A leading industry figure has made a blistering attack on the “army of providers swooping down on agents and eating away at their bottom lines”.
Robert Sargent, CEO of the Acorn Group, said that it is hard to see what value some of these providers – which mostly go under the ‘proptech’ title – could possibly add to estate agency businesses, calling them “emperors’ new clothes ventures trying to earn a living from the hard work of quality independent estate agents”.
Sargent, whose rapidly growing business has 30 branches in London and Kent and employs 400, said: “There is a plethora of ex-estate agents and marketing people who are trying to sell their products into estate agents’ businesses. Invariably a monthly subscription is involved. They are feeding off the backs of agents.
“They are telling agents how useful their products are, in just the same way that the smallest agents are being milked the hardest by portals, without whom they are led to believe they cannot survive.
“I would urge agents to make their choices very carefully. Are these providers really doing anything that an agent cannot do for themselves, and more cheaply?”
Yesterday, Sargent announced another acquisition by his firm, that of south-east London independent UniPlan Residential Estate Agents, and also said he would be opening another six cold-start branches next year.
UniPlan has operated for almost 30 years. Sargent said: “We concluded the sale in just six weeks. It’s an excellent business, so we’re very pleased. It will continue to operate under its existing brand, and we have taken on all the staff.”
Sargent revealed to EYE that Acorn has acquired six sites on the London and north-east Kent borders which will open next year, from March onwards. Locations include Swanley, Woolwich and Plumstead, and a seventh site is currently being negotiated.
Does this mean that Acorn has no plans to launch an online offering? “We are committed to a traditional estate agency service with a physical presence in all our areas.
“Are we going to discount our service in return for a lesser fee? No. We’re not going to do it.
“Almost all our work is very local, within a mile of each office, and we know many of our clients personally.
“The business is changing. It is not as easy to sell a house as it was six months or a year ago. It is a hands-on, advice-driven industry, and I expect these to become greater, not lesser, features of successful estate agency. I also think it would be impossible to run an online lettings business, because landlords increasingly need access to help and expertise that cannot be provided digitally.”
Sargent yesterday attended an OnTheMarket roadshow – Acorn is a founding Gold member – and said that he will support the bid for a flotation.
He said: “OTM probably has 35% to 40% of the market, but there is no doubt that growth has plateaued and we have now got to look at powering it up – even if that means sacrificing some of our original ideals.”
He said litigation part-funded by Zoopla had also slowed recruitment, although OTM went on to win the case.
Sargent paid tribute to OTM chief executive Ian Springett: “The proposal is to raise £50m, based on a valuation of between £200m and £250m. Whichever way you look at it, that is a tremendous achievement for a young company.”
Questions were asked at yesterday’s meeting about the shares, potentially worth £20m, that Springett will get in the event of a successful float, but Sargent said that Springett revealed he had worked for nearly two years for nothing, before the launch of OnTheMarket’s parent company, Agents’ Mutual.
“He got it to the point where the project had legs, and he has made a good job of it. That is deserving of a reward.”
He believes that the flotation will receive the 75% support of voting members that is required, and that it could go higher.
But will investors bite? “I believe they will – categorically. If enough members vote for it, I think it will fly – and the more members who vote, say 90%, the more investors will like it.
“My belief is that independents must regain control of the sector. There is no let-up in Rightmove’s hikes in prices. But if we were to to stop uploading our properties tomorrow, it would not have a business.”
Acorn gave up Zoopla under OTM’s one other portal rule. He said: “There has been absolutely no impact on our business. If anything, it has thrived. Yet we were always led to believe we had to list on two portals.”
Sargent said that a float would give OTM a much-needed war chest, to give it “a real chance”.
He said: “The independent sector needs to get on board. I would appeal to independents to look outside their own high street and look at the industry as a whole.”
Acorn was picked out by the London Stock Market as ‘one to watch’ a couple of years ago. The list normally includes private firms which the stock market believes could float. So, will Acorn do this?
Sargent said it was ruled out for at least the time being: “We have an excellent management team, all of whom are operational. None of us would be happy to lose any control over the way we run the company.
“What we might do is acquire a business of a similar size to us, but at any rate, we will keep growing, and we continue to look for acquisitions.”