Tuesday 3 February 2015

The Times thinks houses should be bought and sold by 'an algorithm' - just like booking a hotel room or insuring your car

Behind the pay-wall the Times (Online and in print) continues: "A sector...where bang for buck has fallen almost every year since 2000. That sector is real estate.

"...output per worker falling by 18 per cent since 2000.

"One possible explanation is that [estate agency] has not experienced the same kind of internet revolution that we've seen elsewhere.

"The internet is at its most powerful when it cuts out the middleman. AirBnB connects those wanting to rent out a room with those wanting a place to stay; Uber [for] taxis.

"In almost every other field we are streamlining the connection between buyers and sellers - yet we still pay estate agents sizeable fees to do something that could quite easily be done by an algorithm.

By now you are getting the gist. And Ed Conway is not alone in thinking that buying and selling your major asset can (and should) be done by 'an algorithm'.

Before we examine this contention in depth, let's look at his two examples, insurance and travel. All types of personal insurance, from motor to household contents to pets is overwhelmingly bought over the web, so is travel, from flights to hotel rooms. But, and this is a significant 'but', they are straightforward purchases. You want to insure your car? Get quotes, pay the premium. You want a hotel room? Decide where and then use TripAdvisor. Job done. Or is it?

On the surface: yes. But let's look at some of the pitfalls. When was the last time you had a complicated claim with an online insurer? Who fought your corner? Have you seen the levels of dissatisfaction amongst those trying to resolve less than straightforward claims? Maybe, just maybe, an insurance broker is worth the extra (in terms of peace of mind, if nothing else)?

Now travel: Do you how much TripAdvisor and the online travel agencies are earning from your booking? Eighteen to twenty-eight per cent is usual. Do you understand that hotels use the online travel agencies as a way of allocating their less than desirable rooms? Do you understand that you cannot 'get a bargain' by booking with an online travel agency (the rate's the rate)?

So: online, maybe not the bright shining light after all? Or at least not quite as obvious a choice as might at first appear. Now let's look at estate agency: it's a slightly more complex transaction than arranging car insurance or booking a hotel room. Who is involved?

  • Seller
  • Buyer
  • Estate Agent
  • Solicitor 1 (seller)
  • Solicitor 2 (buyer)
  • Surveyor 1 (buyer)
  • Surveyor 2 (lender)
  • Mortgage company 1 (seller)
  • Mortgage company 2 (buyer)
  • Bank (not always the same - bridging, for instance)

We're all familiar with the age-old expression 'many a slip...' - there are ten 'cups' and 'lips' listed above. We have absolutely no bias towards either high-street or online estate agencies, but we do have a bias in favour of full-service agencies. Whether the transaction is for £100,000 or £10 million, we reckon everyone needs an experienced full-service estate agent.

So why don't some people (the Times amongst them) agree? It's partly because estate agents themselves fail to make the case for putting a value on their services. And a big part of the reason for that is that no-one wants to highlight what may go wrong when pitching for business, so this is where Dialogue comes in...

Let your reviews do the talking for you

If you read any of our clients' reviews, the same words and phrases keep popping up:
  • 'professional'
  • 'dedicated'
  • 'reliable'
  • 'went the extra mile'
  • 'saved the day'
  • 'resolved issues'
  • 'kept the transaction on track'
  • 'above and beyond'
  • 'honest' 
  • 'our interests at heart'
But the kind of review we really like to see runs like this...

If anyone has any doubts (especially along the lines of 'Will they earn their fee?') before they see our clients' reviews, we sincerely hope they will have been dispelled once they have read them.

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