Expert said he expects online estate agents to struggle against traditional agents this year
Today there’s an abundance of choice when picking an online estate agent, but according to the founder of estate & letting agent comparison site, Rentround, this has caused the cost per acquisition to increase.
Rajdeep Dosanjh (pictured) said the current market and economic conditions were proving a real challenge for online estate agents and he expected them to struggle this year.
“In recent times, we have seen a dip in the amount of clicks online agents are getting from ads, and it is the opposite for traditional agents,” Dosanjh said.
Rentround monitors search terms to help landlords compare letting agent fees and performance to make an informed choice on which agent to select.
Dosanjh said the lower margins for online estate agents meant they were able to bid less when people were searching critical terms on Google, for instance ‘let, or sell, my property quickly’.
“With the ad positions for such terms mainly being taken up by traditional agents, it puts acquisition pressure on online agents,” he said.
The big online agents have in the past spent huge amounts on PR and TV ads; however, Dosanjh said it was obvious from the share price and profits of certain online agents, that this was not working.
Dosanjh believed online agents should therefore consider organic rankings to obtain traffic, although he added that getting a platform to rank well on Google could take years.
“So, online agents looking for fast growth may not have the funds to wait this period out, or the expertise; creative methods such as TikTok, referrals and comparison platforms should therefore be considered to increase market share and revenue,” he said.
Innovation
Despite the difficulty in standing out amongst the crowd, Dosanjh said that, from his interactions with online estate agents, he believed it was clear to see that there was plenty of innovation in the space.
“I have been extremely impressed with online agents, they have been adopting better lead management platforms, increasing aggressiveness and creativity in marketing, as well as introducing improved online tools,” he said.
On the flip side, Dosanjh said traditional and hybrid agents had also embraced technology to challenge the position of online agents.
He added that these types of agents were providing an element of face-to-face interaction while still offering low fees.
“They are investing in strong technology and processes to streamline operations and lower costs, which closes the gap with those agents that are online only,” Dosanjh said.
Advice
Dosanjh said that during the pandemic, online estate agents had the upper hand because there was a fear of interacting face-to-face, as well as restrictions.
However, the environment was now very different, and with the economic challenges facing many people, he believed the importance of a personal service had risen to the forefront.
“Landlords are becoming increasingly worried about their rental income security; there are more fines, more regulations and increasing amounts of tenant power and rights,” he said.
As a result, Dosanjh said landlords wanted local knowledge and expertise to guide them through the rental market, which online agents did not provide as part of their service.
In terms of selling, house prices were turbulent and valuations from one agent to another could differ drastically, therefore, Dosanjh said a hands off or virtual valuation might not give the comfortability factor a local agent could provide.
“All these factors are veering a proportion of the market away from the hands of online estate agents, and toward the higher cost services that encompass a more detailed and personal service, which traditional estate agents provide,” Dosanjh said.
How do you expect online estate agents to fair over the course of the year? Let us know in the comment section below.
