in our ‘back end systems’ to make us as streamlined as possible. We believe, we are more streamlined than any other agent in the whole of the UK, meaning our fees will continue to be at low levels compared to other online agents who continue to put their prices up.
So perhaps not 'for every online estate agent that opens, 9 high street agents will close'. Perhaps more accurate, is that 'for every Hatched.co.uk that opens, 9 high street agents will close'. But only time will tell, so bring on the future!