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EYE interview: Leading industry figure begs agents to wake up to the need for change – or risk extinction

ONE UTILITY NS

Industry trainer and consultant Mike Day is marking 15 years since he founded Integra.

But he has revealed that his original intention in 2003 was to set up what would now be called a hybrid agent. He agrees it was ahead of its time, but is still a huge believer in change – and the need for agents to embrace it.

He said: “I had completed an MBA in 2000 and my 30,000 word research dissertation was on the internet and its effect on estate agency.

“It makes interesting reading today as it predicted the arrival of the online services we now see and warned that agents would need to change their business models.

“You must remember that Rightmove was only started in 2000 and two thirds of people at this time did not use email. Indeed around half of agents didn’t have their own website.”

However, along came the financial crisis of 2007/8 and in 2008 he sold his single-office ‘hybrid’ agency to Roberts Newby, now Strutt and Parker, to concentrate on consultancy and mentoring.

Day was previously a main board director at Connells, involved in multi-million decisions such as setting up the group’s conveyancing operation and investing in Rightmove.

“There was greater freedom running my own business, but different pressures such as ensuring I generated the results needed to survive and thrive.”

He has seen a number of other challenges in the industry.

When Rightmove launched, agents were sceptical and thought it would never replace local papers. Day now thinks it will need to develop its business model.

“It is dominant but almost entirely reliant on subscriptions. If the number of agents reduces and other models emerge, it may need to exercise considerable fleetness of foot to retain its current position.

“Generally, the director of travel is clear. The emergence of new business models such as the online offering are a huge threat to traditional operators. So far, most have simply moaned about it on EYE and cut their fees.

“My view is that all business models are fine providing there are legal and honest, which is why I wouldn’t support the attempt to create an anti-corporate, anti-online agency club in CIELA.

“The major challenge now is getting to the consumer earlier in the process as the dominance of the portals has made this difficult.

“Despite GDPR there is enormous value in agency databases but only if they are communicated with on a regular and personal basis.

“Too many agents are running their businesses by email and know little about the motives of their customers and clients.

“The art of questioning, conversation and building trust is slowly dying in the industry and it will prove fatal for many.”

Day happily accepts that a chunk of his living is created by politicians passing laws, and when asked if it puts a smile on his face whenever something new and mandatory pops along, he says “absolutely”.

However, he points out that he speaks the same language as his clients, understands their businesses and can offer sensible solutions.

As for GDPR, he believes it will be a mixed bag.

“Obviously I only come into contact with those seeking to operate compliantly – those that ignore it are not likely to instruct me or attend one of my courses.

“There is a however lot of nonsense being spouted and some companies, in a desire to comply are potentially shooting themselves in the foot by seeking consent for everything they do.

“They risk losing huge quantities of valuable contact data by doing so. There are six lawful basis for holding and processing data and consent is just one of them.”

He also runs courses on anti-money laundering. “As with other regulation, I only come into contact with those that wish to comply but even then, it is often easy to find holes in their procedures and systems that could be damaging.

“My experience generally is of a desire to comply but in some situations (particularly involving overseas customers and unusual legal entities), it can be difficult to be robust. Ensuring risk assessments are run alongside all customer due diligence is vital.

“Many agents talk to me about buyers supplying “proof of funds” when it is really “source of funds” that is the key question. There has never been anyone successfully launder money without one key ingredient – the money!”

Day says the industry as a whole is deeply conservative and generally resistant to change.

“Many are in danger of going the way of Kodak who ignored the arrival of digital imagery.

“Most traditional agency businesses are not doing enough to differentiate and innovate. Consequently they pull the only lever they feel they have which is fees. Wrong!

“The tenant fee ban is coming and yet many are still hoping it won’t and the professional bodies have done little (apart from whinge) to help their members reshape their businesses for a different looking future.

“Ultimately those with their heads firmly buried (I won’t say where) will largely become extinct over the coming few years.”

And if he were to be given a soapbox for five minutes, what would he use it for?

To encourage business owners to plan more, take more time with their staff and, ignoring the rhetoric, ensure that the customer or client is truly at the centre of what they do.

“There is a real danger that large parts of the industry, particularly when things get tough, look for magic bullets and actually cut corners instead of innovating.

“A client once asked me – “What if we invest and train our staff and they leave?” I replied – “What if you don’t and they stay?”!

“The dominance of the portals and the use of software systems is, in many cases, creating offices full of “order takers” – people unable to engage with customers and clients and who fail to build trust or sell.

“Telephone usage across the industry is reducing with the average length of calls often less than one minute.

“If this continues unabated, the industry should not be surprised when people refuse to pay what might be perceived as high fees and opt for cheaper execution-only services.

“This is a huge threat but also a great opportunity for those prepared to take it.”

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Source:: EYE interview: Leading industry figure begs agents to wake up to the need for change – or risk extinction