It’s been an interesting couple of years in the industry with online Estate agents popping up and hybrid agencies. The fact is, no one knows as a business model whether it even works yet.
Purple Bricks are losing a million pound a month and investors and big agencies are jumping on to the online agency bandwagon. Connells bought ‘Hatched’, Savills own ‘Yopa’ (which is a train wreck of a start-up in my opinion) and Countrywide are testing hybrid models.
A new entry was Ewemove a quirky new entrant into the market in 2014, with a successful franchise model with explosive growth with 90 franchisors throughout the UK. Incredibly selling for a massive £15 million pounds, which is a real result for a two year old company.
I still fail to see how Purple bricks is valued at £330 million. It’s a ridiculous valuation and for a business that has not yet made a profit and investors queuing up to stick their money into these companies that may or may not make distributable profits in the future.
It’s like ‘Lambs to the Slaughter’, someone has really ‘Pulled the wool over their eyes’ and these big agencies jumping onto the hybrid bandwagon, where one leads, other follow. That’s sheep for you.
The point is, online agencies currently make up 5% of the market and have been around for 15 years now.
It’s only Purple bricks who have adjusted the business model, still online but have a local rep but is it good for the customer?
I can tell you. What incentive do they have to sell the property? … NONE
They couldn’t care less if someone sells or not, they do not register buyers because there is no point. They have no database of buyers, no sales meetings, no phone outs, no ongoing service.
Once they sign someone up, the fee is ‘buy now, pay later’ credit. To the point, where some local reps couldn’t even be bothered to do the viewings. Fortunately, now customers can buy a ‘bolt on’ service to pay them to do the viewings but they still have little interest whether they sell or not.
This combined with their limited advertising, no office, no local publications, no yellow pages, no database, the fee has to be cheap. Cheap fee, low marketing, low results and the problem is once sellers are hooked in, paying no matter whether they sell or not, they are reluctant to change agents. Then, they reduce their asking price by sometimes tens of thousands because they are not receiving the interest or correct advice, but at least they can boast they saved some money on paying real estate agents.
I’ve just taken on a property, the client has paid Purple Bricks a thousand pounds and after several months on the market, nothing. They have now instructed Clifftons and our Service is FREE, FREE to list their property, FREE advertising and marketing, FREE viewings, FREE negotiation, FREE to find a buyer, FREE to sales chase for months between all parties, its brilliant. She only pays Clifftons if the sale completes and she moves home. How can you compete with that?
As an agent, my biggest business expense is marketing / advertising. I spend thousands of pounds to attract hundreds of buyers and tenants on a weekly basis. As a business if I cut the fee, I have to cut the marketing which is not in the sellers interests. Sellers need to generate maximum interest and obtain the best possible price in the marketplace. Online agents, someone working from their back bedroom, with no office, worries me greatly. Its only a matter of time.
On a brighter note, if you want to use our FREE service to place your property on the market for FREE – Call Clifftons today – 01202 789699.
- We promise you will not pay us a single pound, unless we actually find you a buyer and you move home.
Posted: 14th September 2016