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.

ebooksAn evocation of the conflict through the eyes of those who lived through it
Arts and Entertainment
Martin Amis: Taken to task over rash decisions and ill-judged statements
booksThe Zone of Interest just doesn't work, says James Runcie
Life and Style
life – it's not, says Rachel McKinnon
Arts and Entertainment
Eye of the beholder? 'Concrete lasagne' Preston bus station
architectureWhich monstrosities should be nominated for the Dead Prize?
travelFrom Notting Hill Carnival to Zombeavers at FrightFest
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Service Delivery and Support Manager

£55000 - £75000 per annum + excellent benefits: Harrington Starr: Service Deli...

Corporate Tax Solicitor

Highly Competitive Salary: Austen Lloyd: CITY - HIGHEST QUALITY INTERNATIONAL ...

Relationship Manager

£500 - £600 per day: Orgtel: Relationship Manager, London, Banking, Accountant...

Trainee Recruitment Consultant

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

Day In a Page

Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

Magic circles: Artist Olafur Eliasson

Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

Greggs gives lesson in crisis management

After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

Matthew McConaughey sings the praises of bumbags

Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
7 best quadcopters and drones

Flying fun: 7 best quadcopters and drones

From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
Joey Barton: ‘I’ve been guilty of getting a bit irate’

Joey Barton: ‘I’ve been guilty of getting a bit irate’

The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
Andy Murray: I quit while I’m ahead too often

Andy Murray: I quit while I’m ahead too often

British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home