Online agent HouseSimple is due to start advertising on TV “imminently” and will go on another fund-raising round shortly, aiming to quadruple in size over the next year.
The firm, in which Carphone Warehouse founder Sir Charles Dunstone has invested and has made it plain it plans to raise the stakes in the online estate agency world, is also to launch an advertising campaign on the London underground.
The firm has made two clarifications after EYE asked for more information as to the size of Dunstone’s investment and the firm’s attitude towards no sale, no fee, following its move to a weekly pay-as-you-go option which combines with a success fee.
Alex Gosling, CEO, said: “Until last week, HouseSimple did offer customers a no sale, no fee option.
“We introduced the £995 (plus Vat) option back in 2007 but it has consistently been our least popular choice amongst our customers.
“The no sale, no fee price plan has now been discontinued.
“We have listened to our customers and given them what they want.
“We have brought our fees down to a much more appealing and realistic level, while still focusing on offering a high quality service.”
Gosling also confirmed that Dunstone and his partner invested £5m in HouseSimple.
We raised the inquiry after seeing from returns by HouseSimple to Companies House in May that Dunstone holds 153 shares and Taylor owns 17 out of a total of 1,333 shares.
This suggests that the pair have paid £5m for a 13% stake in HouseSimple, putting the valuation of the business at £38m.
Gosling would not confirm the figure of £38m but told EYE: “The investment agreement was for £5m, and the valuation was in double digits.
“HouseSimple.com are also likely to be raising significantly more in the coming months.
“The company has doubled in size in each of the last two years, and is now looking set to quadruple in size over the next 12 months.”
Russell Quirk of eMoov told EYE that he places HouseSimple fourth in a ranking of online agents, based on current inventory and weekly run rate:
- Purple Bricks
- Emoov
- House Network
- HouseSimple
- Tepilo
- Hatched
- Open Houses
- Urban Sales
- Estates Direct
- MyOnlineEstateAgent.com
Yes, all very interesting, he should have stuck a dollop of disrupt into the press release as I believe is now standard for all budget boys, anyway, to the point, it does seem true that customers don’t want to pay HIM no sale no fee, I’m sure this hasn’t been helped by his 9 quid a week offering.
Meanwhile in the rest of the world where profit is made and vain sugar daddy investors trying to keep themselves out of the house since retiring to young aren’t needed no sale no fee still seems to work for 98% of vendors who also don’t seem to have asked the budget boys like this lad here and Quirky to speak for them either.
Race to the floor for the on liners? – Jonnie
Ps. Good bit on fees from Stephen Hayter, time for the ASA to look at the ‘savings’ being claimed by the budget lot?
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https://www.housesimple.com/about-us – this tool alone should be looked into by the ASA..
Move the slider to your house valuation and it tells you how much “YOU SAVE” – load of rubbish and very misleading..
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@ dave_d
Have a look here:
http://pstatic.powys.gov.uk/fileadmin/Docs/Estate_Agency/NTSEAT_guidance_on_property_sales_-_June_2015__draft__en.pdf
New guidance coming out from NTSEAT (Trading Standards) come August. Lot to read, but guidance on what agents will and will not be able to do.
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dave the ASA don’t really care – if enough ‘consumers’ make a complaint they may react but apart from that their head is firmly in the sand
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So this begs the question if the no sale no fee was his least popular option, it was still an option chosen by some of his customers therefore why end it? Could it be someone told Alex that his business isn’t actually selling property, its selling the idea that they might sell property and there is no money to be made in actually giving customers what they pay for now is there!
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Surely Express Estate Agency must be No1, they have more properties than anyone.
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I would say Countrywide and LSL are the biggest UK online agents. ………
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“No 1” for WHAT, Mr Gillham?
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I believe ‘no sale – no fee’ remains essential otherwise it becomes a listing business. This is especially pertinent in a challenging market where a vendor wants more than one agent. What about those sellers who have little money and really need to sell? One of the biggest growth areas for many service business is ‘no win, no fee’ (see lawyers). Putting your money where your mouth is remains at the core of successful agencies.
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“We introduced the £995 (plus Vat) option back in 2007 but it has consistently been our least popular choice amongst our customers.
“The no sale, no fee price plan has now been discontinued.
“We have listened to our customers and given them what they want.
Have I missed something?
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“This suggests that the pair have paid £5m for a 13% stake in HouseSimple, putting the valuation of the business at £38m.”
Can also suggest that its a pie in the sky figure in the first place.
We have listened to our customers and given them what they want.
“We have brought our fees down to a much more appealing and realistic level, while still focusing on offering a high quality service.”
Discount your fees more – lets see how long your investment last then.
Its a loss leader. They are going flat out to get the market share by being cheap and then increase their fees. They dont care if they sell or not – the longer it is not sold the more money they get. Making it cheap enough so that owners think that its worth a punt at advertising with them then withdrawing after a short time when nothing happens earns them their money.
How long will it take to get the investment back + some one a Micky mouse money?
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“We introduced the £995 (plus Vat) option back in 2007 but it has consistently been our least popular choice amongst our customers.”
The reason it was the least popular choice is that 98% of sellers feel that it did not represent value for money. They have proved that they would rather use a professional, local, full service agency branch, even if the costs are higher. They consider High Street to be the real value for money.
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£5m and only doubled in size. GOSH
Budget agency is an easy pitch, backed up by the fact main portals allow adverts in to sit next to traditional agents. But there are many things budget agents can’t do as their fees are too low to allow extra exposure via other agents. ie budget agents low fees don’t allow enough in the pot to allow commission sharing.
But again we all know that VC’s want a hefty return. As such do they inject to have others inject £m’s with the view to then exiting with £m’s + shares. But take all the £m’s away that in cases only double a size, and how many years can such models last when the vc’s start taking £m’s out.
Many budget models simply wouldn’t exist or couldn’t exist of natural growth and sustain.
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Is this not another case of building up a company / awareness of the company with a view to eventually being bought out or floated on the SM?
It has always struck me that this is the aim of these investors, as clearly the business model has no legs?
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Please figive the link Ros but we can’t post photos. It seems Instead of being ranked No4 House Simple are actually the No1 Online Agent, we according to this advert they are.
http://bit.ly/1JbqxSG
At least the PB “Best Estate Agent” advert has been taken down
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This is a great business model for making sizeable profits. That is why these ‘high roller’ investors want to invest. No interest in customer service only profit. These businesses are cash generators. Guys working from their bedrooms registering properties, taking the money and not doing anything. I would be interested for all these companies to show their conversion rates from gross instructions to sales completed and I would be surprised if it was higher than 10%. The aim of these businesses like those back in the heyday of the dot.com bubble is the grow their business as fast as possible at the expense of the consumer and then float on the stock market, take the money and run.
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10% Ashley that is a bit on the high side the ideal scenario is to get the name and address, job done. Feed the machine with leads!
Whoever it was on here last week inadvertently let on how this works. It is quite sad for the guys who will be working from home. Our local rep will be earning £18/ week plus add ons. Yay! I guess it’s one way of getting around minimum wage regulations.
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I would suggest an opportunity for OnTheMarket.com to promote Real Estate Agents versus the unrelated and easily confused Online Only Property Listers.
I have just taken a £300k house on where the client had listed with an Online Only Company, she paid £500 up front, was told that she could have a basic or premium Home Report?…. there is only 1 type in Scotland…. and got conned out of £720, rather than typical £400-500 actual cost…. the client has heard nothing verbally since and no viewers!…. she received the occasional email from the company. The client felt conned by the whole process and now understands the difference between a real estate agency and the virtual property lister.
Looking at the Con-Line Company the most visible part of their Website Front Page was To Start Now – Pay Here by Card! As I said to the client…. there are Real Estate Agents and Online Property Listers!
Dunstone & Co are money makers, money takers and the Pay As You Go latest approach demonstrates that they think they are dealing with Toffee Apples!….. Dunstone is good at making money, however comparing his involvement in the property business to what a real estate agent does is nonsense….. thankfully I am a real estate agent and not a Pay As You Go Property Lister!
There is High Street Estate Agency and there are Con-Line Property Listers!
Pay As You Go in our industry?…. what next Mr Funstone?….. Funstone Cremation Service…. Pay £10 per month and we will cremate part of you….. think of the savings being part cremated and then we will try and gather up all your ashes after you have been fully cremated…. and for a further £10 per month we will scatter your ashes each month until they are gone!?
Dear Oh Dear Oh Dear….. who are these folk trying to hi-Jack our industry!?
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