We are fortunate enough to work with over 5,500 of the best performing estate agents in the UK and something that comes up time and time again is the opinion that a successful estate agent is one that has local knowledge.
What isn’t clear is what actually constitutes a ‘local’ estate agent and how they go about deciding how ‘local’ they should be, so we decided we’d explore this further. Following the success of our previous research, we felt it was also necessary to look at the differences between high street estate agents and online estate agents, in this instance using Purplebricks as an example.
As a data driven business we have access to a number of property sources. As such, we were able to analyse over 14,000 estate agency branches and all estate agent property listings (over 1 million in total) over a 6 month period from January 2017 - July 2017. We also spoke to a range of estate agents to find out what they think.
We have outlined the main findings from the research below.
In order to understand what is meant by ‘local’ we analysed the median distance from branch to listing for over 14,000 estate agency branches.
KFH branches were the closest to their properties, with a median distance to their listings of just over 1km. Sequence Homes branches were the furthest away from their properties, with a median distance to their listings of just over 3.5km. On average, properties are around 3km away from the estate agency branches they are listed with.
To understand how important locality is we spoke to a number of estate agents, both corporate and independent.
Interestingly, the large corporates use a very scientific approach when deciding what area they should cover and the size of that area. They use a number of data sources, including the number of households and the frequency of property sales. The independent estate agents we’ve spoken to tend to choose a location they know very well and the size of the area they cover depends on customer reach. What all the high street estate agents we spoke to have in common is that they see their local knowledge and their local database as a key factor to their success.
“Being local is so important. I don’t understand how an estate agent can add value if they don’t know the area, the people and the properties. I know I can value a property accurately in the area I cover as I am likely to have sold a property very close by.”
Online estate agents do things a little differently to high street estate agents. Firstly, they do not have a branch, a cost saving approach which allows them to offer customers a cheaper (albeit upfront) fee. Instead they have Local Property Experts (LPEs) who manage listings from home. Secondly, rather than expanding a business from one set location, what determines the area they cover is the leads that are generated from the main website. As such, they often pick up listings from a wider catchment area than high street estate agents.
We analysed the average distance between two Purplebricks property listings and looked at how this compares to a high street agent.
On average the distance between two Purplebricks listings covered by the same LPE is 10km. 10km is a much larger distance compared to the median distance between the high street branches and their listings.
10km is the average distance between two Purplebricks properties.
Research shows that each Purplebrick’s LPE has taken on substantially more properties than the average high street estate agent. So this means Purplebricks have further to travel between properties AND more properties to visit. Purplebricks LPEs listed 90 properties on the main portals, compared to the average high street branch which was 45 listings (analysis of a 6 month period January 2017 - July 2017).
“I recently listed my own home with a competitor as my estate agents is not local to the property. I know that they will do a better job as they have a local database they can utilise”
As the graph highlights, the closer the estate agency branches are to the properties, the fewer the number of properties they list. There are a number of branches that are an exception to this rule, situated further away from the properties and listing fewer. These are branches that are based in more rural areas. This is likely a result of there being less stock available, increasing the area size they need to cover. There was also a link between smaller median listing distance and larger property values, which makes sense.
The nation is often quick to criticise estate agents but our experiences have been quite different. Discussing the importance of being local with estate agents showed there is in fact a softer side to them. It demonstrated how proud and passionate they are about the neighbourhood they live and work in, not just about the properties they are wanting to sell.
“There is nothing better than being able to reassure parents coming to a new area. Making them feel confident about the school they are looking at (because your child went to the same school) and being able to put their mind at rest. Local knowledge also means we are able to value correctly and get properties sold quicker.”
I think it’s safe to say that the research has made us question whether the Purplebricks Local Property Experts can really call themselves 'local'.
BBC Watchdog recently covered Purplebricks following a number of complaints against them. Steph McGovern spoke with one disappointed Purplebricks customer, he lived in South London but found out his LPE lived 30 miles away from the house he was selling. Purplebricks are on a drive to recruit more LPEs so this may be a short term issue but can they really expect customers to deal with the consequences in the meantime? Are we seeing another company expand too quickly, forgetting that the service they offer to customers is key to long term sustainable growth?
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