28 Nov 2017
So the internet-only model isn’t all it’s cracked up to be!
Who knew? Certainly not all the investors who’ve ploughed millions into the founders’ pockets and are still waiting for a return on their investment.
Or the customers who’ve been duped into believing they’re getting a good deal when their properties remain unsold but they’ve coughed up hundreds of pounds. Or the isolated staff who are trying to earn a crust facing long hours and heavy workloads.
The wheels are most certainly starting to come off the online estate agents’ bandwagon. With rumours of two leading internet agents contemplating a merger, there’s a strong feeling that no-one can make a go of it and actually make a good profit when fees have sunk so low, yet marketing costs in many cases run into the millions.
We’ve done our own analysis of all the online agents in the towns where we have branches. It transpires that only 6.26% of all properties for sale are with internet-only agents.
The top five online agents between them account for 90% of the online market in those areas. The remaining 15 online agents had just a handful of properties for sale in each case. How they are surviving is anyone’s guess.
Which led me to look at some of these agents’ accounts at Companies House. These publicly-available records show Purplebricks, Housesimple and eMoov all reporting a loss in their last accounts, while Tepilo’s profits have taken a major nosedive. Hope value is turning into no-hope value!
How will Purplebricks fare in the US when Foxtons failed when they went to New York with a discount model a decade ago and instead drained their coffers of cash? Will LSL’s £20m investment in Savill’s-backed YOPA – which also received millions in investment from the Daily Mail earlier this year – generate the rewards that are being sought?
I fear it will take more than the Chancellor’s Stamp Duty cut to transform the fortunes of these businesses. High marketing costs will always outweigh the income that’s generated, making the future uncertain for a business model that hasn’t yet proved its worth.
Every agent is going to have to change but I don’t think anyone has the right model yet. The new currency is speed, with an instant service that will give the best customer experience.
However, if you don’t like change, you’ll certainly hate extinction!
Countrywide on the ropes
There can’t be any greater example right now of a poorly executed online strategy than that of Countrywide. They’ve finally admitted that their online model – competing with their own high street brands – has had a catastrophic impact on their business. So much so that they’ve now pulled the plug.
They say it’s temporary, but unless they’ve got a few magic tricks up their sleeve, they’re going to struggle to conjure up a new action plan that’s going to turn the tide on their failing business model.
Now Berenberg Bank has warned that the business is almost ‘uninvestable’, reiterating my own comments about the warning flags that have been flying over Countrywide for some months now.
Can they reverse the tide of their misfortunes with the current leadership at the helm? Surely change is coming – and it wouldn’t be a day too soon.
Why reviews are so important
How many of us look on review sites when making hotel reservations or buying goods and services online these days? I would hazard a guess that most people do nowadays.
Which reinforces the importance of gathering excellent reviews and testimonials from all of your customers, to help others make an informed choice about the quality of service you offer.
We’ve pulled together data from a number of different sources that say nine out of ten consumers read reviews online. Just over two-thirds say that positive reviews make them trust a local business more – and nearly everyone says they would hesitate to use a business with negative reviews.
Interestingly, almost half feel that a review must be written within one month to be relevant and they will read up to ten reviews, rarely more, in order to form their views.
Where word of mouth used to be so important, we are now so reliant on electronic word of mouth.
The agent that ignores their reviews, good or bad, is missing a trick. Our very future lies in the hands of our customers, who won’t fail to pass on their stories of incompetence or mistrust if things don’t go according to plan.
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