The world of estate agency is being buffeted in ways we haven’t seen in a long time, with transactions in steep decline, triggering shockwaves across the industry.
But the news that has come as no surprise is Purplebricks’ announcement that they are considering a sale. I have been wondering how much more pain they can take, considering the multi-million losses they have racked up. Shares have now plummeted to below the 8p mark as I write, with a market capitalisation of £25m.
With an expected loss this year of £15-£25m, it’s not an attractive proposition in its current guise, and any purchaser will no doubt be looking to pick off its bones, use its brand name and either become a total digital offering, or become a channel for people to sell their own homes, or accept that they need to go into full scale estate agency with a phone out culture. I understand they’ve also lost some very good agents and senior management in recent weeks.
Which makes me question how the likes of Yopa and Strike will also get through the current trading conditions. They’re having to scale back so do they have the people in their call centres to generate those leads? Do they have the staff on the ground to get out and about to canvass and prospect? We can see that low-cost models don’t work in volatile markets.
It’s not just the hybrids that will be struggling right now. I can’t imagine it’s much fun for those who are self-employed either, whether through the American models such as Keller Williams and eXp or other agencies. The strongest individuals in their teams will make it through, but there will be many who will be looking at their lack of listings and wondering whether now is the time to jack it all in. It’s certainly a risky choice for others considering this as an option. A traditional agency will always be preferable. I also wouldn’t be surprised if some of the self-employed models flip to become employed models or franchised.
As for the Connells and Countrywide combo, we’ve all been waiting to see how the acquisition will pan out, and whether there will be a shakeout of duplicate branches and staff with stock transferred in certain locations from one brand to another. Surely, given the current market conditions, they cannot carry on without consolidating or closing some brands or branches? I predict it will be a considerable number.
As someone who has commented on the industry for over 30 years, I’ve always found it fascinating to see how different businesses fare when the going gets tough. We can’t rely on the portals to feed us the leads right now, so perhaps it is time to switch to the U.S. or Australian models of buying leads from the portals and having no listing charge.
It’s going to be tough for everyone, with long days and late nights, putting in the hours to secure as many leads as possible and get deals over the line. We’re not short of buyers, with an average of 25-28 viewings per sale in our organisation, where it used to be 8. We just need to persuade people that now is the right time to sell. This means being brilliant on the basics, to ensure survival and growth.
Right now, agents will be using every tool at their disposal to spread their expertise, authority and trust to become the digital mayor of their patches. I expect to see everyone posting more on social media – and not just about listings but sharing their local marketing expertise, tagging local businesses and influential people in the process so it appears in their feeds.
Some local agents have done extremely well to establish themselves as the go to people to sell their property in their communities, promoting not just their brands but themselves too.
Agents will also be stepping up their investment in digital advertising, particularly through Google and Facebook ads, though this drives up the cost for everyone in the process. I dare say there will be a renewed focus on their Google business profiles and 5-star reviews, all of which help with organic search engine rankings.
I always know we’re in trouble as a sector when I get approached by independent estate agents looking to sell – and at the moment, they’re coming in droves. Not the occasional one or two but many more than usual, as some have had enough and are looking to get out.
Recessions are always tough for every business and there are plenty of jitters out there. However, the good money is on the drop not being as prolonged or as severe as it might be – but we’ll revisit this in a month’s time. We might even see a bounce back.
It might be gloomy out there, but spring is around the corner and already we’re starting to see the shoots of growth emerging in nature. Let’s hope this transfers to the housing market sooner rather than later.
Paul Smith is chief executive officer of Spicerhaart
Comments (4)
Whilst estate agencies continue to chase “leads”, instead of relationships, they are forced to react to market fluctuations. Those that have turned this industry into a competitive ‘rat-race’ shoulder the blame.
As for social media, it’s not whether you’re known, but whether you are worth knowing. Ditch the high visibility and embrace high transparency in order to attract better clients.
Maybe now is the time for high street agents to lift their fees as the online competition falls away.
We are now in my opinion moving to a normal market which in turn will push the weaker to the brink.
I agree that digital marketing will increase and maybe the US and Aussie models will be considered.
Now is the time to show your worth with service and customer experience a priority.
Mr Smith states that his company have 25-28 viewings per sale, in my opinion they are booking in too many time wasters and what a waste of their vendors time and their staff. I would suggest asking the correct questions upon applicant registration and half those figures and I would not be shouting about it!
Interested to see how eXp get on, I hear they have some top people.
There will always be high street agents who will win business by cutting fees on houses they know they can sell quickly.
As for EXp have a look at home many properties any of their agents have listed.
It is pathetic.
I have worked with 2 people who are in that both were utterly useless when they worked with me
With the EXP model it is all down to the actual agent. I have one in my area who actually knows what they are doing. Looking at listings elsewhere it is not always the case.