How much longer can online agents continue to make multi-million pound losses year on year without investors realising they are throwing good money after bad and finally pulling the plug?
Yopa has just filed its 2017 accounts with Companies House – over three months late and potentially facing a financial penalty for doing so.
The accounts reveal a massive loss of £18m, on top of the prevous year’s £14.25m loss, the worst we have seen.
I dread to think what their loss will be like for 2018. Surely even the very wealthy Barclay family realise they can’t keep throwing money away like this?
E-Prop Ltd, the company which licenses easyProperty, made a £9m loss with £22.8m liabilities for the year ending December 2017.
It chose not to declare its income for that period but confirmed it relies on funds from parent company eProp Services PLC, which also owns Fine & Country and the Guild.
As I’ve always said, for any of the internet estate agent start-ups they need at least £28m in marketing spend to get any form of brand recognition.
So are easyProperty going to put their money where their mouth is?
It could bring down the Guild and Fine & Country if they genuinely believe internet agency is the way forward and we look forward to our streets paved with orange boards!
In its audited accounts the directors of E-Prop Ltd state that there is no certainty that this support will continue, although they have no reason to believe it would not do so.
Surely one good reason if it continues to make a loss is because agents aren’t rushing out to snap up the easyProperty licences?
According to TheAdvisory, easyProperty listed just 13 properties from January 9 to 23: that’s not going to pay off the debt, grow the business or make profit.
Meanwhile Housesimple, for the year ending March 2018, made a £13.5m loss – compared to £9.8m the year before.
Rather shockingly, its turnover was only £2.5m, while its marketing expenses alone were £8.7m.
On top of this, it had its usual bills and portal fees, plus a headcount that had risen from 59 to 93.
Having looked at how many properties it has on the books, I estimate it’s spending something like £3k per acquisition just on marketing – that’s without all of its other costs – three times more than it charges to sell a property.
It’s simply unsustainable.
Moreover, after all that marketing, you’d expect it to have a much bigger market share by now.
The same goes for Purplebricks which, in its most recent interim results, showed a loss of £25.5m, having spent an indecent £39m on marketing.
Having said that, it must be rubbing its hands with glee when it looks at everyone else’s figures.
We have already seen the administration of Emoov and Tepilo (although now in reincarnation, is this business going to find £20-£30 million to get a foothold again?) and the closure of Hatched.
I doubt if the 2018 figures, when reported, will be better for any of the online agents, not least because recent reports suggest they currently have around 7% market share between them, nowhere near the figure they should have reached by now.
There have been many winners and losers in the race for online dominance.
Google, Facebook and marketing agencies have reaped millions of pounds from the online agencies’ spend. And yes, there are vendors with an easy sale who have indeed managed to save money.
But everyone else is a loser – those customers in chains or with difficult sales who didn’t get the customer service they needed; those other agents spending extra time picking up the pieces to hold a sale together; and those self-employed internet agents working silly hours trying to make ends meet.
Not to mention those investors who are holding out for the long-term gold rush which looks increasingly like it will never come.
* Paul Smith is CEO of high street chain Spicerhaart. The rest of his regular monthly column appears below