Slaying of the super-agents

Autumn Property Survey

MANY dreams were ambushed by the recession, among them the idea that large financial institutions can run huge chains of estate agents at a profit.

This was one of the defining marketing theories of the 1980s. Take a big insurer or building society and pour millions into buying out hundreds of small local estate agents. Put the lot under a single corporate umbrella and cross-sell your mortgages and endowment policies.

Wonderful theory. In practice it has turned into a huge loss-maker. For instance, Prudential Property Services, which peaked at 805 offices in 1988, was dumped by the Pru in 1991 after incurring losses of pounds 400m.

Two years ago Abbey National sold its Cornerstone estate agents chain of 357 offices for just pounds 8m, after losing at least pounds 243m on the business since it was launched in 1987.

Other institutions have joined this retreat, often selling back the offices at a huge loss to the local business people who had founded them.

Other big names have shrunk, rather than disappeared. Halifax Property Services had slimmed down from 709 offices in December 1989 to 526 at the end of last year. General Accident Property Services had reduced its branches from 623 in 1989 to 358 last autumn.

There are two main reasons for this failure. The first is the worst residential property crash since the Second World War, with no real recovery in sight (but small agents continue to prosper). Then there are the top-of-the- market prices paid by the big boys in the 1980s. When a local agent received his windfall, there was little incentive for him to stick around and work under the new bureaucracy. Quite the opposite - he would take the money and run.

Some of the cannier chains allowed small offices to keep their original names, but elsewhere the absence of local knowledge has been badly missed. This is critical. Being an effective estate agent involves knowing where local schools and supermarkets are - the general lie of the land. Without this special knowledge, the agent offers little of value.

Another flaw in the grand design was the idea that people would first select their houses, and then arrange their mortgages and buy their endowment policies through the same estate agents. The theory went that people would be happy to do everything under one roof. If it worked for Sainsbury, surely it would work for estate agents.

Perhaps people would even start buying other personal financial products, like unit trusts, some hoped. It has not happened. Cross-selling has stubbornly refused to take off, clients preferring to make their mortgage arrangements separately.

One company has spectacularly bucked the trend towards retrenchment: Hambro Countrywide. Owned by Hambros, the merchant bank, it recently bought the 11-branch Spencers chain in Leicestershire from the National & Provincial Building Society. This brought Hambro's strength up to 757 offices, by far the biggest in the UK and an advance of more than 200 on its total in December 1989.

The City is convinced Hambro can make a lot of money if the housing market recovers, but this is a huge if. Last year the estate agent operation made losses of pounds 6.4m, and broker Smith New Court expects it to lose another pounds 17.4m this year. Other big operators are hanging in there, but the longer a housing recovery takes to arrive, the bigger the pressure to get out.

There is one piece of advice the big boys might take: open on Sundays. Not to do so seems silly when this is one of the few days most people can view properties.

PROMOTED VIDEO
News
Alan Bennett criticised the lack of fairness in British society encapsulated by the private school system
peopleBut he does like Stewart Lee
Sport
John Terry, Frank Lampard
footballChelsea captain sends signed shirt to fan whose mum had died
Life and Style
food + drink
Arts and Entertainment
Rita Ora will replace Kylie Minogue as a judge on The Voice 2015
tv
Life and Style
tech
Life and Style
Alan Turing, who was convicted of gross indecency in 1952, was granted a royal pardon last year
life
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Sheridan Smith as Cilla Black and Ed Stoppard as her manager Brian Epstein
tvCilla Episode 2 review: Grit under the glamour in part two of biopic series starring Sheridan Smith
Life and Style
life
Arts and Entertainment
Tennis player Andy Murray's mum Judy has been paired with Anton du Beke for Strictly Come Dancing. 'I'm absolutely delighted,' she said.
tvJudy Murray 'struggling' to let Anton Du Beke take control on Strictly
Life and Style
Vote with your wallet: the app can help shoppers feel more informed about items on sale
lifeNew app reveals political leanings of food companies
Sport
David Moyes and Louis van Gaal
football
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

IT Project manager - Web E-commerce

£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits