I have been expecting the true colours and form of the online agents to come to the surface for some time. I expect this headline and many more will appear again and again as time goes by. The fee model is not sustainable, and the service package is simply not there compared to the high street model. I have argued for some time as to why anyone would put, what could be their biggest asset, in the hands of an online only agent. I firmly believe the best service and value is with a high street sales team. Matthew Wiggall, Managing Director of Fresh Estate & Letting Agents
Paul Smith wrote recently in a column - Who knew? Certainly not all the investors who’ve ploughed millions into the founders’ pockets and are still waiting for a return on their investment.
Or the customers who’ve been duped into believing they’re getting a good deal when their properties remain unsold but they’ve coughed up hundreds of pounds. Or the isolated staff who are trying to earn a crust facing long hours and heavy workloads.
The wheels are most certainly starting to come off the online estate agents’ bandwagon. With rumours of two leading internet agents contemplating a merger, there’s a strong feeling that no-one can make a go of it and actually make a good profit when fees have sunk so low, yet marketing costs in many cases run into the millions.
We’ve done our own analysis of all the online agents in the towns where we have branches. It transpires that only 6.26% of all properties for sale are with internet-only agents.
The top five online agents between them account for 90% of the online market in those areas. The remaining 15 online agents had just a handful of properties for sale in each case. How they are surviving is anyone’s guess.
Which led me to look at some of these agents’ accounts at Companies House. These publicly-available records show Purplebricks, Housesimple and eMoov all reporting a loss in their last accounts, while Tepilo’s profits have taken a major nosedive. Hope value is turning into no-hope value!
How will Purplebricks fare in the US when Foxtons failed when they went to New York with a discount model a decade ago and instead drained their coffers of cash? Will LSL’s £20m investment in Savill’s-backed YOPA – which also received millions in investment from the Daily Mail earlier this year – generate the rewards that are being sought?
I fear it will take more than the Chancellor’s Stamp Duty cut to transform the fortunes of these businesses. High marketing costs will always outweigh the income that’s generated, making the future uncertain for a business model that hasn’t yet proved its worth.
Every agent is going to have to change but I don’t think anyone has the right model yet. The new currency is speed, with an instant service that will give the best customer experience.
However, if you don’t like change, you’ll certainly hate extinction!
Thank you for everything. The service, professionalism and effort has been above what would be expected. Thank you. Richard & Laura