As scary Halloweens go, yesterday was quite a shocker for Britain’s online estate agency sector - and not in a good way.
During the day Purplebricks’ share price - which earlier this year was approaching an extraordinary 500p mark - sank another 3.6 per cent and ended trading on the London market at 177.7p.
“A slowdown in the housing market has caused investors to become increasingly cautious despite the continued transition of the estate agency industry towards online” says the Motley Fool investment blog, which claims Purplebricks has under-performed the FTSE 100 by more than 40 per cent so far this year.
Then in the evening came news that Emoov was up for sale; the Sky story which broke the news described Emoov as showing “signs that it is facing a cash squeeze.”
Sky, citing unnamed sources, said traditional estate agency Foxtons was in talks as a potential buyer.
As recently as July, Emoov chief executive Russell Quirk told potential investors that if the company was floated on the stock market it could be worth £120m to £150m and suggested revenue could increase multiple times in 2019; he also hinted at a desire to get involved with Countrywide.
However, when EAT reached Quirk yesterday evening he said he could not make any comment.
Yesterday’s news came only five weeks after Connells closed its online service, Hatched, with immediate effect.
“We have thoroughly tested the hybrid model and have reached the conclusion that it does not produce a viable economic result – evidenced by the results of those operating in this sector – and with the cost of customer acquisition being one of the main barriers to being able to deliver a profitable return,” said David Plumtree, Connells Group estate agency chief executive.
Emoov has been in the news frequently in recent months.
A few weeks ago Quirk penned a LinkedIn statement hinting that online agencies may not be able to break through and achieve the market share he once hoped. A few days earlier, Adam Day - ironically, the man who founded Hatched in 2006 - quit as Emoov’s head of estate agency.
Both were unexpected developments for an agency that had snapped up Tepilo and lettings platform Urban a few months earlier for a reported £100m.
Charlie Wright, the software entrepreneur behind Best Agent and a strident supporter of traditional and particularly independent agents, said in a comment on EAT last evening that it was never pleasing to see an enterprise fail but the Emoov sale “should make people reconsider what agency is all about.”
He added: “This is good news for conventional, full service, in-person agents who have stood their ground and defended their industry. You can’t commoditise personal service. Helping people move house is a complicated, emotional gauntlet that affects people’s lives. It needs the human touch, in person, to help ordinary people through an often traumatic process at a difficult time.”
London estate agent Rollo Miles, in another comment on EAT, said of the Emoov news: “Good agents need to make a living and the current race to the bottom in fees led by the discount up-front fee-charging agents has not helped the industry but only made it worse …The industry does need to change but online up-front fee agents are not the future."
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With regulation and education on the horizon maybe the high street agent will be around a lot longer than many thought. A personal, face to face service, provided by a professional.
Agency is changing and needs to change ! However the discount upfront fee model where vendors pay an estate agent before they have found a buyer and the vendors does the viewings is simply not working. Their fee structures are not sustainable and their agents can not make a living and are not incentivised to do the best for their clients. Being an estate agent is not just about listing a property on the portal sites and hoping for the best! Pricing, customer service and experience are key. The high street is not perfect just look at the countrywide share price from £6 to 10p ! The public just wants honest advice when it comes to property .
13 years ago I set up Red Homes, online...no high street office!...I am local I know the area, I charge a no sale no fee of 0.75%+vat. I have been the market leader for the last 12 years selling on average 100 properties per year. Red Homes is the future someone local who gives the service without the high overheads of unnecessary high street office...No one can say its not the best of both worlds and is the future!...
we are coming to the end of version 1.0 - going forward agency will change increasingly rapidly and those agents who deliver great local service and technology with a human touch will lead - we simply cannot rely on inflated marketing claims without delivering at the coalface; local must be local and the value delivered must generate sufficient revenue for good agents to make good livings - they are worth it !!!
High Street Agents have stepped up over the past few years.
I think we will be around for a long time yet.
No complacency
Keep being the friendly face.
People deal with People face to face.
Being an ex local agent with an online...
Thanks Steve.
Great piece
Great post showing great insight.
Steve, would you agree with me that the future is Red Homes?...A local person who knows the area, who charges no sale no fee without the unnecessary high street office, they have less overheads meaning they can charge lower fees.
Everyone in the industry knows you DO NOT need a high street office to sell a property, the high street agents go on about service and yes I agree call centre onlines like pb and emoov cant possible give the same service...but with Red Homes they deal with the owner/director who take calls at 10pm at night even high street agents cant do that!.....
I want to hear a high street agent say to be fair this man is right!!!!!!
Richard.
Why do you need approval from others.
High Street.
Foot Fall.
My window is the most looked at window in Saltcoats.
Does anyone walk in your door.???
Why cheep fees.
Surely it's about profit for your Vendors.
???
Amazon’s share of the US e-commerce market is now 49%, or 5% of all retail spend... High street retail (higher overheads and prices), online retail (lower overheads and prices). High street agent, online agent... it isn't much different really. There is room and wants for both.
I like the Red Homes model, I like the online and traditional too. I guess there is room for all. The problem was/is Purplebricks/Micheal Bruce started a war with everyone else and created a lot of animosity in the industry. Red Homes offering a great service can only do well. :)
Peter
You have to charge higher fees than me because you have higher overheads- that’s simple.
A simple question for you...do you need a high street office to sell a property- yes or no?
No one walks in my door because they view property online and in the paper hence I don’t need a high street door.
I don’t understand what you mean about profit for the vendors the vendors will be the ones who accept the offer whether it’s you or me selling their house- yes they will get more profit using me because my fees will be lower than yours!
The trouble with high street agents is you just won’t admit what’s staring you in the face, I just wanted approval that you recognise that Red Homes is the best way forward...but you can’t because you don’t want to and that’s the answer I knew I would get lol
Take my hat off to you on your posing Steve - great insight!
Notice the Poppy on the site - well done guys!
Richard.
1. Are you Qualified through Propertymark.
2. Only been doing this for 20 years.
3. I have all my Staff Qualified through Propertymark.
That is the way forward.
Just think how much more business you could do
1. If you were Qualified and had great staff.
Oh.
By the way
Our fees are competitive withe the online guys and I'm on more websites than you the on line guys.
Your kidding yourself Steve.
You could do a lot better if you had more exposure and are Qualified.
Only saying.
Top Agent in my Area for the past 18 years
Peter, if qualifications were so important, then someone who has just completed a masters at university is worth more in that field that someone with 5/10+ years experience and is on the ball - I think not. I know plenty of people who haven't got a bit of paper in their line of work, but could easily teach the course that paper covers. I suggest it is you Peter, who are kidding yourself. As for top agent, I expect by your opinion and perhaps some others, but many will disagree. It's a case of Mac or Windows? Apple or Samsung?...
Hi Peter
Without making you look silly...yes I am qualified through propertymark I also have my CeMap(not that I use it)...
You only need to be on rightmove and zoopla...I suppose you would disagree?
You are lucky I didn't choose your area to start Red Homes 13 years ago...lol
Right now the serious stuff......remember you are not a politician....this will be the second time I have asked you this question....(Drum roll)...Do you need a high street office to sell a property? ...Yes or No???????????
Richard
CMAP. Financial Adviser N/A.
Why don't you come up to Bonnie Scotland and give your model a try.
I have put better than you on line boys out of business.
Have a look at my Micro Site on Rightmove.
Look at my sales over the last 6 Months then we will see who looks SILLY.
move2ayrshire.com
You are a good Agent in your area but answer me this.
How better would you have been if you had a High Street Office and Qualified Staff like minded people in your Business.
To Answer your Question.
To be the best all round Agency an Office on the High Street is vital.
Hope this helps you with your question.
Feel free to copy anything i do. To be the most successful Estate Agents on the Ayrshire Coast not just one Area you Must have a High Street presence.
OR
Spend bucket loads on TV Advertising.
So you sell more properties than Purple bricks then?
Hi Richard. I'll have a go at answering your question..... I started a similar company to yours back in 2013. I did a year working from home and was market leader in my town within 3/4 months. 25% share out of 10+ agents. At this point it was myself and two others so we took on an office in an old farm type complex, just out of town. This worked well for a couple of years and we continued to grow steadily. The business grew to a point where a high street rent became negligible in the grand scheme of things. There was still a premises cost as we needed to work somewhere. Two and a bit years ago we moved to a high street shop. This has cemented our business in the town and has created a nice place for the team to work and meet clients etc. It's also simplified our sales pitch not having to explain that we are different but the same and all that. The pictures in the window don't sell the houses and I'd agree that you do not need a high street office to sell a property, however we do get walk-in instructions and valuation requests from clients that quite possibly would have just gone elsewhere if we didn't fit their view of what an estate agency should look like. I see it as a sign of our success and a marketing tool to attract clients. So to pass a question back to you Richard... 'Do you spend any money on marketing?' My high street rent is approx 2.5% of my turnover which is less than I spend on flyers and facebook each month. My personal experience is that a high street shop is good for business if everything else is going well. Just for interests sake we have also charged 0.9 % (0.75%+VAT) since day one.
Peter...Appreciate your offer but I am happy in the sunnier climate of East Devon..thanks thou.
You seem to be getting a bit agitated, I have visions of Rab C Nesbit with steam coming out of his ears..lol..(this is a joke so don't get mad)
Are there any high street agents who can answer the question as Peter is struggling...Do you need a high street office to sell a property?..Yes or No?...
Hi Mark
Thank you for a sensible response......I love the lifestyle of working from home, I can do what I want when I want, in the summer my office is the garden...I would rather this than be stuck in an office from 8.30am to 6pm etc....
My only marketing is via leaflets, and some social advertising. I sell 100 properties per year(on average) with very low overheads, average fee being £1500.
Your model will work as your fees are sensible and you are also the directors/owners....The bigger agents whose directors want £100k plus for doing nothing will be the ones who close!
Thanks Richard. The nice thing about humans is that we are all different, and have different views as to what is best for us. I loved working from home however there were negatives with this also. My aim back then was to build a solid team whilst charging fairly to enable me to work how and when I wanted. I'm sure that some directors of the larger firms earn their £100k and others might not.
Mark.
Thanks for your sesible input to this debate.
Working from home. Richard are you out of your Pajamas yet.
Move 2 have just Sold 4 Proeprties this morning
Richard
Night Night
Purple bricks sold more... about that office... wink wink
We get tons of business because people have walked through our door. It creates a professional image and the office therefore pays for itself. We charge 2% whereas online clowns like PurpleBricks are charging £849. Interestingly on AllAgents review site, all our offices (5 in total) state that over 95% of our customers are happy with our fees compared to PurpleBricks 20% (despite them being so cheap) . People DO NOT WANT CHEAP FEES!!! They want a service that is VALUE FOR MONEY!!
Peter... Pyjamas not pajamas ....says it all, well done on the 4 sales this morning....Keep up the good work...just for your info the answer to the questions was No you do not need a high street office to sell a property...there you are you have learnt two things today...x
Paul Singleton, totally agree with service that is value for money...Red Homes half your fee but same if not better service.
Who's next?
Good night Richard
Richard, maybe you should take a look at your fees. You’re working twice as hard as you need to for less money!
Peter sweet dreams x
Paul I am happy earning £90k to £100k working from my study, I wouldn't say work is hard as local people with half a brain who want to save thousands in fees use me...
You have contradicted yourself thou....
If an agent works harder for less money that is great value for the client...as you clearly put in your previous post in capitals people want VALUE FOR MONEY!....you clearly want to do less work for more money making yourself less value to the client so what you are is a high street agent charging a higher fee for the same service making you less value for money.....Doh
Vendors do want value for money, we charge 2% but we achieve the highest prices in our areas which covers the higher fee. We also visit our vendors purchase property and negotiate on that on their behalf saving our vendors thousands of pounds. I don’t even know of another agent that does this. Our clients therefore get VALUE FOR MONEY. You quoted “Red Homes, same if not better service”, I very much doubt it but everyone has an opinion ;-)
Out of interest what is your average value? 2% is a great fee unless the house values are low.
So if the house is which is being brought and sold is managed by your agency, do you negotiate with yourself? :-) That would be an interesting watch... Value for money is what it is all about, different vendors consider that different things.
Paul, you achieve higher prices surely its the vendor who accepts the offer not you...
I have to say I don't visit vendors purchase properties and negotiate on their behalf, I tend to deal with Adults who have a brain who can act for themselves , but I suppose if said clients aren't bright enough to negotiate on their own behalf they are probably stupid enough to pay you 2% fair play to you..;-)
Richard.
Now is the time to get off this site.
Hi Mark, probably mid £200s. The most expensive one in the last 12 months at 2% was £800,000 and the second £775,000. On cheaper properties we have a £2,000 plus vat minimum fee.
Richard, are you just trying to be a clever sod? Of course vendors can neg on their own purchase, and they are adults, but as an agent I’m sure you neg the sale price on their behalf and I’m sure they’re adults on the sale? Does that mean they’re not bright enough? I’m sure you’re right about everything and trying to convince me that 0.75% is far smarter than charging 2%. It must be me that’s dumb?
Trying....I am...;-)
Being an ex online self employed agent in the UK and worked in the USA as a realtor I have seen the different ways we do business. I've also had talks with emoov and yopa from a recruitment perspective. First off after chatting with emoov they came across in complete disarray. I received wrong emails from them and also the other communication was very poor. Their CEO Quirk is obviously clever and he can see the writing on the wall by trying to align himself with countrywide previously and he's burning through cash in his war chest. As for the chatter that emoov has a price tag of £100 million, that's crazy and very very unlikely that anyone is going to offer anywhere near that unless they are crazy to but crazy things happen, the brand emoov is worthless and tepilo probably in these conditions worth something. They both have no real assets apart from the Beeney name. For £15 million you can set up a very decent online model so why pay a premium? Yopa is happy to wait in the wings and pick up the pieces but they are clones of the Purplebricks model. My take is that online won't be a big player in its current form in the UK, USA or Australia. People buy Jaguar cars because they can afford them and they choose not to buy Dacia. This plays out in their other shopping habits and with who they choose to sell their home etc. For that reason I see this shake up still panning out in the sector in the UK but not the USA or Australia. The trouble with online in the UK is the support and ongoing contact from the local agent and post sales. From what I saw its absolutely terrible. The cases I was involved with horrible and basically the clients liked it or lumped it. If they filed a complaint they would be offered a partial refund or if they pushed it even more and often a full refund. The firm Trust pilot is also very questionable, I've seen poor reviews removed due to a technicality. The majority of the complaints are lack of support from the agents and post sales. Although the training is excellent at Purplebricks almost the entire focus on the two week course is the sales pitch. There is almost no emphasis on support to the client. The second week of the course is entirely learn the pitch and get them to sign on the line that is dotted.
Working with an online agent means long hours and little support and the money does not equal the effort if you want to do a good job. The agents that do well there don't mind selling and dumping and leaving HQ to try and pick up the pieces.
The majority of the territory owners are really good and the lpes are mostly good but Purplebricks have seriously over hired and their attitude is throw it against the wall and see what sticks.
At the regional training sessions the focus again was the sell not support.
Clearly these online agents are focused on selling and not supporting and pumping and dumping the stock.
Why have the online guys made an impact on the traditional? It's easy to answer that and it's advertising that's helped them make this dent in the traditionals piece of the pie. By spending many many millions on TV radio and internet it's gained market share. Advertising definitely works. The big boys like countrywide have rested on their laurels. But sequence I think is a different animal and will come through this turmoil quite well as they have good senior management from what I can see. In addition I see the small mom and pop agents surviving but some multi branch and small chains will fall by the wayside.
In the USA the biggest problem Purplebricks has is that a lot of realtors don't work full time and these guys and girls make a hefty commission check from one sale. The average commission is say 5% and the realtor on average walks away with 65% of the total with the broker getting the remainder. So take a 200k sale the realtor gets 6500 when they sit down with the title clerk on closing. They sell one or two a month happy days. With Purplebricks they have to work full time for less than half that. In addition and this is looming they haven't been sued yet in the USA and they will. Another massive part of American business is customer service, they are the masters at this but Purplebricks seriously lacks it. Michael Bruce has said some pretty brutal things about the UK & US real estate markets and he's taken on a lot of powerful people with very deep pockets. His attitude in business is "it's better to ask for forgiveness rather than permission"
In Australia the market is turning into a recession for housing and I see Purplebricks possibly using that excuse to withdraw from that market if it continues.
In summary this shake up is ongoing. I see online as a viable option but not huge. The bad press will turn the tide on the online sector. People will use them but people will always buy Dacia.
The traditional boys are rattled but they need to learn from this lesson and they will come through this but they have to be a lot better. Michael Bruce talks about online and only online but that's never going to happen. Traditional and online will be the two forces and people will decide which is better for them
As a 'traditional' Estate Agent with 30 years in the business, we have a High Street office and an on line presence. We don't 'need' a High Street office, we want one so that we can meet face to face with our clients and our potential viewers/buyers. We are very much aware that the on line agents are here to stay and that is absolutely fine, we have no problem with that at all. Service is where things tend to go wrong. People deal with people and a faceless entity is not personal. But, for some who don't mind the lack of contact it's fine. With the technology out there at some point in the future there may well be no high street agent, every marketed property will be 'web cam'd' to the hilt and you can view property from the comfort of wherever you may be. But we are not there yet.
Agents fail all the time, on line and high street and it will be for a variety of reasons. Fees are too low, service is shockingly poor, presentation is amateur etc but in the end the constant comparison of which is best takes our eye off the ball. Concentrate on the job in hand and you won't lose instructions, you'll gain them. Charge a proper fee not get in the race to the bottom. Do what you say you will do.
Most people do not ask whether you are qualified or not, it means very little to them because they just want to sell their property as soon as possible and for the best price. Performance gets you more business. We all know that fee can be an important factor in 'winning' and instruction but if you charge £99, £1 or £850 and you give a rubbish service as an on line you will be disinstructed. Similarly charging .5%, . whatever or 1% + and you are rubbish you will equally be disinstructed.
What is a problem is combating competitors will silly high 'valuations' just to list it and wasting time. We know from Rightmove and Zoopla nearly 40% of listing reduce the price. From there they do it again and again and finally sell or withdraw. What a waste of time. Is there a housing shortage...no just a lack of supply for the right property at the right price. Value to sell not just to stock up your listings. Again it is down to the public perception of what we do. 'Sold' boards speak more than words.
We all work in the same field, we all want the same thing - sales. How we go about it will be different and different options free the market.
I know I have digressed slightly but it is all about what we do.
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