11 Jun Online-only vs the high street
With the introduction and subsequent rise in popularity of the online-only estate agent with their promises of cheap fees, there has been speculation over recent years about the future of the high street estate agent.
However, it seems the cheap service has been tried and tested by enough home-movers over the last few years and, although there is a place for the online-only firms, the proof is in the pudding and the tables are very much firmly turning back in favour of the high street.
In this series of articles, we’ll explore the evidence which leans towards a winning high street agent.
Estate agency – it’s all about trust
Steve Moir, Chairman of the Experts in Property
“Some high street estate agencies have been around for hundreds of years and continue to stand the test of time. Over the course of history, even those which have survived tens of years and one or more recessions have sold thousands of homes for generations of families, they have been held accountable and have built reputations and years of expertise in their areas.
Since the Internet hasn’t been around for that long, it would be unfair to judge online-only agencies on that basis, but to give you some background, House Network claimed to have been the first online-only agency when it was launched in 2003, Hatched joined the scene in 2006, HouseSimple in 2007, Tepilo in 2009, eMoov in 2010, Purplebricks in 2012 and EasyProperty in 2014. Others have come and gone, but these have been the bigger players over the last 16 years.
Owned or managed and staffed by local people, high street agencies have a personal touch. They understand that our homes are our most cherished, most valued and most valuable assets and their job is to provide help, guidance and reassurance in what can be an unfamiliar, long and fairly stressful process. These people are there for us to talk to, we can read their faces and see their body language, which either instils a trust, or indeed a distrust, that can’t be generated in any other way. We need to trust these people, and while visiting their offices, we get a feel for their personalities. If we come across an agent we don’t like, we don’t put our homes in their hands.
However, with online-only agencies there is none of that. It’s intrinsically difficult to get this level of feeling, of a trust or distrust over the phone, and even less so online where there is no personal contact whatsoever. So, the popularity of online-only agencies is purely based on fee. And who could be blamed for being tempted by the promise of saving thousands in fees? No-one.
Now, don’t get me wrong, the high street has suffered its losses, including of course estate agents and some big brand retailers. Indeed, Debenhams is one of the latest to go into administration, and only this week, the Select chain of clothing stores. Much of the high streets’ demise has been blamed on the internet, but recent developments in the online estate agency sector speaks volumes.
The last few months have witnessed the collapse of names including Tepilo, Emoov, House Network and Bettermove, most of which have subsequently been bought out and resurrected, but will they now win the confidence of home sellers, who at the end of the day are placing their biggest life’s investment into the hands of their estate agent?
The list goes on… Connells’ online venture, Hatched, was shut down and their reason – the online-only/hybrid business model is fundamentally flawed and not viable. Housesimple and Yopa have reported losses, and only last week, Yopa reduced its headcount by 16.
In February, Purplebricks issued a profits warning and lost two of its chief executives. More recently, its share price fell sharply, prompted by analysts downgrading the business by over 80% citing slowing growth in its UK market, a marketing spend of £7m per month, and mounting losses in America and Australia. And then just this month, its turbulence has continued with its founder and chief executive quitting the company closely followed by two other high-level departures, its announcement to quit the Australian market and review its operations in the US, and share prices tumbling further.
It’s an interesting time. In our next article, we’ll look at the fundamental differences between online and traditional estate agency business models.”