A researcher who is tracking how high street agents compete with online firms is asking for our readers’ input into a new survey.
Mark Notari completed his first survey in February 2016 as part of research while taking his Master’s degree in real estate – which was awarded a merit – at Reading University.
Notari is an unusual academic in that while studying for his Master’s he also worked as a negotiator for a London estate agent for a year, and then spent two years at Zoopla, working with overseas agents and helping generate new business internationally.
His university thesis was partly based on an online survey in which 135 high street agents participated. He also conducted a series of interviews.
Although no longer at university, Notari says he has a strong interest in continuing the research into the evolving market – although he says that he personally has no plans to set up an estate agency.
The main findings of his first survey showed that high street agents were looking to compete on cost but unwilling to sacrifice their service levels, but with 54% of agents saying they would consider charging fixed fees in the near future.
His thesis made two recommendations: first that high street agents should be proactive about the online competition; and second that high street agents should not try to compete on both cost and differentiation.
Notari suggests that agents cannot compete simultaneously on both cost and on differentiation without facing the risk of being “stuck in the middle”, a situation where the company does not secure a clear competitive advantage.
He said his earlier survey showed: “Rather than seeking to compete on both dimensions, businesses need to identify a clear strategic position and accept the associated trade-offs, thus limiting their business to a certain market segment.
“Companies that do not limit themselves to one competitive strategy will blur the lines of their product offering, creating confusion in both their employees’ and customers’ minds, and will eventually undermine their competitive advantage.”
His conclusion then was that agents who did wish to compete on both cost and differentiation should create a separate business unit, with a different identity and business model.
Notari is now undertaking an identical survey to see how the competitive landscape has evolved over the last 20 months.
He said: “It is clear that things have moved on since the beginning of last year and it will be interesting to see if and how agents’ attitudes have changed.
“One particular risk identified 20 months ago is how high street agents can run a digital offering without cannibalising their own business.
“Another risk was the fear of undermining the company’s image and reputation. Agents were most concerned about compromising on the quality of service.”
Almost two years ago, as the thesis showed, three-quarters of agents wanted to stay focused on their traditional business.
Almost 20% wanted to “play both games at once” by creating an online agency in addition to their traditional activities. The remaining 9% preferred to ignore the online competition altogether.
One of the questions asked in the February 2016 survey which might now get a different answer was whether agents expected to see online agents’ market share increase over the next five years: 75% said it would.
However, more respondents predicted that the online market share would drop within the next five years than within the next year.
Notari concluded in his thesis: “This would suggest that high street agents view the online model as having a limited market space, which could run out of steam in the long term, once it has reached maturity.”
So, what has now changed? This is where EYE readers come in.
The new survey asks just 15 questions and should take no more than ten minutes of your time. At the end, you will be able to access the full results of the 2016 survey.
Results of the new survey will be shared exclusively on EYE.
The survey is open now and will close on Monday (Nov 27) at 5pm.
It can be found at https://www.surveymonkey.co.uk/r/HSVSOA
After you Ms Platt, how has that dual strategy worked for you?
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It should be an interesting survey. I hope as many people complete it as possible in an honest and genuinely unbiased way. Surveys are, by their very nature merely a statement of opinion and are often weighted by how the user is feeling on the day (perhaps reacting to good/ bad news for example). That said, they often provide a useful snapshot of opinion and insight.
Dependent on the time reference points, the online market filled much of the traditional FSBO market sector which has remained at a relatively constant 5% for the past 30 plus years. In the last year or so, it has hovered around this figure with consolidation of players but no real growth in the sector as a whole. There is evidence of significant portal juggling going on again (by full service and call-centre model) which suggests numbers are being manipulated to attempt to impress, potential customers, management and or investors. This alone suggests that all is not well in some firms.
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The online sector has grown and is expanding contrary to the constant inaccurate and unevidenced opinion of the standard detractor.
PB alone have 100% year on year growth in instructions and as Hardmans expectations are currently looking to be filled, the company is flying.
But let’s not rely on evidence let’s all be shouty and angry.
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Using Rightmove Intel, I recently ran reports on 30 random towns throughout England & Wales and the online market share for new instructions, including PB, was around 5%.
Hardly the most comprehensive analysis but pretty indicative none the less.
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There’s an interesting (and revealing) thread over on stockopedia.com. One poster is collating market share data; it shows that PB share growth is stalling. Why wouldn’t it when their business is comparable to flying a hot air balloon. The market share is the volume of the balloon, the gas is the investors’ cash. What happens to the balloon when the gas gets turned off?
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My own observations suggest that PB’s market share has been steady and is possibly even declining slightly.
However in the first half of their financial year the company has stated they expect 100% year on year growth in revenue. I expect part of this is an increase in income per customer.
Current Trading also suggests 100% year on year growth of instructions (this is not based on my own data but on what I’ve been told by somebody else which is that they had about 2000 instructions last November).
The conclusion is perhaps that growth comes in spurts and is linked to marketing. Last year they increased marketing around Xmas time.
So the big question is whether they can replicate this 100% year on year growth (or whatever is required to achieve the £80M turnover that they predict) when comparing with January to April of this year. They’ve put the LPEs in place to handle the demand but will they pull off a successful marketing campaign like the one started last Xmas?
Over the longer term you would imagine market share of the onliners to increase just on the basis that tech savvy sellers represent a larger share of the market.
The keys for me are marketing & demographics. So another big player (known brand?) in the online arena with money to burn on advertising should also increase onliner’s market share.
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“tech savvy sellers ”
Behave, what ‘Tech’ do PB have that i don’t?
My ‘Tech’ as with a lot of independents is years ahead of PB.
If people are choosing on tech or service, high street agents win.
If you think you will sell with PB and save money that another misconception. Only 35% of people who list with PB go on to complete through them. Also once you have taken the deferred payment option, used their woeful solicitors, paid for viewings …. The saving really is not that much.
Do not get me wrong, PB and other online listers have a place int he market, its for penny pinching, short sighted sellers. Same way people have always been able to stick their own for sale board up.
Don’t try and spin it the have better tech, because they do not. FACT.
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smile please,
I was referring to the general situation not you in particular. But seeing as you mention it, do you and all the independents have an app for the iphone. Even if you do, how do you market that fact?
>Only 35% of people who list with PB go on to complete
That doesn’t tally with my own investigation or the one that GetAgent did (I think they determined 57% and given that this was some time ago and there were properties SSTC and not being marketed then this figure could now be higher). Where are you getting your 35% figure from and how is it calculated? Presumably there’s a time period.
>Don’t try and spin it the have better tech
I didn’t say that, I said the online market share would increase as the number of tech savvy sellers increase. it’s a combination of having the tech available and marketing of that availability.
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Most high street agents have better tech than onliners, yes i have an app, as do most agents these days.
You hit the nail on the head “Marketing” Purple Bricks out spend every other agent in the UK in marketing, But not on marketing properties on marketing people to list with them.
Despite CW pitiful share price they will have a healthier profit this year and also a more robust business (fs, conveyancing, letting, property).
Their offering is worse than 99% of the High Street but because they shout louder some fool for it. They have been on watchdog, had numerous adverts condemed by the ASA, They have made little or no profit.
The bubble will burst. PB was (and never will be) about a viable estate agency business, it is an investment vehicle. It has worked extremely well, it has made individuals alot of money but it is not sustainable. Its a question of how long until it pops not ‘If’.
Even if you take your figure of 57% of sucess thats almost 50% who have paid on average over a £1000 on a flip of a coin, They may as well go and stick that grand on red in a casino, same result!
By all means, invest in it, and champion the cause but at least be honest about it (or are you really that blind?).
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smile please, when have I ever been dishonest about PB? I am not invested in them either.
>who have paid on average over a £1000 on a flip of a coin
No, it is not a flip of a coin, as a customer you are in control of the listing price. The 57% figure was in a given timescale (I think 10 months). In that time some people switched agents who might have sold if they stayed (In my experience other Agents are very keen to poach you with all sorts of claims if you’re listed with PB :)). Some were SSTC which might have already completed or will complete and others were off the market which might come back on and complete. There’s no fee from PB to put your property back on the market with them.
If you don’t sell with PB then the chances are another agent will offer to sell for you at a reduced commission just because you are listed with PurpleBricks. You will then go to the top of Rightmove’s list as a newly listed property.
Sounds like a “no brainer” to me, especially if your property is above the average for the market but even at the market average. There was an article the other day which was working on a 50% conversion rate and the average saving at the market then was £550 if you did your own viewings. Probably more if you pay up front and shop around for a solicitor.
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The fact you are saying they are more tech savvy is not entirely honest. You have also given the impression its an equal if not better service to the high street which it is not.
Again you hit the nail on the head, The owner is in charge of the asking price (same as the high street) and if it is not selling they can reduce. Surely this shows that PB are not skilled at selling property, it is just about listing it online and hoping people like the pictures and pay the price asked. No skill, or experience needed other than to sign the vendor up.
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>The fact you are saying they are more tech savvy is not entirely honest.
smile please, it is not PB that I am saying is more tech savvy, it is the demographic of homebuyers over time that is becoming more tech savvy.
>Surely this shows that PB are not skilled at selling property, it is just about listing it online and hoping people like the pictures and pay the price asked. No skill, or experience needed other than to sign the vendor up.
I’m not sure the fact the owner can change the asking price shows that at all.
When I had my first offer I’d already negotiated an accepted price with my buyer and I asked him to make the offer through the PB platform. Within 15 seconds of the email arriving from PurpleBricks telling me I’d had an offer my LPE had phoned me and was asking if I wanted him to negotiate with the buyer.
You don’t read that on these rather one sided discussion do you? This is one of the reasons I feel obliged to comment when reading all the misleading comments on here, in blogs and on twitter. To add a bit of balance.
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Thanks for that, PP.
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I don’t think it will be this years results that are the true test, although the second half of the financial year to April 2018 will be interesting. It is comparatively easy, with huge marketing spend, to grow anything very quickly, doubling up each year for 3 years……..but I think it is next financial year that will show the true picture, the point at which semi-exponential changes to levelling off hyperbola (my description).
We all know the market for selling over the last three years has been a lot easier than in previous years, with demand outstripping supply and rising prices (certainly that’s the case in our area anyway)……but we also feel times are about to get tougher….and tougher times differentaiate types of offering more.
Headwinds are arriving and navigating a safe route in choppy seas, is where real experience and expertise count most.
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The 100% year on year instructions, would depend on where that data is coming from. I saw yesterday the same property had been listed 4 times over a 10 week period with an online estate agent, creating 4 new instructions from a portal point of view.
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20 days to the big reveal when we can finally dig down in to some deeply detailed and independently audited figures including their Listings:Completion ratio which, if everything is on track as already stated, will support their previous public claim of 80%+. Can’t wait.
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Property Pundit,
PB’s accounts are audited. It’s a very simple business involving cash payment of a listing fee. The bank balance itself would be a pretty obvious indicator of claims made by the company for any auditor.
All this nonsense about individual listings is not helping people (including Estate Agents) make descisions. I found this out when I was investigating all the claims of portaljuggling. The people making these claims have their own agenda.
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What agenda is that?
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>What agenda is that?
Perhaps I should withdraw that. Some or all of them might actually believe what they are saying but are not interpreting the data properly because they lack information or analytical skills.
Perhaps some just repeat what they have heard and it makes them feel better.
The bottom line is that the results are audited and we’ve been hearing for a long time about all this alleged doppelganger nonsense which is clearly insignificant in terms of what is being reported in their audited statements.
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But you cannot dispute, since portal juggling was identified and portals such as Rightmove took action this practice has stopped.
No longer are you seeing the churn in “new instructions” not only from PB but other independent and corportate agents.
The individuals you speak about have helped clean a dirty corner of our industry. With no agenda, apart from creating a level playing field.
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smile please,
When you see somebody tweeting only opinions recommending you sell PB shares you really do have to question the motives of that person. Likewise somebody who tweets only negative reviews. People who spend all their time on a company with 3.5% market share when there are all sorts of issues with traditional agents who have a 95% market share.
>But you cannot dispute, since portal juggling was identified and portals such as Rightmove took action this practice has stopped.
I don’t think I disputed that, what I am saying is that since I started paying attention in January/Feb of this year (subsequent to RM’s change) there were all sorts of questions and talk about dopplgangers etc. and nothing came of it. The so called doppelganger effect looks very suspicious but has actually proved to be negligeable because my own estimates don’t take account of it and have proved pretty accurate.
I can recall PeeBee who spent every day (and a couple of allnighters per month) monitoring “portaljuggling”. Constantly questioning the figures and suggesting the very best growth PB would achieve was 60%. When the accounts came out it was actually very close to 100% which was very close to my own estimates.
Perhaps it was bad prior to my own interest but since I became intetrested it has all been a big fuss about something very minor.
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PeeBee (And others) highlighted the issue of portal juggling and it has largely now stopped.
PeeBee (And others) are highlighting the issues regarding Trustpilot and the reviews. Hopefully they will be successful in this as well.
Of course PB have positive reviews, but even you must be sceptical of the amount, you also (for balance) must admit the removing of all negative reviews unless the poster jumps through hoops is too restrictive and not a true reflection.
PB (in my opinion) have built a successful investment vehicle on figures and reviews that are quite simply false. If you are an investor and this is true and this does one day go pop, how will you feel if your investment is lost? (no doubt you are smart enough to if you have invested to dump shares by this point, but what about investors that believe the hype?)
Likewise as a competitor that sticks to the rules, how do you think i and others feel when they are so blatant misleading (in my opinion) the public and investors?
Its not personal with PeeBee – I am sure he does not mind me saying, he has not ‘Shorted’ the shares of PB, he is an age where he is going to no doubt be retired before online / hybrid really take over (which it will not) He is not worried regarding his company and the competition. He just thinks its grossly unfair the way they do business (As would anybody else that looked at it in the light of day).
Honestly, i know its easier said than done (and not practical) but you should spend a month in an sales office, see the work we do behind the scenes in obtaining the best price, keeping a chain together and making sure it exchanges. Then put your knowledge of what PB offer and you will change your tune.
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Good grief, I could reply and pull your post to bits but then you would only accuse me of being a bully (again) and run off to your safe space.
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Property Pundit. I’m here to midday. Happy to discuss anything you say. Always happy to be proved wrong.
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Tesco accountants ‘falsified documents’ to hide £250 million black hole, court hears
“The report also described accounting practices that were used “to avoid the attention of external audit,” and cited “material audit risks” in Tesco accounts”
http://uk.businessinsider.com/tesco-fraud-trial-accountants-falsified-documents-2017-10
Auditing is never a cast-iron guarantee of integrity or probity.
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Of course it isn’t. Some companies accounts are complicated and auditors don’t check every transaction or document. If you look at the details of the Tesco case they stand accused of bringing income forwards which should for accounting purposes be spread over many years.
Like I said above, PB is essentially a cash transaction business for accounting purposes in terms of the number of listings. The auditors will be able to determine very easily from the current account the number of listings and the fact that the income comes from thousands of different bank accounts.
You can always live in hope Chris and carry on with your campaign of innuendo and speculation but for those of us who have been investing for many, many years and do our own due dilligance you don’t get a more transparent company.
If Robert May’s software is working properly he’ll be able to confirm the number of transactions for you but I’m happy with my approximations. The actual reported figures and mine pretty much match up and substantiate to my own satisfaction that both my own proxy is a good one and the figures provided by PB are genuine.
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Property Pundit
Listings:Completion ratio which, if everything is on track as already stated, will support their previous public claim of 80%+. Can’t wait.
Unfortunately, I don’t think they will be declaring that. Why would you declare anything that might decrease your share price, if you don’t have to?
BSOS23PC 😉
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You’re correct of course. Two ways forward:
1. They produce evidence to substantiate the CEO’s claim that 83% of their listings result in a sale (we also need further clarification that the sale occurs while the property is still on purplebrick’s books).
2. Individuals state their perception of what the ratio is and then await a legal letter asking them to cease. You would assume they would only do this if the figure quoted understates the actual position. Various sources state a figure of 57% (it’s even mentioned in this thread). This is substantially less than 83%, where is the legal letter?
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Interesting that a student with very little industry experience was able to see what Countrwide couldn’t.
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I can see cwd under £1 very soon, such an astonishing implosion by the management team.
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£1 you say Dom?
That’s what Purplebricks should be charging?
For once I agree with you although 99pence would be more eyecatching for their marketing, then they can claim that they undercut the £1 Shop
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I think the word “retail” will do for Countrywide what the word “cr@p” did for Ratners
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I have it on good authority they are in the process of trying to find a buyer.
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Countrywide?
Anybody up for a whip round?
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I believe All Agents crowdfunding may have enough
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Yep Countrywide, business is being realligned to make it look more attractive to purchasers.
Only way of saving the share price as they are in too deep.
Company purchased, it is no longer listed. Run the company correctly and then relist (for the third time).
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“His thesis made two recommendations: first that high street agents should be proactive about the online competition; and second that high street agents should not try to compete on both cost and differentiation.”
I have to disagree
If you rent a property you can choose if the agent manages the property for you or you manage it yourself.
The costs are quite different.
As a traditional “no sale no fee” agent I’ve always bulked at the idea of a low cost fixed fee service, but I have now changed my mind.
I can see two opposing arguments for and against but put simply we cannot dictate to the market what it is we are prepared to or not to do.
For example: Hi, I’m foxy agent and I charge 3% but I am the best and will get you the best price!
or
Hi I’m moan liner I don’t charge much but will get you on rightmove.
Neither appeal to me personally but I will offer either service, so long as you the client go in with your eyes open and understand if I charge you up front and you don’t sell, you dont get your money back.
Also I am not worried about how the market around me persieves my success or lack of as I am simply offering 2 types of sales service with very clear deliniation of the two.
And lets not forget, no matter how good you think you are, you know some clients “know better” and they don’t want to pay 1%,2% or more so why give them up to pimplebricks?
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Property Paddy
I have learnt my lesson. Somebody earlier this year listened to all my hard gained experience, accepted my appraisal amount, and then went on with an online lister.
The thing that gauled me the most was if they had paid me upfront the same amount as they paid the online lister, it would have been well over half of what we would have charged no sale no fee. I also truly believe I would have achieved a higher sale amount for them.
I kicked myself for not mentioning a way they could have a higher level of service with us for the same ‘up front fee’…a stripped down’essentials’ version of our normal level of service, involving less man hours, but still giving more than they would get from an online lister.
I now make sure I talk about other options, just in case they are contemplating using an online lister, and are trying to ‘pick my brain’ first.
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There is nothing wrong with the Countrywide plan, what is wrong is the execution. since most of the higher performing MDs were dumped by previous management there is little in the way of motivational 2nd line management.
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It will be interesting to see the results if Notari undertakes another study in another year or so. Only the other day PIE were reporting on Hystreet which is supposed to give traditional agents the tech the onliners are using. Will there even be a debate anymore if the tech is there for anyone to use?
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