I would like to elaborate on Mr. Jobs' rather "binary" observation. The Internet is no place for middle-men that don't add value.
Nowadays, if your consumer business does not understand or cater for the "hearts and minds" of its target audience, modern customers have the smarts and the tools at their disposal to find a similar service that operates with more candour and authenticity. Every sector is now experiencing long-awaited disintermediation, where unwanted parties that add unjustifiable fees for little work are being replaced. The replacement is by leaner, more efficient online services that tilt the balance and empower the consumer. This new generation of customers will not tolerate anything less than a fair price for a fair and transparent service.
We have entered a digital age where the public’s disdain for non-value adding middlemen has reached boiling point. The rapid rise of crowd funding means that the customer will soon choose which products reach the marketplace. Services such as Spotify and YouTube allow musicians to reach an audience of millions without the backing of a major record label’s distribution network while streaming services allow people to watch their favourite shows whenever they want. This disintermediation has put power back in the hands of the creators, leaving once-profitable middlemen obsolete and scrambling for ideas that they can’t come up with.
In the last decade, we have witnessed these traditional middlemen being ruthlessly ejected from the process (travel agency, music, movie rental and gaming) and replaced by a new generation of internet players that offer efficiency, convenience, and choice to the ultimate consumer. I am convinced that estate agency is heading in the same direction.
For years, the public has expressed displeasure with the existing structures in place around the buying, selling, renting and letting of properties. In 2012 RICs published a survey which revealed the “total lack of trust” with which the public hold estate agents (Source). Many see traditional high street estate agents as middle-men who charm, mislead, smile and deceive before charging extortionate amounts for a service that simply is subpar.
How can all these dis-satisfied customers regain their trust in a sector that is drowning in negative public opinion but is kept buoyant by a palpable lack of an alternative?
The answer is to bring the process into the 21st century. What we need more of are disruptive business models that empower the customer by offering a fully customisable, digitised estate agent service for a reasonable price. One could call it “Smart Estate Agency”. With these newer models, if you don’t want it, you don’t pay for it. Selling a house should be as simple, enjoyable, transparent, and reliable as shopping on Amazon.
Some may express discomfort at selling such a valuable asset via the internet. Selling a home is an emotional process so mild scepticism at its digitisation is understandable. There will always be a place in the sector for the highly discerning consumer looking for a bespoke, hand-held end-to-end service, where full fees are justified. The top tier of the market in terms of value will continue to justify traditional full-service agency. It is the rest of the pyramid below the top tier that, in my view, is ripe for disruption. Where full fees are being charged for a mediocre service, smart consumers (and consumers are smarter than estate agents would like to think) will look elsewhere. In my opinion, estate agency’s imminent embrace of the online realm is a natural progression in the evolution of the sector.
Imagine a world in which selling your home is really this simple: you can go online, post details of your house, upload photos, name your price, and click enter. You can not only add the "list my house" service to your shopping cart, but also related services like conveyancing and boxes for moving. Or you go on your smart phone and download the mobile app and sign up in a seamlessly integrated process: no queues, no travel times, no waiting around. You customise the amount you would like to spend on the promotion of the property. You choose whether you would like to pay one lump sum or a few monthly instalments. The price charged is thousands less than it would have been if you had gone to a conventional estate agent, yet a better, more streamlined service is offered. Your property is put on all the same portals (RightMove, Zoopla, etc) and is given an equal opportunity to sell. You are kept in the loop throughout the process - you receive emails and you have the mobile application to track the progress and to offer you complete transparency. All legal proceedings which are underway behind the scenes are explained to you in simple English. It’s smart estate agency with transparency. And it's the future.
This power-shift will also save everyone a great deal of money. Since the vast majority of buyers and tenants look for homes online (95%), traditional high street estate agents will have to evolve their business model and pricing. Which? have suggested that opting for a digital agent could save the average homeowner over £3,000. With these types of savings, and and with real success stories of real people having sold a home this way, it’s no wonder that online agents have got the high-street worried.
95% of all house searches start online. Why should it not stay online for the entire process end to end? The technology is certainly here to do it (as the creators of online travel, insurance, and recruitment businesses have demonstrated). And tech-savvy consumers are ready to embrace it.
In 1996, Steve Jobs predicted in an interview that the internet would not be a place where middlemen would prosper. In the past few years, we have witnessed a power shift which is resulting in a more even distribution of power between consumer and service provider. The playing field has evened out as creativity and technological innovation is harnessed by new market entrants - lateral thinkers often entering from other sectors. There is a clear and present danger to the industry incumbents, and no sector is immune to this disruption. Some sectors, like estate agency, which have been slow to attract those inclined to think creatively have been slower to adapt. We are about to witness a change. The winds are blowing against traditional estate agency.
2014 will be the year when real estate enters the digital age with the rise of fully interactive and integrated end to end property services. This can only be viewed as a progressive step forward in a sector that has been crying out for change since the mid-80s. Next year, the tides will turn and estate agency will go through a long awaited revolution. And as with all revolutions, there are winners, and there are losers. My readers will be pleased to hear that this time, the winners will be all of you - the current and aspiring home owners, landlords, buyers, and renters in the UK.