Proptech firm comes down firmly on side of traditional agent

Delegates at yesterday’s Proptech conference in London were told that high street agents are a better bet for vendors than hybrid and/or online firms.

Colby Short, of comparison site GetAgent,  told his audience that, based on listings in January 2016, Purplebricks vendors have since completed on 57%.

Short yesterday said it meant that 43% of Purplebricks customers had not saved money.

An excerpt from his talk said:

“People have been asking for completion rates for online agents forever and a day so we did the research.

We looked at 500 new listings by Purplebricks in January 2016, alongside all of the properties listed that month by Tepilo, HouseSimple and Emoov and this is what we found.

Purplebricks’ home owners completed on just 57% of the listings from that month: 57%.

Housesimple did best but only completed on 58%, while eMoov and Tepilo were down at 51% and 48% respectively.

So over half of Tepilo’s customers paid more than they would have with a no win, no fee agent, just by paying something: 17% of vendors went on to instruct a high street agent meaning they paid Tepilo and then paid a high street agent anyway!

Looking at Purplebricks, 43% of their customers definitely paid more. So for almost half of customers it definitely wasn’t cheaper and they definitely didn’t save any money. 

And these are people who were so keen to sell their home that they were prepared to part with £1,000 up front.”

Short yesterday evening told EYE:  “At GetAgent, we feel that the huge majority of people should not use an online agent.

“Whilst it may work for the few people out there who have good local market knowledge, are good negotiators and have lots of time on their hands, that is not often the case in today’s busy world. We feel this is shown by the fact that their market share is still so small despite spending £45m on TV and radio advertising in the past two years.

“We believe that a good traditional agent who has a strong track record of selling properties like yours, in your area, well is the only option when choosing who to use when selling your home. The challenge is seeing who those are and that is where we come in.

“Over the next few weeks we will be releasing more data and would encourage everyone to help us get the word out there about the amazing job many agents do using the hashtag #loveyouragent.”

GetAgent is an online service claiming to help people find the best agent in their area.

https://www.getagent.co.uk/

 

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17 Comments

  1. cyberduck46

    >We looked at 500 new listings by Purplebricks in January 2016, alongside all of the properties listed that month by Tepilo, HouseSimple and Emoov and this is what we found.

     

    The estateagenttoday website reports on the same event and says it was a sample size of 50.

     

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    1. Colby GetAgent

      it was 500 properties. I’ve messaged EAT asking for them to correct. Thanks for highlighting!

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  2. Eric Walker

    The sample size couldn’t have been 50. It it were, the result of 57% would have meant the sale of 28.5 properties

    🙂

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    1. cyberduck46

      Good point.
       
      Just as long as it’s cleared up.
       
      So assuming the figures are an accurate proxy for the true picture and you’ve got 100 average priced properties to sell.
       
      If you list them with a traditional estate agent you will sell them at a cost of approx. £400,000 (£4000 commission)
       
      If you list them with PurpleBricks you’ll sell 57 of them at £850 which is £48450. and 43 of them at £4000 which is £172,000. A total of £220,450 saving £179550.
       
      An average of £1795.50 saving per property.
       
      Once you start talking about above average priced properties then PurpleBricks becomes even more attractive. What’s the average priced property in London these days? Of course PB’s commission is higher in London.
       
       

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      1. Robert May

        Where does £850 come from? the previously declared average income per listing for Purplebricks is £1060.
        Factor in the ‘g.a.s.p’ error of  £9744 average of non geogrpahical valuations, the vendors that do sell are subsidised by  32% thanks to those who don’t sell. The actual average saving of £2972 (according to  averages produces by PB’s conveyancing firm and the  transaction average price) becomes a net loss on the transaction of about £6772.
         
         

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        1. AgentV

          cyberduck46
          Some of the properties PB list will sell…of course they will, especially in a market characterised by low stock levels where demand is correspondingly high.

          But lets be clear about this….they are spending a lot of investors money on attracting each and every customer. Many people have estimated that it costs PB well over £2,000 per property (including investment subsidy, their fee and expensive conveyancing referral commissions)….and that is effectively an up front charge. Thats more than my average no sale no fee amount (and I would suggest more than many high street agents average commissions) …and we offer the full service with fully accompanied viewings, negotiated offers and full sales progression through to completion. Whats more all my vendors deal with a highly experienced person from start to finish….no call centre.

          So in effect we offer a far more comprehensive service at less overall cost on a no sale no fee basis!!!. We just need some investment money behind us and the systems we use, and then we would see which model is more attractive to customers.

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        2. cyberduck46

          Robert, my example was for properties outside London so both your figure & mine is incorrect. The average amount outside London would indeed be more than £850 but not as high as £1060.
           
          The comparison still stacks up – there is a big saving on average. For properties above the average price the savings become even greater.
           
          I think you will find that The Government, Trading Standards & the Courts will look at averages rather than worst case scenarios when deciding what is in the best interests of the public. So when Estate Agents and those with a vested interest bang on about the worst case scenario it really is misleading. 

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      2. Chris Wood

        Bad maths.
         
        100 properties listed with PB equals customers paying out £103,200 43% of which (using these figures) paying £44,376 with no sale.
        100 properties listed with full-service agent at a cost of £0
        Using the average UK house price of £217,502 and Purplebricks own conveyancers published stats of 1.3% (and this may well be lower now) means the total paid by full-service agents customers using the same conversation ratios would equal £161,168.98 (£1,611.69 per listing customer)
        Total cost per listing for PB customer  £1,032*
        Total cost per listing for full-service agents £1,611.69
        So, assuming that all sales are an exact like for like coparison of what each business type might achieve (and other data suggests PB may well not be as ‘successfull’ as these figures suggest), a seller is taking a non-refundable £1,032 gamble on a low probablity of a possible saving. Not much of a bet in my book.
         
        *From memory. I believe this is the correct average fee but may be a few pounds out either side.
         
         

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        1. cyberduck46

          Chris,
           
          Yes, using £850 was probably on the low side as an average but in your example you are also in error. The average figure that you are using in your calculations is also wrong because it includes London properties where PB’s fee is £1199. So you can’t use your figure of 1.3% because when it was calculated it didn’t include any Central London properties in the calculation. It’s also not clear whether VAT is included because I’ve seen the figure 1.3% bandied around to include it and also to exclude it.

          Then you  ust also allow for the fact that some of the average income is for an EPC certificate and some of it will be revenue from the conveyancer which only applies in the case of a sale.

          So using rough figures is fine because we don’t know the actual breakdown.
           
          The most recent study on Estate Agent Commission provides a figure close to £4000 if my memory is correct. 
           
          You can’t use average figures as the figure you are gambling on. The approximate figures are £4000 versus £850. Your are gambling a cost of £850 to a cost of £4850 put simply. So 6 to 1 ratio approx with a 50:50 chance of success (aprox.)
           
          Of course this simplified because if you don’t sell your property it might be because you are asking too much for it and no agent would sell it at the price you are asking. I’m sure there are quite a lot of cases like this that make up the 56% figure from GetAgent. However you are always able to put it back on the market with PB so in these cases the fee is not lost.
           
          If we look at London (and there are a lot of properties there wouldn’t you agree?), Foxtons will charge you 3% commission. The average property is something like £450,000 so you are comparing PB’s commission of £1199 (no extras) for London with about £14700 (approx) (if you can’t sell with PB but can with Foxtons). So a ratio of 12:1 with a better chance of evens to achieve a £12,000 saving (approx).
           
          Then look at all those properties that cost above the average London price – the decision becomes even more of a ‘no brainer’.
           
           
           

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          1. PeeBee

            “…the decision becomes even more of a ‘no brainer’.”

            I’m sorry to be the bearer of what will be unwanted news, ducky – but your recent attempts at splitting reality into its subatomic constituents take the phrase “no brainer” to a completely new level…

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  3. Trevor Mealham

    With only RM and Z at most budgets hands. As I understand many, many budgets not having a applicants list (as they charge on instructions rather than selling them).

    Its a bit like entering a mule to the Grand National.

    Yes it looks a bit like a horse. But other than being in rhe same place. The odds sure are reduced an gaining best result.

    But it would meet the definition of a hybrid.

    All said. I dont believe in sole agency from any agency model being the best route.

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  4. Shaun77

    I’m not a fan of getagent and believe their model is fundamentally flawed.

    They present their data as fact without knowing the background surrounding the data e.g. they might suggest that an agent typically achieves only 96% of asking which doesn’t look favourable for the agent. However, they’ve no way of knowing if the asking prices they’re basing their analysis on are the prices recommended by the agent or prices that the vendors have insisted on.

    It’s unfair to represent such comparisons when the data they’re basing their “facts” on is far from genuine.

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    1. Colby GetAgent

      Hi Shaun, there is an element of pushy vendors who put the property on above the advised price being evened out across the agents when you have any medium to large volume.
      However, we simply show the data and allow the homeowner to make their own mind up.

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      1. cyberduck46

        >However, we simply show the data and allow the homeowner to make their own mind up.
         
        Are you sure about that? Your site says “Our clever technology recommends the best agents in your area, based on their past selling experience.”
         
        You won’t be just presenting the data and even if you did the data is likely to be too limited to make those decisions and easily manipulated by agents if the system did become popular with the consumer.
         
        If these types of tools did become popular then an agent could just spend a period of time accepting properties that were likely to sell quickly and get to the top of the league table and then completely change their strategy by accepting anything and everything as the business flooded in. There would be a delay before the agency was re-rated and during this delay they could even set up a new agency where the approach was once again to get to the top of the league table.
         
        I really don’t see these types of tools if they ever become popular being to the benefit of the industry or the consumer.

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  5. Tablespider006

    If this is a good news story for the more traditional agent, where do we get to shout it out loud and proud so that the people who need to know about it, get to know about it?

     

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    1. cyberduck46

      I think it’s actually very bad news for the traditional Estate Agent if it is an accurate proxy. PurpleBricks can certainly claim to be saving their customers thousands of pounds and they’ve got a marketing budget of £14m a year and are on the TV.

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    2. Colby GetAgent

      If you’re keen to get involved, please email bethan@getagent.co.uk

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