Is this the beginning of the end for online only estate agents?
At Eden Estates we have long understood the benefits of online marketing having advertised our properties on Rightmove from the very beginning, we even invested our own money into the launch of On The Market because we felt that they had a good business plan in place to provide an effective and alternative property portal. What we have also long understood is the value of good customer service and genuine local expertise.
The collection of online agents which have sprung up over recent years have all been very keen to emphasise how effective their online presence is and as I’ve already mentioned, we know because we’ve been doing it for years. However, I am yet to hear a good reason for not having someone on hand to speak with face to face, who knows the local market inside out, will be proactive in marketing your property, negotiating the best price for you and then managing the sale through to completion. This level of service is expensive to provide and therefore the reason it is not offered by online only agents or many of the firms who charge a cheap fixed fee. In the end, it all boils down to money!
We have been boring anyone who would listen about this for ages, cheap fees are simply not sustainable and this is even more relevant to High Street agents with bigger overheads who are trying to compete with online agents on fee.
Firstly, what a lot of people fail to realise is that the online or cheap fixed fee model requires the fee to be paid whether the property sells or not and often in advance. So, straight away I would be asking the question where is the motivation to sell my property, negotiate the best price for me or manage my sale through to completion when the fee is already in the bag?
Independently commissioned analysis carried out by data experts Twentyci for the 2017/2018 financial year has unearthed some rather concerning data. During this period, Purple Bricks failed to sell or exchange 41% of the 64,000 properties they listed, but still charged their vendors an upfront and non-refundable fee for the privilege. Based upon an average fee of £1100 that means they generated £28.8 million for doing nothing! Similar statistics were revealed for other online agencies.
Secondly, if a business is charging less than it actually costs them to sell a property they’re going to run into trouble. Regardless of how deep their pockets might be, at some point the money will run out and these businesses will start to disappear; and guess what, it’s already started:
- Emoov, which also incorporated Tepilo, recently collapsed into administration with debts of £15.6 million and 2400 live customers at the time with around 80% of them having paid their fees in advance.
- Hatched has shut down.
- One of the significant shareholders in Yopa has just had its stake in the business down-valued from £20 million to £7.8 million.
- Nested has just raised £20 million to keep itself going whilst laying off 20% of their staff.
- Purple Bricks seems to be stumbling from one disaster to another announcing a profit warning for this year and also the news that their CEOs in both the Uk and US are stepping down.
- House Network, the UK’s first online agency, made a loss of £3.1 million in their last financial year which forced them into administration and a last minute bail out from a wealthy entrepreneur.
- BetterMove, who once described traditional High Street estate agents as ‘smug, suited slime balls’ has just gone into liquidation this week despite their self-professed ‘revolutionary online management system’.
So a word of warning, think carefully before deciding which agent you choose to handle the sale of your most valuable asset and don’t be seduced by the promise of a cheap fee. Surely it makes more sense to use an agent who will only charge you if they are successful in selling your property and who isn’t playing a game of high stakes poker, balancing massive debts against upfront fees.
At Eden Estates our fee covers all of our marketing costs, we work on a completely ‘no sale, no charge’ basis and we don’t tie clients in to a restrictive contract. If you want to, you are free to walk away at any point and without penalty; we like to think that this is a strong reflection of our confidence in our ability to do our job properly. Check out our independently verified testimonials to see what our clients have to say about us, a traditional High Street estate agent with a far reaching online presence and a town centre office in Bewdley staffed with real local experts covering the Wyre Forest area and beyond.