The FT Lex column on Rightmove’s dominance of the online search market for residential properties reminds me of how much and how little has changed in the buying and selling of houses. Whilst it’s so much easier to find out what’s available (some of my friends label their habitual online perusing for homes that they’re never going to buy as property porn – they’d know more about that type of thing than I would), the high street estate agents still seem to be doing pretty well. Lex sees Rightmove’s dominance as
…a case study in network effects. Its near-80 per cent market share means that estate agents must use it. The site is free for consumers, and the monthly fees that agents pay are relatively small in relation to their other expenses, so there is no incentive to cut spending. Then there is the operational gearing: Rightmove’s sales have risen almost sixfold since 2006, but selling and general expenses (the biggest component of operating costs) have merely tripled.
The internet seems to have transformed the marketing of property but not the sales process. Despite the high (?) fees that tend to bear little relationship to costs, largescale disintermediation in residential real estate brokerage still seems a long way off. That means it’s even further off in the commercial sector.