Online estate agents: The start of a conveyancing revolution?

Earlier this year (in SJ 159/3), I wrote about the imbalance of power in the solicitor and estate agent relationship that leaves solicitors seething and estate agents in the driving seat. To some, it's the way of the world these days, but the digital revolution is already in the process of redistributing power in many other industries. Maybe, just maybe, a conveyancing revolution is round the corner.

There was a time, now fading into a distant memory, when solicitors were the principal players in a property transaction; in fact, in the 1960s, conveyancing made up almost half of the legal industry's income. With the advent of cheaper licensed conveyancers, high-street law firms resorted to undercutting each other in terms of fees, thereby commoditising what used to be a vital offering in the eyes of buyers and sellers.

Around the same time, estate agents came
to dominate the property market, cleverly positioning themselves as an indispensable component to a housing transaction. The relationship between solicitors and estate
agents became fraught with miscommunication and deep misunderstanding.

Solicitors versus estate agents

Since then, the tussle has continued, with estate agents promptly blaming slow conveyancing for botched deals. Why is it so hard for conveyancers to get on the phone? Why is it such a nightmare for lawyers to modernise their processes?

Solicitors, in turn, have argued that estate agents need to better understand the vital role
of due diligence in the home-buying process. Some things can't be rushed, they say, least of
all in matters concerning the average Briton's most valuable asset.

With their exhausting schedules, solicitors can understandably feel they simply don't have the capacity to constantly update estate agents, especially when there is really nothing of substance to report anyway. A response
to an email query takes seconds, perhaps minutes, to write up, but it is a trickier task
when you consider that it involves a potentially overworked conveyancer opening up the requisite case file, reviewing it, replying,
and then printing the email chain to maintain
a hard copy of the correspondence on record.

And let's not forget, last-minute instructions and a shortage of surveyors are to blame for delays in equal parts. Conveyancers also push for introducers - brokers, lenders, and estate agents - to be more realistic with their clients from the outset when fleshing out timelines.

Time to strike

These frustrations are obvious to those of us who work side by side with conveyancers on a daily basis to trim the redundancies in the search process. We're well aware of the unnecessary legwork that gets in the way of them concentrating on the jobs they have trained and qualified for. Like seeing a friend in times of need, it preys on our minds and makes us think - how could things be different?

Since the recession, estate agents have remained strong, but in the meantime, conveyancing solicitors faced the brunt of the slump, with conveyancing firms leaving the market or merging with other players for a competitive edge. This dip in the number of firms continues.

According to Search Acumen's Conveyancing Market Tracker, activity has gained momentum during the course of 2015, but there was a year-on-year drop of 3 per cent in the number of firms operating in the market during the second quarter. The reduction appears far more dramatic over a longer period, with an 11 per cent decline compared with the second quarter of 2011. This suggests over 500 firms have either merged with competitors or left the market, temporarily and permanently.

A declining number of firms, as well as a poor relationship with estate agents, has been a reality for so long that solicitors might reasonably feel they have to accept the current status quo with a pained sense of resignation. After all, it's the estate agent, not the solicitor, who often gets the chunk of credit. Not only this, but it's also the estate agent who gets the visibility with slick, coveted street-corner offices next to the local Barclays or Waitrose. What option is there, other than to remark on the unfairness of it all over drinks?

But if solicitors remain passive to this 'comfortable' discomfort, they may miss the opportunity to strike at the ideal moment: a wave of technological disruption is building up next door, and traditional estate agents are struggling to cope.

I'm not suggesting a deviously treacherous plot to overthrow the estate agent, of course. Instead, I'm talking about the chance for a marriage on a more equal footing, which may finally become possible with the ongoing overhaul of the traditional estate agency model. And for that, rather than cantankerous grumblings, there needs to be a discussion among conveyancers at a more strategic level.

Online estate agencies

High-street estate agents launched OntheMarket in the new year to combat the high costs of advertising by industry incumbents such as Zoopla and Rightmove. Since its launch, OntheMarket has indeed achieved its goals by providing a more level playing field to those local high-street estate agents who were previously unable to sustain high listing fees on the online portals.

However, while OntheMarket has rattled the market leaders in the online portal industry, whether it will be able to break the duopoly is
yet to be seen. Zoopla has recently fought back, reporting a resurgence in membership figures.

A fierce battle has ensued, and in trying to secure their needs against the power of advertising portals, it appears estate agents may be underestimating the onslaught from another form of technological disruption occurring within their own industry: the arrival of online estates agents such as PurpleBricks and eMoov.

Based virtually, online estate agents charge their customers a small fee to list property and lack expensive high-street overheads. Remarkably, the convenience and price of an all-in-one platform supersedes a smart corner shop on the high street. Buying or selling a home happens three times in a lifetime, on average, so there is still a lot of scepticism among end-customers and it will probably take time to build trust.

However, disintermediation appears to be taking place in many industries in the digital age, meandering through new issues and shaking up established relationships, regulations, and working practices before setting in. We see the disruption everywhere: London's iconic black cabs are fighting off competition from Uber; with the advent of Airbnb, expensive hotels are considered unfashionable by millennial travellers; and now the online estate agent model is shaking up an industry that's still resting on its laurels.

The momentum in the online estate agency market continues to grow, with the latest new entrants including Your Online Property Agent (YOPA). It promises zero upfront fees and, like no-frills airlines, offers sellers add-ons at an additional cost: for example, if homeowners are too busy to arrange their own viewings, YOPA can assume responsibility at £75 an hour.

New opportunities

So, where does this leave conveyancing solicitors? There are a number of interesting scenarios that play out in the conveyancer's favour. First, this is a tremendous opportunity to build a fresh relationship of mutual trust with online estate agents, free from resentments and existing relationship baggage. Conveyancers now have a 'tabula rasa' moment, a blank slate to lay the groundwork for a new dynamic.

Second, as the digital revolution gathers pace, it's the ideal time for ambitious businesses to review and revamp their current systems and to re-engineer processes to ensure unnecessary logjams are avoided in the future.

It's an exciting time for anyone prepared to ask the challenging questions that might benefit them in the long run. Is there a better case management system you could be using? Have you considered switching off your servers and transferring to the cloud for greater freedom and flexibility? Have you reviewed your current supplier contracts to see if there are others offering greater value and efficiency?

Currently, a lot of conveyancing depends on having a place on introducer panels. But this new digital dynamic offers conveyancers an equal footing to establish direct relationships with end-clients, who now have greater control over decision making in the property-buying process. Many online estate agents, for example, allow sellers to select their own solicitors. Suddenly, there's a new reason to make sure you stand out from the crowd.

Again, this opportunity begs a number of questions. The end-clients today are restless,
and often expect to be connected to their preferred service providers 24 hours a day. Consumers do their banking at odd hours, browse and shop for goods online, and expect updates and delivery

So, is your firm prepared for such a demanding, high-maintenance relationship? Does your firm have the systems in place to satiate a millennial audience?

Outside the comfort zone

The infant online estate agent industry also offers a lot of prospects, if leading conveyancers in the country have the foresight to seize the budding opportunity. This may sound completely absurd and far beyond a solicitor's natural comfort zone, but what if conveyancers grouped together
to launch their own online estate agency? Conveyancers who delay deals with the nitty gritty have always been a pet peeve for other players in the home-buying process, but perhaps due diligence could be the unique selling proposition of this conveyancer-run agency.

Besides these new opportunities, the disruption in a sibling industry provides a blueprint of how technology can be harnessed to expand horizons. When it comes to conveyancing searches, the reaction to the Land Registry's digital project to centralise local land charges has largely been one of shock and horror, but instead of trying to curb the wave of reform, it's better to strategically map out a contingency plan.

Seeing the new digitisation as an opportunity, our company has welcomed the changes,
and we are energised by the possibilities of
this admittedly ambitious project. It makes no sense to resort to defensiveness and refuse to acknowledge the inevitability of innovation in
our industry.

There was a time when solicitors ruled the high street. Then licensed conveyancers arrived with a new proposition and swallowed up transaction volumes. It was around this time that we saw the property boom and the rise of the formidable estate agent. Interestingly enough, we now see a similar parable in the estate agent market.

Solicitors may be inclined to smirk a little, perhaps thinking of it as cosmic realignment or the chickens coming home to roost. But there's no time for that. Instead, the time is right to put aside the dusty case files, close the doors, and have a conversation about estate agents and what all this means for you. SJ

Mark Riddick is chairman of Search Acumen

@SearchAcumen

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