Page last updated at 16:52 GMT, Sunday, 21 March 2010

Making money in the property market

By Ian Pollock
Personal finance reporter, BBC News

Estate agent's window
The traditional way of looking for a home to buy

It has been a tough couple of years for people trying to earn a living in the property market.

The slump in home sales that followed the onset of the credit crunch and the recession led to widespread job cuts among house building firms and saw thousands of estate agency branches closing down.

With lenders restricting their funds, and in some cases ceasing lending at all, people like mortgage brokers, solicitors and removal firms have all suffered.

But with the housing market picking up, albeit gently, new types of businesses are hoping to take advantage of some opportunities.

Inevitably these days, the internet has a lot to do with it.

Last newspaper adverts

Simon Gerrard is the managing director of Martyn Gerrard, a traditional estate agency chain in North London which has been going for just over 45 years.

In the last two months we have pulled our last bits of advertising out of the local press
Simon Gerrard, Martyn Gerrard

Business is good again and he says prices in his neck of the woods, stretching from Kentish Town to Whetstone, are now back to their previous heights of 2007.

This January was the best January in the firm's history, despite the freezing weather, and in the first two months of the year 75 sales were tied up - much more than the 43 in the same two months last year.

But some traditional selling methods have gone for good.

Simon has just paid for his firm's last batch of adverts in his local papers.

From now on, his advertising will be restricted to his own firm's website and those of the big property portals.

"It is a sea change, 20 years ago we spent an absolute fortune on the local press," he says.

"In the last two months we have pulled our last bits of advertising out of the local press because it is a luxury."

"The local press is not where you look - you look on the internet and that is where we advertise."

New market place

Online estate agency is dominated by traditional firms using either their own websites or the property portals, such as Rightmove and Findaproperty, which in turn choose to deal with the traditional estate agents only.

Sarah Beeny
Property websites are expensive to set up, says Sarah Beeny

The Office of Fair Trading (OFT) said recently that the transaction costs of buying and selling homes would be cut if more businesses were prepared to set up as pure online estate agents, or were prepared to help individuals sell their homes without an agent at all.

TV presenter Sarah Beeny, who specialises in property programmes, has been trying to have a go since July 2009 with her website Tepilo.

It is an online market place, free to buyers and sellers, and aims to cut out estate agents and their fees.

"If the buyers are heading straight online, it is kind of odd that the sellers and letters can't, and the reason they can't is that the major property portals where you search for property only upload property adverts if you are an estate agent," she said.

'Fine line'

Tesco tried to do something similar in 2007, charging sellers £199 for a web advert and a notice board, but the supermarket chain found that this meant it was defined by the authorities as being an estate agent.

Most people waste time looking at unsuitable properties
Tim Hammond, Buyers Edge

At that price it could not afford the cost of things like checking out the accuracy of people's house descriptions, so it shut the site and sold it a few months later.

How has Sarah Beeny managed to avoid falling foul of the estate agency laws, which tripped up a supermarket giant?

"The really grey area comes with notice boards," she says. "It is a very fine line but has been heavily looked into by all our lawyers."

"There are ways you can tip in and tip out - you are on the fence all the way through but we are just the right side of not being an estate agent," she says.

The need for extensive legal advice, supplied by one of her co-investors, has contributed to the very considerable costs she and her fellow shareholders are shouldering in running Tepilo.

They have run to several million pounds already, covering things such as the construction of the website and attendant advertising.


Tesco is now backing a venture by the estate agency Spicerhaart which is launching a cheap online-only estate agency in the Bristol area under the name iSold.

Matt Hutchinson
Spareroom makes money with just a 15% conversion rate among users

But you do not need to be big at all to start making money in the property business.

Spareroom, as the name suggest, is a site devoted to letting people advertise for lodgers and flat-sharers to move into their spare rooms.

After covering the London area since 1999 it has been going as a national website since 2004 and is the biggest of its type.

The idea is simple - it is an online version of the classified small ads that used to be the mainstay of advertising in local papers.

It employs only 12 people including the founding directors.

"The number of users has pretty much doubled year on year, to the point where we have got about 1.3 million registered users," says director Matt Hutchinson.

The business is profitable and the money is made from people who are happy to pay for "early bird" access to adverts, or who want their adverts displayed in bold.

Spareroom says it needs only 15% of its registered users to agree to pay for these services to be in this happy position.

"I think one of the reasons it is a good business to have in the market such as the one we've got at the moment is that it doesn't earn a massive amount of money from each user, but we've got a lot of users," Mr Hutchinson says.

"Fingers crossed, it's a fairly recession-proof business model as we aren't reliant on any one section of the market."

Buying agents

An even smaller niche is being explored by Tim Hammond.

He has been running a network of 85 buyers agents in the UK for seven years.

Never heard of them? They do your house hunting for you and, until now, have been the preserve of the wealthy.

Mt Hammond, whose network is called Buyers Edge, is trying to extend the service to customers who have less money but who are still too busy to search for their perfect property.

"Most people waste time looking at unsuitable properties and you don't have to be rich to be busy," he says.

The lure for the new customers he hopes to attract is that they will not be charged a fee, unless one of the agents negotiates a discount on the published asking price and saves the customer money.

The fee is 15% of that saving.

How has the internet helped him?

"What the internet has done has given an abundance of information," he says.

"We find a shortlist of properties on the internet, we are in touch with the local estate agents, we focus on the most suitable properties, viewings will be lined up, then we haggle professionally for you."


Small initiatives are all very well, but what the OFT would like to see is the internet giant Google bringing a service to the UK that it offers in the USA, Australia and New Zealand.

There, anyone looking at a map on Google can tick a drop-down box.

This brings up little circles and pins which show the precise location of houses and flats, for sale or to let.

Click on them and you get directed to the full advert, on the website of the estate agent which has chosen to advertise on Google Maps this way, along with photos and webcam views of the street.

At the moment the company is very coy about whether or not it will offer such a service to users elsewhere.

If it does, it will make it even easier for buyers or their agents to search for a new home from their desk tops, and may encourage estate agents to operate even more via computers rather than High Street branches.

Google map Australia screen grab
Sydney: The property search on Google Maps pinpoints the homes for sale

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