One of the country’s leading high-end buying agencies says it has ‘mystery shopped’ Purplebricks - with mixed results.
For while it found its Local Property Experts wanting, it says some version of the hybrid agency may nonetheless become a kind of model for mainstream house sales of the future.
Property Vision, an independent buying agency which routinely handles clients with seven and eight figure purchasing budgets in prime central London and the Home Counties in particular, says it undertook a mystery shopping exercise on Purplebricks after seeing it advertise its total fee for selling a property as being £1,158 including VAT.
In a blog explaining the results of the mystery shop, PV says that “the responsiveness and speed of reply were good and the 'local expert' was punctual and pleasant.” However, then things take a turn for the worse.
“The only problem was that he was neither local nor an expert in that he had never worked in the areas he was an 'expert' in and he was covering 11 - that is 11 - London post codes. How he would have time to see all the potential instructions, let alone help in any negotiation, is hard to fathom. Purplebrick's aim is to have one 'local expert' per postcode. Even then that would be a stretch for a service which is, by definition, mass market” says the PV blog.
However, Property Vision then says two recent announcements by traditional estate agencies - Countrywide’s piloting of a hybrid system in three of its ‘volume’ brands and the investment in hybrid agency YOPA by high end traditional firm Savills - shows that the concept of a local property expert of a kind may be the future.
PV particularly backs the Countrywide interpretation which it says is like an easyJet flight - a cheap basic cost “but you pay through the nose for every sandwich you eat and suitcase you put in the hold.”
It concludes by asking whether all estate agencies will end up like that - although it says it doubts it will happen “at the top end of the market.”
Meanwhile Purplebricks has received a more favourable review from the Business section of the Sunday Times, ahead of the release of the agency’s first set of annual results on Thursday.
City commentator Danny Fortson says that while Purplebricks’ current share values are clearly somewhat ahead of its performance to date, and while it certainly needs to improve its conversion rate of listings into actual sales, it is nonetheless worth buying into.
“The company reminds me of Uber” he says. “What it has done, like Uber, is zero in on an industry notorious for being expensive, inconvenient and leaving one feeling like you need a shower after using its service.”
And Fortson contrasts its City performance this year (it has risen more than 50 per cent since its December floatation) with the likes of Savills, Foxtons and Countrywide which Fortson describes as having “staggered” in share value terms, in the light of the threat of a Brexit.
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High Street Agency really needs to buck its ideas up and improve its offering to compete against the likes of Purplebricks and Yopa. Customer Service issues, which can be sorted, are teething issues. Any agent who poo poos them, that is what High St Insurance brokers said of Go Compare and Compare The Market, that is what Blockbuster said of Netflix and Lovefilm, that is what Woolies/Comet/Bookers said of Amazon ....
What are you on about Christopher??!!!
Tell me how High Street agents compared to online listers need to buck up their ideas?
The main difference as you have pointed out is service and knowledge which is far superior on the high street. What do the online listers do apart from offer a basement fee which is then shown in the service they offer?
They do not proactively call out instructions, they do not know their buyers or sellers, there is no incentive to sort out a chain that is falling through.
Give me one example other than fee were an online lister can offer something a high street agent does not?
Unfortunately @Smile, many Hg St agents are little more than listers. It's those that will/are losing out.
There is a way UK agents can power their consumer take up via changing their sole agency pitch to to a dual pitch. 1. Sole 2. Main/premium.
In this big data sharing age, agents can come on to a firum and share chat, but few have the skill to share listings.
PB, YOPA, Will take out the lone agents. But main agency could self exclude to budget listers.
Smile Please - I agree an agent based in a town will have greater knowledge of the local market than an agent who covers many postcodes from their kitchen table. A High Street agent gets paid on the sale whilst a PB get paid on the listing. Physically being there should mean a better service. 100% agree with you.
.. but the fact is, they are selling on fee.
.. and some agents will try an compete with them .. by lowering their fee. At first, the process of lowering your fee involves smart efficiencies. It forces hard choices that lead to better outcomes.
Over time, though, in a competitive market, the quest for the bottom leads to brutality. The brutality of harming your suppliers, the brutality of compromising your morals and your mission. Someone else is always willing to go a penny lower than you are, and to compete, your choices get ever more limited.
As Seth Godin says, "The problem with the race to the bottom is that you might win. Even worse, you might come in second"
To cut the price a pound on that ebook or ten dollars on that plane ticket (discounts that few, in the absence of comparison, would notice very much) you have to slash the way things are edited, or people are trained or safety is ensured. You have to scrimp on the culture, on how people are treated. You have to be willing to be less caring or more draconian than the other guy.
Every great brand (even those with low fees) is known for something other than how cheap they are.
Henry Ford earned his early success by using the ideas of mass production and interchangeable parts in a magnificent race to the most efficient car manufacturing system ever. But then, he and his team learned that people didn't actually want the cheapest car. They wanted a car they could be proud of, they wanted a car that was a bit safer, a bit more stylish, a car built by people who earned a wage that made them contributors to the community.
In the long run, to be the cheapest fee is a refuge for agents who don't have the flair to design something worth paying for, who don't have the guts to point to their agency service and say, "this isn't the cheapest, but it's worth it."
... and this is my point ... estate agents are rubbish at proving that value .. they all look the same.. they all market themselves in the same way ... and if we aren't careful ... we will all start to look the same .. and in the absence of value and differentiation .. you cant blame people going for the cheapest agent
I agree with your last paragraph of your reply, agents need to demonstrate a difference and value.
But you said High Street agents need to buck up their ideas and offerings which is a completely different argument.
The only way Online Listers are attracting sellers is by lying to them and deceiving them. Just look at how many complaints the ASA have upheld against them.
Are you suggesting High Street agent lie to the public to show why they are different?
Smile .. you asked, "Are you suggesting High Street agent lie to the public to show why they are different? ". Quite the opposite - I am suggesting agents should prove their worth and value.
Agents seem to think to prove value, worth and difference, they should market themselves as the biggest, the best, look what we have sold, best opening hours, most experience etc etc .. but people aren't that interested .. or at least the 97% of people who aren't trying to sell their property.
What I advocate instead, to prove worth, value and difference is talk about something that interests, intrigues, educates and helps potential vendors - so when they need an estate agent - they have already decided to us that agent months or years before ... because of the very fact they interesting, intriguing, educational and helpful.
If you (or anyone else) were interested - I have written 5,000 word paper on how High Street Agents can beat Purple bricks at their own game. I warn, its in-depth and very meaty ... https://www.linkedin.com/pulse/beating-purplebricks-yopa-own-game-christopher-watkin
Christopher, you have completely done a U turn and answering different questions now. You said at the outset High Street Agency needs to buck up their ideas and improve its offering. Now you are saying you do not need to change the product just the way you advertise it!
I have seen your blogs in the past and to be honest they really (in my opinion) do not mount to much. Its idealist and simple that in a competitive, saturated market of agents will not work.
You of course will disagree with me as is your right. But given you cannot even convey on here your thoughts i am not likely to implement them in any marketing campaign.
The truth is if you have a large marketing budget its about brand awareness locally. You can put out pretty much any message as long as it has your logo on it and buy the market.
If you do not have a large budget its about being smart, door knocking, going through the database and making most of opportunities.
What you advocate (from what i have seen) is the middle ground or wasted ground as i like to call it. You want agents to promote why they are the right agent for the user yet still spend X£ on rather expensive adverts like newsletters or newspapers. Truth is makes little difference (in my opinion) people are just paying to be different but does not really make a difference (you will of course disagree with this).
So once again i will ask you, how can a high street agent improve their offering compared to an online lister? We already streets ahead of them on every thing! - Saying we need to reword adverts given your accusation is just nonsense.
As a conveyancer we experience online Agents. I could not recommend them to family let alone clients.
Incentivise the Agent not to settle for first offer but 25% higher next few offers.
Always been cheap Agents, but that is why people in the main avoid them.
It must be a new week and time to go online agent bashing again...when are people going to realise that they are here to stay?
@ Dean. There's good online only and traditional agents.
Equally, there's bad in both camps. Unfortunately investment is mainly going into supporting the race to the bottom fees models.
I have mixed feelings about hybrids and online agents. Being of a certain age, I remember well the doomsayers predicting the end of high street estate agents at the very beginning of the internet revolution. So, I am somewhat surprised it has actually taken this long for a real threat to emerge. to us traditional agents.
The current online offerings are by no means perfect BUT I think they are the start of a real paradigm shift. If, however, the market changes from being a sellers to a buyers one, well, that is when I feel the online agents will have to up their game, if not totally change their offering. It's easy enough to sell property at the moment with most agents being little more than door-openers. It's when the market changes and the grey-arts of customer service and negotiating come to the fore, that is when the chaff will be well and truly separated from the wheat.
Time and time I come back to the subject of regulation. The industry needs to be regulated and it needs to happen now. This will result, I believe, in higher standards for the consumer and better fees for agents.
www.docklandspropertyblog.com
If the "expert" has little or no knowledge of the area he is not an expert and Purple Bricks would be liable to prosecution for misrepresentation and possibly criminally for fraud if Purple Bricks has taken money under false pretences. When will the first person do something about this?!
Misrepresentation no longer exists other than in comparative case law.
Were now under CPR's, BPR's and 'omissions'. So even more to catch agents out on.
I think the only agents at risk by online offerings are those that offer a poor service and knowledge. If you hire the cheapest staff you can find and invest nothing in to developing them- dont be surprised when your only negotiating tool is to drop your fees killing your business.
Those agents that continue to drop fees to get business pull themselves ever-closer to online offerings making the leap an easy one to make.
Invest in your brand, your offerings and your staff and you have nothing to fear. Online offerings are great for the right clientele but I dont see this becoming a market-leader/dominator any time soon.
Whilst I still have a huge issue with how people keep calling trdaitional agents expensive- I beleive the national average sales fee is around 1.5% which is a fraction that you pay in almost any other country in the World.
Well said. But abroad the 5% includes legals and typically main/sub agency (mls) exposure. When you market are legals included and do you cobroker??
Equally, sellers overseas run with it over lone agency which the bulk of UK agents only offer.
Low fees is simply a race to the bottom and one must question if cheap. What other than listing on TM and/ or Z do agents have to offer
Well Christopher, it is lucky that ALL agents are not rubbish at selling a good service rather than a poor service with a low fee. What type do you belong to?? I know which one I belong to. PB blatantly lie about the supposedly great deal their clients receive, and they hide fees also. Their 'Local property Experts' are neither local nor experts, and we are getting more and more buyers who will not even attempt to view a PB property because they have had bad experiences trying to view before. Their spend will always be greater than their income. I do not disagree that so-called 'Hybrid agencies' are the way forward, but it is NOT hybrid, just good agents changing with the times. Unless PB and certain other agencies change how they do things (or not), they will be the agencies that pass.
Terrence - I belong to neither camp - I am just an estate agency industry commenter and in fact, really do 100% agree with you that Hybrid is just forward thing agents changing with the times.
If you were interested .. here is my thoughts on how agents could counteract the Purplebricks threat by playing them at they own game ..(note its 5,000 words long - not for the feint hearted ! )
HOW TO BEAT PURPLEBRICKS AT THEIR OWN GAME https://www.linkedin.com/pulse/beating-purplebricks-yopa-own-game-christopher-watkin
You get what you pay for in terms of service. Having personally used both a traditional agency and one of the new online entrants, I would certainly recommend a bundled fixed fee agent if you’re provided to put a bit of extra effort in yourself.
If you have the budget and need to shift your seven figure property quickly at the right price, go to premium agent who may have a list of buyers waiting. Remember you can only have three types of service.
Good and fast, won’t be cheap. Good and cheap, won’t be fast. Fast and Cheap, won’t be good. We certainly don't want the last, as Christopher Watkin points out, a race to the bottom is not good for anyone.
I would really like to see if possible, an online estate agent to charge that fee at the end rather than the beginning to gauge the kind of service they will provide.
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