The door opens to a better deal for home buyers
The Scot bringing US methods to estate agency says the industry is in need of a shake-up , writes Stephen Breen
IF STUART WHITE is correct, the estate agency industry in the UK is about to undergo a transformation every bit as radical as that experienced in the financial services sector in the 1980s to become a properly regulated service which customers can really trust. From an office in Coatbridge, White is plotting a revolution in the way we buy and sell houses in this country as he rolls out a series of Century 21 offices – part of the biggest estate agency franchise in the world.
Since securing the UK licence from the US-based corporation in 2005, 40 Century 21 offices have opened – 33 in Scotland with the rest in London and Derbyshire. White, a former milkman and apprentice welder from Glasgow, has ambitious plans to open 500 outlets by 2010, which would make Century 21 the biggest single branded chain of estate agents in the UK.It would still be dwarfed by Countrywide, which has more than 1,000 offices, but as White points out, they operate as a network of subsidiaries, including Slater, Hogg & Howison.
In White’s opinion, the whole process of selling property in the UK is so fragmented and riddled with inefficiencies that it is primed to fail clients. In a typical corporate estate agency, five or six different members of staff might be involved at some stage in selling a
single house. A valuer will estimate how much a property will achieve and agree a marketing strateg y with the client, but will not be involved in selling the house. A negotiator may or may not stick to the strategy, and any number of staff might arrange viewings but will not go to the property themselves. Some companies hire part-time staff to let viewers through the door, but who can’t answer any questions about the house.
“There is no one individual who takes ownership of the client,” says White, the company’s managing director. “The corporates have made it almost a factory production line with different people participating in different components of the process. When you have a good team that delivers all the time, you get good transactions. Not every transaction is riddled with inefficiencies, but when you don’t have a good team, you start to incur problems.
“Many people comment that they feel like they are selling their house themselves. With house price fees in excess of £1000, is it not reasonable to expect a higher or better level of service than what’s on offer now?”
In 2004, a report into the £5bn plus a year industry by the consumer organisation Which? found only one in ten buyers and sellers strongly felt they could trust an estate agent, only a third said they were kept well informed, and 70% thought estate agents frequently gave misleading information about properties.
In the UK, estate agents are not licensed, although other professionals involved in the business such as solicitors and mortgage arrangers are. In other countries such as the United States, Australia, Japan, France, estate agents are licensed and a single professional deals with the seller from start to finish.
When it comes to cleaning up the industry, White, 39, is not afraid to stand up and be counted. He was sacked from Countrywide North in 2004, the year after he blew the whistle on the conduct of senior members of staff. The Office of Fair Trading subsequently found Countrywide North’s managing director, Mairi Eckford, sales director, Michael Miller, and former area director, Stuart Black, had breached the Estate Agents Act and the Estate Agents (Undesirable Practices) Order by failing to disclose their personal interest in new build properties that they had bought and were selling via Countrywide. After Countrywide, White, who has a background in insurance and banking, spent some time looking at developing financial services for estate agents Re/Max, which gave him an insight into a totally different way of operating, with a single agents responsible for the whole transaction.
This gave him the inspiration to make an audacious approach to represent Century 21 – the world’s biggest real estate franchise with 144,000 estate agents in 44 countries – to Britain.
After calling the multinational’s New York headquarters, White got through to a vicepresident and explained his plans. “The impression I got was ‘yeah, yeah, we’ll send you out some information and probably never hear from you again’. It was very cool and I now understand that, because Century 21 around the world tends to be bought by corporates and seldom by individuals.”
By February 2005, White was granted an interview and must have made an impressive pitch because in June that year the Americans granted him the Century 21 licence for the UK. White set up a holding company to buy the licence for 25 years for a fee in excess of £1m. Shareholders provided around half the funds, but White was also given assistance by North Lanarkshire Council, Lanarkshire Business Gateway and HSBC.
“I genuinely believe that estate agency is now ready for change because customers are ready for change,” said White. “When I look back at my experience in the financial services industry in the 1980’s it was warned time and time again for not doing a great job for clients, for not being open and transparent, and about the need for better regulation.
“Financial services salesmen were ranked alongside double-glazing salesmen, but the 1986 Financial Services Act paved the way for regulation in 1988. Now there is strong regulatory regime and everyone accepts that.
Estate agency is an industry that waits until there is a problem or an issue before anyone starts to take any action, then it has to try to fit it into certain categories.”
The 40 British franchisees who have signed up pay a fee of £22,500, which covers five years. For this, they are supplied the Century 21 signage, office furniture, email and web facilities, marketing material and on-call help from the headquarters team in Coatbridge.
White believes one of the main points of difference between Century 21 staff and their rivals is the training they receive. All recruits must do five days of compulsory training and then pass an exam or they don’t get hired. They also have to undergo 50 hours of professional training over the course of a year, in much the same way as licensed professionals such as solicitors and accountants have continuous training.
But the key reason he believes Century 21 will be a success is that house-sellers want to have a single professional dealing with the sale.
Not everyone is convinced that large chains are the way the estate agency industry should be going. Black Horse sold its estate agency offices to Bradford and Bingley, which in turn disposed of them to Countrywide.
White, however, is bullish about the prospects for Century 21. “There is a need for something better – a service dedicated to the client, which is not available in the High Street,” he said. “The feedback that we’ve got from our clients is that they love having a single professional dealing with them all the way through the transaction.”
In the next 12 months, White is planning to increase the number of Century 21 outlets to 80 and he is in negotiations with a number of large financial services organisations about providing exclusive products for their clients.
Few people have a good word for estate agents these days, but Stuart White believes the revolution he is orchestrating from his Scottish base could be about to change all that.
“I came into this to make estate agency a better product and I genuinely think it can be a better product and clients should get better protection than they do,” he said.
Revolutionary: Stuart White plotting a nationwide shake-up