London’s estate agents are trying to beat online competitors at their own game

August 14, 2014
August 14, 2014

It is hard to feel much sympathy for estate agents. They insert themselves between seller and buyer, charging baffling fees and spouting disingenuous spiel. So the rise of online competition might sound like good news—disruption and all that.

But the websites that list real estate don’t actually replace estate agents—most owners still employ humans to show the property and coax buyers to sign on the dotted line. Although these websites offer buyers a new way to browse their options, they also add an extra layer to the deal, inserting themselves between estate agent and buyer and charging estate agents handsomely for the service.

In the UK, where agencies pay £300 to £600 ($500 to $1,000) a month to show their properties on listing websites, a group of irate realtors have decided to challenge the country’s dominant listings sites—Rightmove and Zoopla. They formed a group, Agents Mutual, and are starting a website of their own, called Onthemarket.com, reports the Wall Street Journal (paywall). It is scheduled to launch as a not-for-profit in January next year, and promises much lower fees for realtors.

In theory, that sounds good for buyers and sellers: more competition, especially if it eliminates a middleman, should be a good thing. But the reality is less rosy. Onthemarket will require any UK realtor who lists on the site to forgo one of its two competitors. That means if an agent chooses to list on Onthemarket, he can only list on either Zoopla or Rightmove, but not both. That may turn off sellers looking to list their properties in as many forums as possible.

The lower listing fees could conceivably lead to lower prices for customers. But since the amount is paid per estate agency office, rather than per house rented or sold, the savings for sellers and buyers will likely be tiny. Besides, who ever heard of an estate agency striving to give customers a better deal?

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