Online estate agency Hatched will be closing to all new business with immediate effect, Connells Group has just announced.
The decision, said the announcement, “underlines Connells Group’s belief that the ‘online-only’/hybrid business model is fundamentally flawed and affirms the group’s absolute commitment to its high street estate agency operation”.
Connells Group will seek to retain and redeploy all Hatched employees elsewhere within its business – it is understood that this could include its call centre.
David Plumtree, Connells Group Estate Agency chief executive, said: “Significant resource has been poured into Hatched over the last three years.
“We have thoroughly tested the hybrid model and have reached the conclusion that it does not produce a viable economic result – evidenced by the results of those operating in this sector – and with the cost of customer acquisition being one of the main barriers to being able to deliver a profitable return.
“There is much talk of ‘disruption’ from hybrid estate agents, but from our experience we have found it significantly lacking when compared with the level of customer service, support and expertise that our high street operations provide.
“Ultimately, an upfront fee obligation – payable irrespective of whether a property sells or not – is not the right solution for the customer.
“As the UK’s largest and most profitable estate agent – completing more sales than any other UK estate agent – and with years of experience to draw upon, we are well equipped to take decisive action when, commercially, something simply doesn’t work.
“Customers overwhelmingly demand our ‘full service’ and local expertise that blends traditional marketing techniques with the best technological advancements, but which never loses sight of core estate agency.
“Face-to-face accessibility, intimate local market knowledge, a progressive digital offering, dedicated sales progression – and not just a focus on winning instructions – indisputedly works best for our customers and is becoming increasingly essential in a more challenging marketplace.
“Our decision serves the best interests of both our business and customers.”
Hatched was founded by entrepreneur Adam Day – now with Emoov – and acquired by Connells Group in 2015 to be run as an entirely separate enterprise to its core high street estate agency business.
Since then, it has received a programme of investment including new head office premises and the doubling of its team of staff.
In the same period, Connells Group has grown organically through cold start branch openings and acquiring further established high street estate agency businesses – such as 16-branch Rook Matthews Sayer and five branch Paul Dubberley – to extend its, now nearly 600- branch network further.
The group has also been at the forefront of adapting to changing digital technologies and consumer needs, developing new propositions as highlighted by its lead role in Fixflo and mio.
No sh@t Sherlock.
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What they mean is they are to honest a company for the online model. You have to be a criminal to support the pay any way model. Be nice if connells and countrywide announced support for on the market and ditched rightmove.. they created the monstor… now it’s time to kill it before it kills them.
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Well…
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Be interesting to see what this does to PB’s share price this morning. It was already suffering….
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More will follow……..
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Noooooo! Well I best go for a lie down to absorb this revelation.
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Now that’s a well written press release, if ever I did see one!
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Agree fully that if it obviously doesn’t work, pour resources into something that is working and keep improving. High Street!!!!!!
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The best client service will always win out in the end, and you cannot provide this from up front payments that incentivise the ‘move on to the next customer pay check’ attitude.
Vendors are clients….not just customers. I also believe the ‘call centre system’ does not fit in with the best client service. Clients want to know the person they are talking to knows their situation and buyers want to know they know the property they are talking about!
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Totally agree with the upfront fee point but when so much resource has been pumped into it I can’t understand why you wouldn’t go no sale no fee and work alongside your other brands. At least trial that proposition when you’re so far in. There are some vendors, especially younger generations that want to access their house sale online and have nothing to do with a branch. I really can’t see why you wouldn’t do both to cover all location areas and both vendor types.
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Becasue the cheap fee model doesn’t work. Providing younger clients with online/digital services already happens in traditional agency so you’re missing the point. The real point is you can’t resource agency properly by offering a remote, hands off, cheap product.
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I’m not missing the point at all. Who said anything about cheap? Match your branches fees or similar. Online offerings does not have to be about being cheap.
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Without being deliberately contrary, my genuine experience is that younger generations really, really appreciate old school hand holding.
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I imagine Adam Day is feeling a mixture of elation at having got out when he did. And sadness for the fact that his baby has been strangled by its adoptive parent.
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“This affirms our absolute commitment to our high street operation”. Really?? Is this just because the online circus has fallen flat on it’s face? Let’s hope all the other online clowns lose their backers and give up and leave it to the professionals that do a considerably better job!
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Smart move by the Connells Board. The fee structures currently adopted by Online Only Agents are far from viable.
It’s only a matter of time before The City and Private Investors in such businesses start to enquire how these models are going to generate genuine profits, and not just make money from the share price movements ??
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Don’t think PB will be making the same announcement! Hatched has just failed to complete like a few others who are treading water!! Tepilo, easy property etc
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Are you listening purplebricks/YOPA?
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Well done to admitting to a mistake before it sinks your ship like CW.
Expect PB shares to fall further today ……
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Investor gamblers might see it as ‘one less rival’.
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“Given the proximity of the AGM to the Company’s 31 October half year period end, Purplebricks will issue one trading update covering the first six months of its financial year on 6 November 2018.”
Do you think PB have some bad news and want to avoid awkward questions at the AGM?
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Maybe.
Try and dress up the news in a series of webs at the AGM with the receivers not having a chance to digest and analyse. Unlike the rest of the world on 06/11/18.
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How long can Purple Bricks continue to pull the wool over the eyes of their investors?!
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Cos anything can happen in the next five minutes, Troy 😉 (as the buildings go underground)….sorry, just couldn’t resist, I’ll get my coat…..
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They appear to have become aware:
1 week
-16.38%
1 month
-24.49%
3 months
-34.53%
6 months
-29.33%
1 year
-41.42%
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Best nailed-on short of the year.
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It`s not just the business model that doesn`t work with PB/YOPA etc. its the employees or `local experts`(*cough, laugh, cough*) who are leaving in their droves, should tell those at the top all they need to know!
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‘Online’ only works if you have a) massive financial backing to enable you to swamp the market with advertising and b) a reviews solution you can manipulate to ‘fool some of the people…’
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Works for who? Certainly isnt working for investors as the share price has crashed and there is no dividend,isnt working for vendors as a high % of them dont sell, isnt working for buyers as most of them cant arrange viewings, LPEs dont turn up, find the website a nightmare,
It works for those who started the business and “encouraged” people to invest.
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Hi ‘Arthur’
You can see by my second comment (below) exactly what I think of online as an investment – but you cannot argue that PB has ‘bought’ market share.
Just like Uber – give just about anyone a job and to hell withe the consequences – for employees, clients and anyone else (gullible shareholders included). Ever wonder why 8 out of 9 VC-funded ventures fail? Here’s your answer.
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Online works if you want to run a charity.
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I know this is not a PB article, but hey…..I noticed yesterday another PB advert on a Tesco Car park banner. Clearly stating “Doctors recommend using Purplebricks”…..I have sent my thoughts to ASA for the usual response, but just do not see how they can get away with this!! They surely have no justification to claim “doctors” recommend PB????? ridiculous..
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ASA: “Take it down and don’t do it again.”
PB: “Okay and we promise not to.” *wink*
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ASA: “Why did you wink?”
PB: “No reason.” *wink*
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ASA: “This is the fourth time you’ve been before us. This has to stop.”
PB: “What will you do if we don’t?”
ASA: “We have no powers to do anything if you refuse.”
PB: “Okay.” *wink*
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#As_Seen_On_Twitter
twitter.com/TomEvansPB/status/1039069985241481217
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Why don’t you dig up someone who has been sectioned and sold through PB and then run an ad along the lines of ‘Idiots sell through…’?
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Or how about Purple bricks as recommended by Brexit ministers, I couldn’t argue with that.
How much will we save leaving Brexit and give to the NHS ?
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I’ll trust that Mr Day got a full pay-out on sale and didn’t settle for a growth-related deal…
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No pay out if it was a separate entity. They probably put it to sleep.
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The beginning of the end for many other similar online type Agencies. You can’t fool all the people all the time.
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Adam Day sold Connells a goose that doesnt lay any eggs.
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Over the last 6 months I have heard more people asking why don’t conveyancers/lawyers now set up as estate agent property shops doing both conveyancing and estate agency. It’s odd to hear it so frequently all of a sudden.
And the reasons I hear it mentioned to me is from delighted clients who wish we had been their agent and offered our service, not the fee charged.
Well that is true in that I don’t get out of bed to work 12 weeks on a conveyancing deal to receive £1000 plus VAT. I do it as the client will be delighted with my work, and tell everyone they know.
BUT – give agents their due. Like conveyancers, there are shoddy ones, fine – those motivated only by commission, and those who won’t get involved and project manage their own deal through the legal process – but vast numbers of agents (and we promote some impressive ones on our website) are very good indeed, and really do fight for best price and service.
True, I have yet to experience a good online estate agent, but I am waiting to be impressed by one. Then I hope we work together a lot, as that is a dream team to make deals fly through. Low commission is a serious mistake, and sellers should realise they are not motivating agents if they choose that route. The lower the commission, the less you motivate them to squeeze that extra £10k, £20k, £100k etc from a buyer.
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I rang a solicitor to see if they would be interested…. yeah.. he was at lunch and didn’t call me back… next idea
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The beginning of the end for these online agents, in my opinion its not a sustainable business model. Love live the high street agent!
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So I can see all the high street guys coming out of their grey little branches and banding together here.
Comparing Hatched to the Likes of PB and Yopa is literally like comparing an independent with 1 or 2 branches to LSL or Connells, it carries no weight.
The sad truth is the money pot for the big players in the online/hybrid side of the market like Yopa and Purplebricks isn’t going to run out any time soon.
You have to remember that the online/hybrid model is still very young and only really became prominent in the market within the last 3 years, If that. Yet the brands that work in that side of the market have overtaken a vast majority of the businesses who thought it would not work on listings and completions. PB is the biggest agent in the UK, they sell houses, so do Yopa, so does EasyProperty/Emoov. Wake up, smell the coffee and stop being sour.
You’re hoping that PB/Yopa fail because if they don’t, then you know you’re all royally screwed if they get bigger and stronger, you have to remember the big paymasters like LSL and Savills who own most of your branches your all commenting from also own a share in Yopa who are still privately owned, they must see something happening surely?
Kids as young as 3 years old are playing on an Ipad rather than going out with their friends, if you genuinely think that when the time comes for them to buy or sell a property they are going to want to come down to your branch (if there still is branches by then) then you are wrong… Very very wrong, get with the times!
CW’s share price hasn’t looked too healthy for the past 3 years either and a hell of a lot of big fish from the high street have jumped over to the dark side too. Stop being the sad Blockbuster manager who said Netflix wouldn’t work!
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Dear Highstreetisdead
What you say is very profound and I deeply believe you are completely correct in your assumptions about the future of the industry.
One teeny weeny little question for your huge, adept full sighted brain of yours.
Does making a profit to keep the wheels turning an important part of this utopian future of yours?
Please respond. I could do with a good laugh
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