In this opinion piece Russell Quirk writes the online agencies’ obituary – almost.
PurpleBricks recently announced its yearly results and revealed that losses have notched up a further £19 million in the past twelve months. This despite having jettisoned their ill-fated adventures in the US, Canada and down-under – a plethora of cash consumption that makes Bank of England quantitative easing look like the equivalent of the office tea bill.
Vic Darvey, the sector-inexperienced CEO and chief t**d-polisher, blindly continues with his pledge to achieve a 10% market share although it’s not clear if that is based upon future listings or future completions – the latter being the most relevant yet the former being the metric by which PurpleBricks has historically attempted to advocate being somehow meaningful.
Regardless of whether one accepts a fluffy KPI as a sign of success or a real one, Darvey is still light years away from achieving his promise to shareholders. Six years since launch and about £100m spent on marketing has resulted in a peak market share of 6% but this has since slipped back of late to something between 4% and 5%. As a reminder, its latest numbers show a decline in listings of 23% year on year to the end of April and that’s a period that was only marginally affected by the Covid lockdown – about five weeks or so in all – and therefore there are other substantive issues as the cause, clearly.
The ‘newness’ of PurpleBricks is no longer a marketing asset. And the loss making firm cannot simply plough more money into marketing given that not only would this have eyebrow raising implications upon its cost of acquisition but, in reality, it’s not equitable to spend any more money than they already are on TV and radio ads that squawk at us almost hourly as it is – the law of diminishing returns and all that.
In theory of course the online estate agency proposition makes sense. But as it turns out, not in practice. The ‘stack ‘em high, sell ‘em cheap’ ethos is great for washing powder and beans – but not so much for home selling. Commoditising a six-month process with multiple, variable moving parts and trying to digitise empathy works out to be a no-no as far as 95% of home-sellers are concerned.
No, in so far as perception at least, home selling has to be rooted in people and in real relationships rather than it just being a transaction.
But it’s all very well you all sitting there now and saying ‘That should have been obvious’ yet a 28 year old pizza delivery driver just bagged a £1bn company valuation from a few pairs of Lycra shorts – and you probably would have said that couldn’t be done either. Nor would you have wagered that an app that allows you to upload lip-synch videos and that launched just four years ago would be worth $50 billion and the subject of a bidding war between Microsoft, Twitter and Oracle. No you wouldn’t.
Fortune favours the brave, apparently and so some of us, the brave ones, have to be the ones to try these things to see if they work or not. You’re welcome. And sometimes they work. And sometimes they don’t. In this case it’s firmly the latter.
Anyway, enough about me and my incredible foresight. The point is that online estate agency is done. Not finished, but done.
It has settled where it is and it will not grow further. It cannot scale. I suggested here in April 2019 that the online agency sector as a whole would never break 10% market share and I stand by that. Seems I can be right some of the time.
In PurpleBricks’ statement to the City recently the company’s latest strategy is to ‘go upmarket’. This, of course, will be another disaster.
The reason is that the stats show us that the average price of a home sold by Purplebricks is about £210,000 – lower than the UK average house price of £240,000 (Halifax). Even if you include the average from the other online agents too it’s still barely higher than the country average. What this tells us, and should tell PurpleBricks, is that the business model itself attracts lower priced homes. A cheaper demographic. In fact, the total number of listings that have been sold above £1m by onliners can probably be counted as less than 100, ever.
If 95% of the market – the average seller – has rejected the premise of a hands-off platform based estate agent, do we think that minted customers with their bigger egos and greater unearned equity within their homes, are suddenly going to embrace PurpleBricks’ LPEs as saviours of fortunes? It seems rather unlikely.
Elsewhere in the tiny corner of cyber-space where the remaining onliners reside are YOPA, HouseSimple/Strike and a diminished cohort of other hangers on.
YOPA squeezed its tummy in for a couple of weeks to allow chairman Grenville Turner to oil the wheels of PR in declaring a ‘profit’ in July. Based on their previous self-ordained market cap versus that tiny snapshot of profit, this puts their ‘value’ at about 1133x profit (assuming a £10,000 monthly annualised income at a valuation of £136m (Beauhurst, 2019). By way of comparison, the average FTSE 100 company has a price to earnings ratio of a rather more sensible and grounded 16x. TESLA, probably the most hyped company in the world right now, has a PE of 1067x.
In other words, on past declarations, YOPA is more exciting as an investment prospect than a company led by a man that will soon send people to Mars for their holidays. Hmmm, best of luck convincing your next round of investors of that.
And then there’s HouseSimple or rather Arthur Scargill’s favourite estate agent – Strike. And therein another handy comparison in that the Charles Dunstone led entity earns about as much as a coal-miner bagged in performance bonuses in the 80’s. Maybe even less.
easyProperty still limps along as does my old outfit Emoov and in their recycled form both collectively listing less than you can count on a toddler’s abacus.
It was fun whilst it lasted but the party is over although some are still dancing regardless and even though the music has stopped – with bigger hangovers beckoning for those that continue to drink the alcohol infused Kool-Aid.
Talking of easyProperty – cast your minds back to the funeral procession stunt back in 2015. That turns out to be a lesson in irony if ever there was.
I would have more respect for his opinion if he came out and apologised wholeheartedly to his investors who were persuaded to put more money in when it should have become clear to executive board members that indeed there was no hope for his EMOOV company.
The biggest irony is not the funeral procession mooted above but how he is lecturing people on danger signs in the above companies.
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Maybe Headphones ought to take heed of another John Wayne oneliner
“Talk low, talk slow, and don’t talk too much.”
No Bricks supporter far from it but July was a record month for instructions and the results included the winddown when costs were still being reailsed in the USA ,and Australia. They have ditched Canada for a decent price during a pandemic which is no mean feat lockdown and are now sitting pretty with £66m in the Tommy
A position any business would be happy with today . Having said that further growth looks to be stunted and nowhere near the wild projections Blowhard Headphones predicted online would take 50%of the market by 2020 .
Let’s not some facts get in the way of another opportunity for self promotion
This prominence given by EYE to Headphones wind changing predictions all serves his purpose . More column inches more PR
All a bit worrying though that many of EYE readers are his peer group , some investors suckered into Emoov and lost money and are quite rightly aggrieved that someone who has played out in the public eye has been assigned the role of leading headline maker
It really doesn’t sit well .
Now joined up with the co founders of another failed onliner House Network taken on a Keller Williams Essex franchise Some synergy of success there .
A franchise which acc.to Zoopla has just 129 instructions currently on the market yet a huge team of brokers servicing ?
“The Essex centre, known as Keller Williams Plus, revealed at its launch in January it had already recruited 20 agents; now another 30 have been added, despite the lockdown when agencies were not operating. The Essex centre says it’s on target to make 100 agents in total by the end of the first quarter of next year.”
“Months of contemplating and reflection have led me to invest in Keller Williams as the brand and model that has the potential to be one of the biggest estate agency businesses in the UK in addition to its worldwide status” says Russell Quirk.
More hot air Keller Willaims arrived in the UK in 2014 so been kicking around for sometime with little penetration
In 2017 the master franchise for the UK changed hands
“Matt Fetick, one of the three new UK franchisees, said that in the medium term, the plan is to grow each of the three existing “market centres” by adding 24 ‘brokers’ to each. Currently, they have 100 brokers between them.
He also said that four new market centres will be launched, each with a minimum of 30 brokers.
Acc to ZPL they currently have 6 centres with the grand total of 554 sales instructions .Headphones big fish in small pond!
Lets get that into perspective the onliners Doorsteps have 2198 instructions and .99 Home 722
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Had Captain Smith of the Titanic lived, he would, with his unique experience, have been a hot property on the lecture circuit with his talk entitled ‘Icebergs – how to avoid them’.
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Priceless Comment! 🙂
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I’m pretty sure that before the Titanic set sail, the captain didn’t release a book telling everyone how great icebergs were and that icebergs would help the Titanic get across the Atlantic faster and more efficiently than any boat every, and that icebergs would save the passengers time and money.
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It was certainly fun for the founders of Purplebricks – one of which lives round the corner from me, in his brand new flashy house which cost getting on for £20m. In the driveway (not the garages, note) a line of incredibly expensive cars….Bentley etc…..Gotta say – it must have been a great ride!
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Well said Russell. I for one am looking forward to joining Keller Williams, I think the guy above doesn’t understand the model. In the area I will be working in I will only need 2 instructions a month with 1 completion a month to earn more than I would have in the High Street and defo more than My PB income.
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The very best of luck to you in your venture .How many brokers are servcing a nationwide inventory of 554 instructions. It looks to the outsider very much ” loaves and fishes”
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2 instructions a month and 1 completion to earn more than in either of your previous roles? If that’s the case I would look at a complete career change as you clearly were not that good at the job. The very best of luck.
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Yet another keyboard warrior. Idiot
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Truth hurts
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My average fee after paying KW is 9k, do the the math Moron.
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Sorry to hear your ‘average fee’ is so low.
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Yet you state you haven’t joined yet so how can you have already achieved an average fee ? It’s only a projection . How many brokers are currently servcing the KW portfolio of 554 so we can do our own Maths
Acc to Zoopla the “average” selling price of a KW property is just £158k in Leeds and £169 K in Glasgow
£474k in Kent and £594 k in Essex
KW taking a chunk of the fee It doesnt sounds very competive for the vendor !
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That is 6% FEE to sale a average property.
Those are the kind of fees charged in USA
they are living in cuckoo land
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My average fee after paying KW is 9k, do the the math M0r0n.
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‘Idiot’ ‘Moron’.
You might benefit from reading Dale Carnegie – How to win friends and influence people.
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“My average fee after paying KW is 9k, do the the math M0r0n.” – should read “KW tell me my average fee should be £9k but as I haven’t started working for them yet it is only a projection – I will report back in 12 months when I have found out what the truth is in reality. I trust RQ completely as his predictions have always come true ” – there , fixed it for you !
I
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I agree but one thing that online estate agency had passed on to the high street is the interaction online with client accounts.
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Really? I think not – for most of us, that was already in place.
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That’s why you are earning loads then. When did you introduce logins for clients on your site?
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About 10 years ago Trevor.
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I must admit – I prefer the Rodney Trotter quote which is much more pertinent to the RQ failure.
“What a plonker”
Nick – can you please find ANYONE to write some sense about this market, not an old failed has been.
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Unfortunately whilst all continue responding to the garbage, RQ will remain the property pundit. If you look at the stats RQ has more views and more reaction than most other posts in any week with PIE – perfect for the stats to sell to advertisers which is why RQ will continue to feature his journalistic prodding and thought provoking material. Equally, agree that we all learn from mistakes and become wiser. I actually find RQ articles a fun, sometimes accurate and more often ridiculous start to the morning. Now for getting on with the serious work – walking the walk and not talking the talk. Have a great day all
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Quirk’s right. When these short-lived disruptors find they can’t disrupt enough to make sensible profits (or in most cases, ANY profits) they will twist and turn their offerings until there is nothing left to differentiate themselves from long established profitable no sale-no fee agencies. In the process they will lose what little market share they have bought at such a high cost and will then disappear one by one.
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Regrettably for the correspondent Mr Q; I think most reasonably minded intelligent readers will have switched off after the he referred to Mr Darvey in such derogatory terms…… I know I didn’t get any further…….
Ros would not have allowed this piece…….
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“If the horse is dead, get off” – John Wayne
Oh the irony……
Russ, the only dead horse around here is yours and the sooner you get off the better. Unless, of course, your dead horse landed on top of you and your constant bleating is just a cry for help?
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Will we see another ‘Story’ from Quirk in 18 months time about how poor and doomed the self employed model is?
He cannot see what is in front of him, but then speaks like a prophet after the event.
Any idiot swallowing his B.S. after all the stories on him deserve everything they get. (Probably the same people chasing every get rich scheme. Sell Herbalife in their spare time?).
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What would hurt more to Mr Qs ego-26 comments or zero. Opps 27
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If people take the wrong route to their destination, without ever adjusting that mistake, is it any wonder that they don’t arrive?
I’ve yet to see any online agency attempt anything other than half-hearted marketing.. Quirk and his ilk are clueless if they believe online estate agency isn’t going to flourish.
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I saw that RQ claims this is the most read artciel in the property press. With 4,500 views, (2,000 of them by RQ) this is not even the most read article in PIE, TODAY.
Truth be told – RQ knows that he’s a fraud. He’s just surprised how could it be that not all KW employees know it (“doesn’t know to use Google” is a key requirement for joining KW). If they would, they’d know about the people he just hired when eMoov was already dead and he had already established his new company, about the pr clients who’re lined up with legal letters, and the nearly non-existent volume of deals of his KW victims.
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