This article was first published by EAN on 5th February 2021
Estate agents trading from premises with locked doors, or from home, are being hit with large new demands from Rightmove, as they have increased their baseline pricing model for at least one agent by over 11%.
In essence, during lockdown 1.0, Rightmove covered a £30M loss when they put on hold the revenue they would normally get from agents. Now, possibly, they are clawing it all back…and then some.
Here, with the permission of the agent, is part of the one-sided communication, sent to one agent who has been with Rightmove for nearly 20 years. It begins by telling the agent they are paying more. No discussion, just ‘you will be paying an extra 11%’.
We’ll change your price for 1st April 2021. Please speak to us by 26th February 2021 if you want to choose another option.
I think it’s fair to say that we all expect some ups and downs in the property market, but I don’t think anyone expected the highs and lows we saw in 2020.
Last year started with the busiest ever January for time spent on Rightmove, then by March the market was in lockdown. The resilience of agents during that period followed by a very quick pivot to a record-breaking mini-boom, shows exactly how quickly our industry can respond to change.
During the six months that we supported estate and letting agents with a discounted Rightmove bill, we focused on delivering projects to help during a period of so much change. I’ve shared some of the highlights and how to take advantage of them later in this post.
Many of the tools we released in 2020 can help you deal with the shifts in activity and demand we’ve seen over the last year. The rise in demand meant we delivered 53% more sales leads at the end of 2020 compared to the same period in 2019, helping agents to agree an astounding 10% more sales over the year than in 2019. Even with the uncertainty at the start of 2021, sales demand is 11% higher than in 2020 and rental leads are up 27%.
It’s clear from these numbers that despite the impact that coronavirus has had on all our lives, both professionally and personally, people are still determined to move. That also tells us that tools to help you anticipate and deal with change will continue to have an important role to play. We also want to help you to do the important work that keeps the property market and the economy moving.
Change to your Rightmove costs
You currently pay £1,365.00 per month for your Essential Package, as part of your Sales & Lettings membership. That is made up of £1,150.00 for your core membership and £215.00 in advertising products.
The price of your Essential package will change on 1st April 2021 when your core Rightmove membership rate will increase to £1,295.00. This rate is made up of £1,095.00 to advertise properties for sale. You don’t have to do anything, but you do have several options
I read this as: “The market has been booming for you, Mr Agent, we want an extra slice of that action.”
The reality though is that, in total, the number of completions in 2020 was in line with the 1.1 million completions most years. There is no magic uplift for agent’s revenue, it just came in spurts between lockdowns.
What Rightmove’s C-suite forget is that between 2016 and 2019, the company made about 74% gross profit annually. So, in 2019, from a turnover of £290M, there was a pre-tax profit of £213M. Most agents operate on a pre-tax 18% gross profit margin, or in some cases as low as 10%.
Clearly, the sentiment is that a boom for agents in 2020 should be a boom for Rightmove. Hiking the baseline fee to each agent by 8% to 12% (the figures numerous agents have shown Proptech-PR) will add anything from £15M to £20M+ in turnover in 12-months…or 5% to 7%.
With new technology in other portals and platforms ahead of the game and a failure to innovate, the last thing I would do after last year’s schism and wall of silence is to hack off your core clients.
As some big players have shown, a disconnect between the C-suite strategy and grassroots reality leads to decline and a toxic brand.
Andrew Stanton is the founder and CEO of Proptech-PR, a consultancy for Founders of Proptechs looking to grow and exit, using his influence from decades of industry experience. Separately he is a consultant to some of the biggest names in global real estate, advising on sales and acquisitions, market positioning, and operations. He is also the founder and editor of Proptech-X Proptech & Property News, where his insights, connections and detailed analysis and commentary on proptech and real estate are second to none.