Your next introducer……a supermarket?

Tesco, the UK’s largest supermarket chain has entered the real estate market in partnership with Spicerhaart, one of the country’s largest estate agency chains.

Tesco is promoting its service, iSold, to customers in Bristol, which it has chosen for its national launch, by suggesting that agents are not offering good value. The marketing slogan ‘We simply sell homes’ is supported by the message: “In the last ten years a lot of things got easier, simpler and better value. But estate agents certainly haven’t … until now.”

The Tesco-branded service is betting that the strength of the brand and the promise of commission savings will be enough to convince sellers to part with an upfront fee (£299 for the basic package).

ISold charges between £999 and £1299 to sell a property, depending on the level of marketing required, with around 70% payable on completion. The website claims that sellers can save up to £8,401 compared to listing with traditional agents.

Changing the shape of UK real estate?

Tesco and other large supermarkets have long been criticized for ruining traditional high streets by putting local traders out of business. Could Tesco do the estate agent what it’s done to the local butcher and could it start referring business to overseas property firms?

I think the sad answer to the first question is yes, at least partially. Most local estate agency markets are highly fragmented. Local agents compete with the big chains and the businesses with the best locations, marketing and staff win the most instructions.

Tesco is a powerful brand and could take share from the weaker players forcing them out of business. It won’t happen immediately but in five years, it is not inconceivable that most UK High Streets will contain a supermarket-branded agency chain.

It’s not a pleasant image, but I can see my mum listing her property with Asda.

As for overseas property, it won’t be a priority for the supermarkets for the foreseeable future and when it moves up the list, due diligence will be paramount. Like Your Move, the agency chains involved will strike a few big deals with large overseas agents and developers with impeccable track-records.

Your referrer of the future could be a supermarket, but it’s unlikely for all but the biggest industry players. And if you are lucky enough to strike a deal, expect to get stung on the commission you have to pay away.