So, we are in the middle of the 2000’s, money is awash through the system. You can buy a property and the bank will not only give you 100% of the money needed, they will give you another 25% of the value as a thank you, what could possibly go wrong with that!?
The portal market is the same. The list of free portals is almost endless and some with big name investors too such as James Caan, from Dragons Den is an investor in Look4aProperty, started by Arron Turner and offering home sellers 0% finance on their estate agent fees, and some portals have even started ‘scrapping’ sites like Rightmove and claiming to be the google of property where you can go to find links to all of the different portals. These are quickly shut down by Rightmove who threaten legal action.
By now other famous print companies were looking at how they could get involved in the internet and the Trader Media Group (owners of Auto-trader) had bought Vebra, one of, if not the most popular of the Estate Agency Softwares. Initially they had tried to promote vebra.com as a portal, but in reality it was just a place that agents stored their online properties without any real public awareness, so they created a new portal called Thinkproperty.com and all users of Vebra became ‘automatic’ subscribers.
In May 2007 this statement was released:
“Guardian Media Group plc ('GMG') today announces the formation of a new property services division.
GMG Property Services Group will comprise two operating units: Vebra, the UK's leading software provider for independent estate agents; and Thinkproperty.com, the country's fastest growing consumer-facing property portal.
Vebra is a long-established and profitable business that has been providing market-leading software solutions for over 25 years. 13,000 people use its products every day.
In a very short period of time Thinkproperty.com has built up some 400,000 properties and relationships with more than 4,000 estate agents”
But all was not good in the property market. In late 2007 the market began to crash following the trend of the global financial crisis and business became much harder for estate agents.
However, they had given rise to mass amounts of competition because the established agents had given credibility and rise to all of the free portals, therefore it had become very easy for anyone, even an ex-employee with no financial backing to open up as an estate agent and just not list on the more expensive portals but still look good enough to the public to gain traction.
All of the more well-known brand agents started to withdraw from free portals on mass, saying that their brand was valuable and they would not be ‘used’ to promote pointless websites that would in turn only actually damage them by allowing lesser known brands to advertise alongside them for free!
The days of the free portal were dead. Literally, you could not even give it away.
In January 2008, Zoopla launched. I was invited to lunch with Alex Chesterman in 2007 and we discussed what would be so different about this that would make any sort of difference?
We sat in a very smart hotel in Central London and he proceeded to tell me that Zoopla is different. It is not just about the properties that are currently for sale. It is about any property in the UK! You can find your own property on there and Zoopla will have put an estimated value on that property based on recent sold prices etc. But if you don’t agree with it, you can create an account and go in and make changes or challenge it.
Because of this they feel that they will have a website that is appealing to every property owner in the UK and not just those looking to buy or rent, giving them more traffic.
Not only that, but they made a big thing about how unfair subscription based models were where you had to pay the same amount regardless of if you had 10 properties or 50 properties or if you were getting any enquiries or not, so rather than being free, they would charge but they would ONLY charge £1 per enquiry.
Being an entrepreneurial spirt myself I liked the concept. Would it work? Maybe. I was not sure that people were as interested as Zoopla thought about their property if they were not selling or letting and I had also seen so many free properties burn by now it was just hard to see this would be much different. BUT, it was certainly the best idea I had heard for 10 years in terms of new property portals.
Around this time another new portal launched called Globrix. Globrix was really based around the now age old model of being free but it had a super modern design for the time that made everything else look very dated. It had the backing of News International newspaper group and really just followed the method of ‘we can promote it in our papers’.
2008 to 2012 were tough years in the estate agency industry, not only had mortgages become much harder to get but agents had really significantly increased their competition by allowing literally anyone the affordability to become an estate agent and not have to pay to advertise properties. Fees had now become a huge problem for agents. For instance a 2+ branch agent with 10 staff running estate agency software and listing on Rightmove simply could not compete with 1 bloke working out of his bedroom who lists on free portals and Estate Agents were not used to that battleground that they themselves had created by thinking, what harm can it do to list on a portal if it is free?
Zoopla, had failed to make an immediate impact into the property portal market but instead had embarked on the acquisition trail of all of the remaining battle scared portals that the newspaper groups no longer wanted.
In July 2009, Zoopla acquired property website Thinkproperty.com from the Guardian Media Group.
In August 2009, Zoopla acquired Propertyfinder.com, for an undisclosed sum. In January 2011 Zoopla acquired the historic database of UK house prices HousePrices.co.uk.
Then in October 2011, Zoopla and Digital Property Group, the subsidiary of A&N Media, operating property websites Primelocation.com, Globrix.com and FindaProperty.com, merged their respective businesses and in May 2012, Zoopla acquired property information website UpMyStreet.com.
In June 2014, Zoopla's biggest shareholder, the Daily Mail and General Trust floated Zoopla on the London Stock Exchange. This was from The Negotiator Magazine at the time:
“The Zoopla stock market float was a long time coming, but on 18th June Zoopla Property Group’s listing on the London Stock Exchange (LON:ZPLA) valued the company at 220p a share, selling 38.3 per cent of its share capital, £919m in total. The issue was, apparently, four times oversubscribed and by 9th July the share price had risen to 257.25p.
All the money raised went to pay off existing shareholders, notably Daily Mail & General Trust, founder Alex Chesterman (who enjoyed an impressive £30m windfall), Countrywide, LSL and Connells; the float was not intended to raise new money.”
By 2014 the Estate Agency market was back, with sales and rentals busy in all parts of the country but the landscape had changed. Zoopla had moved to a subscription-based model and there were no free portals left, leaving all agents having to pay to advertise properties. Whilst Zoopla was still significantly cheaper to list on than Rightmove, this brought some balance back to the industry and the fees required.
The years rolled by and Zoopla continued their acquisitions, this time of all of the major property software companies. Their purchases, along the way, included the utilities company USwitch and as such having such rich amounts of data at all levels of the transaction could only increase their valuation.
Zoopla continued to play second fiddle to Rightmove but now had many more strings to their bow other than subscription fees from agents. Then in 2018 it was announced that the company behind the UK property sites Zoopla and PrimeLocation and the price comparison service USwitch were being bought by a US private equity firm in a £2.2bn deal.
So, here is a question for you. Who would pay £2.2bn for the UK’s number 2 property portal that has no clear and obvious way of becoming number one? How do you make money from that deal? I won’t put words into your mouth, so I will leave you to figure out your own answer to that and let you decide if investing your money and data into that company is a smart move.
As things currently stand, Rightmove’s valuation fluctuates but is reasonably steady at around £4.2 billion.
From an agents point of view, if you joined the industry any less that 10 years ago, most of the free stuff etc will have passed you by. But, here we are again.
The perfect storm is brewing for our industry for a second time and it looks oddly similar to the previous one.
Agents have figured out how to ‘game’ the portals in order to have multiple locations under just one branch fee, allowing an agent to setup with next to zero investment. Free portals have started to emerge, and agents are thinking – what’s the harm? You never know one of them might just replace Rightmove! This terrible website that took away the incredible expense of newspaper advertising (anything from £500 to £5000 a week for a one page advert) for around £1000 a month. This terrible website that allows you to advertise all of your properties to the greatest number of buyers and tenants in the country. This terrible website that has lacked innovation for 10 years (Jesus, that is the pot calling the kettle black. Said by the agent who still sends out letters and door knocks people’s homes!). But perhaps we are forgetting that without any barriers to entry estate agency as we know it will die, 100% no question about it. Technology in the early 2000’s was not powerful enough to make that happen, but it is now.
So, where does estate agency go from here? There are multiple paths that estate agency can go down from here and lots of people have different views on which road to take. Some of you feel like the more free portals you can get your hands on the better. Some of you feel so bad towards Rightmove that you would sink your own business if it meant cutting their finger on the way down and some of you feel like the answer would be to put all of your data in the hands of some people that tried VERY hard to kill you once already.
I have run most of them scenarios through my head more times than I care to admit. Unfortunately, there is only one of those scenarios in which estate agency still exists and thrives over the course of the next 10 years. It is not a short thing to explain. But I honestly care about this industry that I have spent my adult life in so much so, that I spent a year writing a book on how you can take that 1 in a million path to survival. Hopefully you will take the time to read it as it might just save your life.
The book is called The Estate Agency Revolution and you can grab a copy from amazon here.