What does Rightmove’s decision to turn down a staggering £6.2bn takeover bid from News Corp’s REA Group really say to estate agents struggling to cope in a volatile market?
Describing the offer from Rupert Murdoch’s company as “opportunistic” and claiming it undervalues the company’s future, Rightmove has sent a clear message that they believe they can deliver higher profits without external intervention.
How will they achieve this? By charging estate agents more? By inviting home owners to sell directly on the platform? By becoming an estate agent themselves? Or something else?
We can see from their half yearly figures that they’ve upped their spend on technology, focusing on new AI offerings, which will inevitably reduce the role of estate agents in key parts of the transaction process.
And while this might be great for enhancing their platform for customers, it doesn’t address the fundamental issue that our industry faces in rising costs and shrinking margins.
According to the Insolvency Service, the industry is already under enormous pressure, with 286 firms going bust in the 12 months leading to July 2024, a third up from the previous year.
The idea that we’ll benefit from even more tech-driven offerings, while Rightmove continues to raise fees, feels increasingly unsustainable.
For many smaller agents, this could be the tipping point. If Rightmove continues to prioritise profit over partnership, we’ll likely see more closures and consolidations in the months ahead. I know from our acquisition conversations there are many businesses on the edge.
With the entry of CoStar under the OnTheMarket banner and the significant investment they’re making in tech and marketing, surely Rightmove’s margins are under threat, or they’ll have to rethink their marketing costs. Are they going to change their model i.e. charge by listing or price per property per week? Or a pay per click?
The REA Australian model of charging is very different and starts at AUS $1,000 basic up to AUS $5,000 for the full display but as their market works at 2% to 3%, fees are higher.
As an industry, we need to be asking tough questions about whether Rightmove’s vision for the future aligns with the reality we’re facing on the ground. Rightmove’s future might be looking bright, but for many agents, the outlook is increasingly uncertain. If they think there’s some cash under our mattress, they may be wrong.
Paul Smith is chairman and founder of Spicerhaart
