Estate agents urged to link up to combat threat from Tesco

A leading estate agent is asking rival businesses to group together amid concern that the entry of the supermarket group Tesco into the home-selling market could drive many smaller firms out of business.

Neil Patel, chief executive officer of OneMove, said there was increasing worry about the ability of Tesco to take significant market share from estate agencies.

"The question on everyone's lips is whether Tesco's entrance into this already hyper-competitive market could kill off the industry for good," Mr Patel said. "There is no magic answer to the situation, but in a collective working environment we can work together to maintain a healthy business."

The warning follows the launch last month of Tescopropertymarket.com, an internet-based service that has already attracted more than 250,000 visitors.

The supermarket group has signed deals with a number of estate agents to market their property, but the chief pitch of its site is that home-sellers can do much of the work themselves in order to save money. The site offers a do-it-yourself home-selling service, enabling people to advertise and manage their own home sale for a fee of £199, eliminating the need for estate agents, who typically charge up to 3 per cent of the value of a property they sell. Sellers are given a Tesco-branded "for sale" sign for display at their property, but must do the work normally performed by an agency.

Mr Patel said that unless estate agents acted quickly, Tesco's superior marketing muscle and distribution would enable it to win a significant share of their business. "Over time the power of the supermarket has taken hold and the impact has led thousands of small local businesses to close, threatening the very core of local British business, the local community shop," he said.

Tesco has already had one run-in with the estate agency profession over its new venture. Within days of launching, one of its partners, Fish4Homes.com, an internet portal used by many traditional estate agents, said it wanted to pull out of the venture. Fish4Homes.com is understood to have come under pressure to withdraw from its own estate-agent clients.

Mark Davis, managing director of Tesco Property Market, said: "I've spent a decade working in the property industry and I can understand why estate agents might view Tesco's entry into the market with initial scepticism because competition can be tough. But it benefits consumers and makes businesses work harder for them."