According to recent research, 20% of estate agents are now at risk of going bust, due to an increasing number of online companies being available.
A study conducted by Moore Stephens, an accountancy firm, indicated that around 5,000 estate agents were at risk of losing their business, demonstrating “financial distress”. The report outlined the difficulties experienced by traditional estate agents, who were likely to have higher overheads, like staff and property costs. These traditional firms are struggling to compete with online companies, which can offer a fixed, low cost fee.
The profit margins of high street estate agents are being squeezed by larger competitors, in addition to online competitors, both of which are forcing them to ramp up the competition, or increase spending. According to Mike Finch from Moore Stephens, there are many areas in the UK with a lot of estate agents, with smaller companies struggling to cope with the competition.
Two of the biggest estate agents in the UK have recently announced a fall in profits. Foxtons, which is a London focused estate agent, announced a fall in profits and revenues, with revenue falling 15% and profits falling by 64%. Countrywide also announced huge losses. Foxtons blamed the drop in profits on the property market being hit by political uncertainty.
Competition is also heating up among lenders, as many of them introduce low rate fixed deals to tempt buyers. Mortgage advisors study for a CeMAP qualification, so that they know which deals are actually cost effective for buyers.
