Katy Billany, Executive Director at TwentyEA, explains: “This stat regarding more than half of homes being sold with a second agent has been floating around the market for a number of years. It has taken hold in many agents’ minds and has become almost accepted, but at TwentyEA we’ve always found it a little hard to believe.”
With this in mind, the firm decided to do some digging to find out the real truth of the matter.
Billany adds: “This statistic has often been quoted by industry leaders and PropTech suppliers and typically goes unchallenged, but our findings suggest something very different. And may come as a surprise to many.”
TwentyEA found that, in 2021, just 6.2% of sellers actually switched agents. So, even when you take into account that 8.2% of new instructions were multi-listings, this means more than 85% of new instructions in 2021 were off-market (i.e. from people whose properties were not already on the market).
Billany continues: “It could certainly be claimed that 2021 was a unique year in the fact that there was such a large supply-demand imbalance. As a result, it was nearly impossible not to sell a property as there were so many buyers fighting over what little stock came to the market. This argument does have some merit, so we decided to analyse the numbers going all the way back to 2017 to check if this was an anomaly or not.”
The full stats can be seen in the table below, which show that the year with the highest number of sellers switching agents was 2019, but this figure was still only 9.1% of the overall market. The average over the last five years is just 7.7%, and a further 10.3% of instructions were multi-listings.
Billany said: “On average, then, some 82% of all new instructions were off-market (in other words, not already For Sale) over the past five years. That’s a staggering number.
“Of course, not every property that is listed goes on to sell, but the big question we have had to ask ourselves is – how many properties did sell after switching agent?”
TwentyEA says that nationally, on average, 71% of properties listed will actually end up selling. But when listing with a second agent, that drops to an average of 50.8% between 2017 and 2020 (ignoring the 2021 figure as around 30% of transactions are yet to be concluded).
She adds: “So, not only do you have a lower chance of actually selling at all if we look at the number of exchanges from properties listed with a second agent as a percentage of the total number of instructions, between 2017 and 2020 only 4% of listings achieved a sale after switching agent - not the 50% that is often stated!”
Why is all this important?
TwentyEA says now the idea of many sellers switching agents has been successfully debunked, the next question to agents is naturally: ‘what are you doing to attract the 82% of ‘off market’ properties that come to market?’
Billany explains: “Typically, many agents will spend a large chunk of their marketing budget on ‘prospecting’ or ‘touting’ the properties of their competitors at various trigger points throughout the seller’s journey.
“But we would argue that actually the large majority of your marketing spend should be focused on the pool of people who still haven’t listed yet but are looking to move. Whilst ‘agent switching’ activity will always be part of the mix, the stats clearly show that it shouldn’t be the main focus of agents’ marketing campaigns.”
Billany says the size of the market of those unhappy sellers looking to switch agents is relatively small, so it makes sense to focus on a pool of potential sellers that is much, much larger.
Billany says times have changed and the wonders of technology make it now possible to anticipate the homeowners that are likely to sell.
She adds: “We have an AI machine-led data model called Forecast, which predicts to a high level of accuracy who is likely to move in the next six months. So much so, that in the last six months of 2021 Forecast successfully predicted over 81% of the instructions that came to market.
Billany concludes: “With a more targeted approach to mailing campaigns, it reduces your costs and increases your ROI. Our Forecast model is currently generating more than 40% of all valuations for one of our largest clients. As well as the traditional direct mail approach, you can also use our Forecast audience to target these home movers via email, social media and mobile to offer a coordinated omnichannel approach. This really is where agents should be focusing their efforts, even in a ‘normal’ market."
