Floating on a wave
Someone somewhere is having a laugh at the expense of investors. With the Purplebricks flotation and easyProperty announcing multi-million pound backing, you would be forgiven for thinking that the new way to make money in property is by putting your hard-earned cash into these online agencies which are still in their nascence.
But easy money it ain’t. Any glance at their listings will show an incredibly thin stockpile which doesn’t tally with their bloated claims.
easyProperty chief executive Rob Ellice is reported to have claimed his business will be worth £1bn in two years. Based on what, exactly?
We can all talk up a good PR story but when it comes to delivering the goods, my guess is he’ll fall terribly short. It doesn’t do your own reputation any good when you make such wild claims.
My fear is that he won’t be the only person who believes his own publicity.
Will high street agents everywhere jump ship and head for the bright lights of the internet-only world? Of course, if they do, it will make even slimmer pickings for the likes of Purplebricks and easyProperty, devaluing their worth in the process.
These dot com ‘disruptors’, as Purplebricks love to call themselves, are undoubtedly providing competition and a wake-up call to traditional estate agents. But I’ve yet to understand how it is possible to arrive at a £240m market capitalisation figure – or how people will reap the rewards from their investment. In fact, I thought the nought on the end was a mistake!
As the first mover to float, there’s no other online agent to provide a comparison. Clearly, they are counting on ‘hope value’ in order to be successful.
I know only too well about the vagaries of internet estate agency and how hard it is to make it profitable. By their very nature, these agents are offering a low-cost, low-service model to customers, yet still have the high costs associated with marketing, sucking their profits dry.
I predict stormy waters ahead. Time to get a few life rafts ready.
Do you know who’s sitting next to you?
The startling revelation that a London estate agency has unwittingly sold a house on behalf of a tenant who didn’t own the property makes you wonder just how easy it is to adopt someone else’s identity.
The house in question is owned by Penny Hastings, the wife of veteran journalist and author Max Hastings. Imagine her shock when she discovered someone had taken her name by deed poll, obtained a passport and, working with an associate, persuaded a purchaser to part with cash for the £1.35m house.
No doubt there are plenty of questions being asked of all those involved in the process. Thankfully for the real Penny Hastings, the deeds are in her name and she is still the owner – leaving the purchaser the biggest victim in all this.
It reminds me of a story I heard about an estate agent who changed their name by deed poll in order to hide their identity so they could carry out fraudulent activity and burgle vendors’ houses.
It’s extremely worrying that people can pretend to be someone else and you don’t have a clue.
We know that identity theft is rife on the internet. But could it be happening right under your nose? How do you know if the person sitting next to you is who they say they are?
When I started out in estate agency over three decades ago, there was just a handful of rules compared with today.
We didn’t agonise over HR legislation or internet security, trading standards or ombudsman schemes or tenancy deposit protection. We didn’t have money laundering regulations or data protection policies.
There was a time when we knew who was who in the industry, who we could trust. We would give and receive meaningful references that gave an insight into the character of the people we were employing. Now we are all too afraid to be open and honest, lest we get sued or taken to a tribunal.
If ever there was a time to keep a much closer eye on both our colleagues and our customers, it’s now. Surely it’s in all our interests to ensure these fraudsters don’t get away with their crimes?
Anyone can pop up as an estate agent, online or not, and yet is trusted with someone’s biggest asset.
I strongly feel that compulsory training, exams and licensing should be introduced to help us go some way to combating these issues – before any more members of the public are robbed and our industry suffers as a result.
Comments (39)
Turnover £3.39m – pre tax loss £5.44m – They have pulled a blinder
On a slight tangent…
I saw the Tepilo TV ad for the first time last night and I’ve got to say as an ad for estate agency it is streets ahead of the ‘Two Ronnies’ formula of the PB ad.
Strangely, neither Tepilo or PB mentions a price.
And then … I’ve just watched a preview of the new Zoopla ad which starts on Boxing Day.
Only one word for the Zoopla ad …. LAUGHABLE.
The ad is typical of the modern advertising agency’s obsession with being ‘different’ and ‘creative’ … the problem is I bet 80% of people watching it won’t have a clue what it is all about, especially if they don’t know who Zoopla are.
In my opinion, if you are selling red apples show a red apple and tell people it is the reddest, juiciest most crisp apple they’ll ever taste. No one then has any doubt what you are selling and why they should buy it.
Two guys standing in a hallway watching a woman throw a wobbler with her ear against a wall before collapsing on the floor … Zoopla, what the heck has THAT got to do with advertising my properties and educating/persuading buyers to use your portal???
Z’s last ad had pigeons flying and landing on roofs???
If Zoopla want to see a proper ‘juicy red apple’ estate agency ad I suggest they contact Sarah Beeney and her advertising agency for some advice.
I thought it was quite good
Ha! Property Paddy – that’s the best comment on here!
FY Information.
I do have a business model that is seriously disruptive to the estate agency business that will work, hits all the high notes vendors want, including saves on fees plus it’s scalable and it will work for as long as people want to buy and sell homes.
I obviously wont be telling you, dear reader, what it is or how it works.
But if anyone with say, er, um, well…. about £240m wants to have a chat with me…
I agree with a lot that Mr S and PP have to say.
But…
The internet is all powerful and all pervasive.
I haven’t seen it yet, but sooner or later someone could quite well come up with a compelling internet solution – probably hybrid.
The thing that us traditional agents forget is that these upstarts understand the linked sale in a way that we (generally) don’t.
I am a web geek as well as an agent and the value of having a database of people’s names, addresses, emails, values, criteria, dreams, hopes, desires is enormous.
After all one of the world’s biggest businesses (Google) makes it’s money out of that kind of thing.
Consider the sale as a loss leader and then add in mortgage, solicitors, removals, decorators, plumbers, roofers, electricians, wills & probate referrals, life cover, insurance, health cover.
Once the customer is lured in they become a continuous revenue stream.
This is something that us high street agents just don’t understand.
The total fees to be earned far outweigh the commissions that we charge on our one transaction and the relationship is much more long term meaning that if they get it right and keep getting it right then they’ll have customers for life.
Customer Loyalty in the internet age is very different from what I used to think it was.
The main issue that most ‘disruptors’ fail to comprehend, dating back to the corporate buy-outs of the 80’s, is that a property purchase is, predominantly and primarily, an emotional one. It is not the same as buying a book, washing machine or a garden shed.
Because of this, both buyers and sellers prefer to have the process conducted by and with people. At one end of the emotional scale this for basic reassurance during a major life event whilst, for others, a convenient person to have as a scapegoat if something doesn’t go according to plan.
Having worked in traditional estate agency for over a quarter of a century and, as the consultant on various models in my time with Tesco/ RBS and carried out many consumer focus groups behind and in front of a two way mirrors etc. I believe I have a fairly good understanding of what consumers do and do not want from an estate agent in the three main models:
traditional high street, call-centre and hybrid
I genuinely do not believe that non-geographic online agents will become any significant force in agency in any meaningful way in the short to medium term. Current market share and customer numbers are dropping for all of the major players. For a business model that demands high volume instructions and ever growing market share; they are currently all on a steep trajectory to closure.
All I know is this. Mr S bought of Tesco’s their property portal cos it was failing. His strategy was to use the site as a disrupter in parts of the country where his company had no market presence then close that part of the operation and open up one of his shops.
At least that’s how I understood it (sorry Mr S if I am wrong, not being malicious) it was I thought a good idea as it was like a double whammy if you were the high street agent trying to compete.
Now bearing in mind the company Mr S owns has a few quid behind it and quite a lot of resources and they couldn’t break into fresh markets with this strategy or even a simple on line agency approach and considering there are some talented people working for Mr S, I have to agree with him, there ain’t a cat in hell’s chance PB will really succeed.
My reasoning has nothing to do with PB or Tescos or even Mr S but simply because as a friend of mine once said to me when I asked which estate agent would he choose to sell his house he said this: ” I would choose the agent with the reputation of delivering maximum price, irrelevant of the commission”
This particular friend is the CEO a £150m P/A business, he is spends about 0.0001% of his energy thinking about the property market and 99.999% of his time on friends, family and of course his job. So if you think about the profile of your potential client, he isn’t thinking “oooooh! I could save £4500 by going online” ! secondly he isn’t going straight to the on line he is talking to local agents too, looking to find out how the land lies before he comes to market.
I have said before ultimately vendors are lazy and selfish so they will consider on line if they can deliver on sale price, service and lower fees.
Why are they lazy? easy! even my friend said he would go to the agent with the reputation.
Why are they selfish: because they want maximum return for their investment, so if they cant get top dollar via high street then squeeze the moving costs.
This is a circle we all have to square everyday, it hasn’t changed in the last 200 years.
Disruptive technology? My 4rse !
Great Post Paddy. well reasoned and I agree. – merry Christmas and hope you have a prosperous new year. (as long as your not in my town 🙂
A friend who is a CEO at a 150m p/a company is not an average punter though. Vendors think they get the best price by holding out for it. Whether they actually do is another matter.
True enough a CEO of £150m isn’t average.
But he didn’t start there, he started with a 2 up 2 down in the suburbs just like most average punters
Putting aside the Traditional v Online debate, I 100% agree with Paul Smith on this part of his article:
“There was a time when we knew who was who in the industry, who we could trust. We would give and receive meaningful references that gave an insight into the character of the people we were employing. Now we are all too afraid to be open and honest, lest we get sued or taken to a tribunal.”
That’s true enough – all the extra regulation, the ombudsman and the development of the training regimes and CPD requirements of the NAEA et al have done NOTHING to improve the quality of the industry.
In fact I would honestly say that it has made things worse.
I’ve been an estate agent for 24 years now and the shifty, dodgy behaviour of estate agents is still the same, but updated and improved for the new internet age.
There are several people I have known over the years, one of whom has an international arrest warrant out for him another who has repeatedly ripped off customers, clients, investors, friends and family. They keep getting away with these things.
Oh look, another newbie “Anonymous Coward”
Hiya PP
No, for me it’s a joke 😉 (Bit of a web geek as well as an agent)
It’s my official moniker on PIE and EAT – it was available way back so I grabbed it.
I’ve been using it for years.
I’ve only ever hinted at who I am though.
Sorry I meant “24 years” another newbie
LOL
I can’t believe that I’ve kept the faith this long 😉
Tristramboris…..what?
are you trying to be the Eric Cantona of the online estate agent world?
the rest of my post is entitled “what tristamboris understands about pyscolological quotes”
“pyscolological” – humorous psychology?
Thanks. That’s just what I expected. A transparent reply to a straightforward question.
Mr Smith is not everyone’s cup of tea but he does run a large, highly successful business and has years of experience in agency. He’s also not afraid to stick his head up over the parapet and put his real name to his opinions.
What are your credentials and track record, Tristramboris?
I can never be stolen from you. I am owned by everyone. Some have more, some have less. What am I?
A ******? (How did I know the Mary Whitehouse filter was going to do that?)
Knowledge – but not sure if it has been used appropriately.
You are such a sage M Barnard! I thought Tristramboris was asking what we thought of him. I hate this time of the year when people start regurgitating the stuff that falls out of Booker Wholesale Christmas crackers.
Poundland Mr May!
Ding ding ding! Choose any prize you like!
…..a bit of an idiot by the sound of it
disdain- Tristramboris-disdain
Knowledge? as they say – to be verified
A dinosaur’s opinion piece written by a dinosaur who can’t see past a valuation today to understand the threat tomorrow.
The rest of my comment is entitled “what Paul Smith understands about technology
….
Are you brave enough to say who you work for Tristramboris? How about you put yourself in the same position as Paul Smith and allow us all to judge you in the same way as you are able to judge him and feel free to pass comment.
Where would be the fun in that?!
This is a man with a remarkable track record of failing to back the right horse in technology….. And often failing to back a horse at all!
It would help explain your sycophantic obsession with Russell Quirk.
Didn’t even need to use rummage4search 😉
https://www.linkedin.com/in/holmeseddie
Are you saying that Tristramboris is EddieHolmes? That would certainly explain the schmoozing.
That is exactly what I am saying.
Cheers. To think; I’m the one backing the wrong horse!
Sorry to come back to this but that Linkedin profile show 3 directorships that I don’t seem to be able to find registered! Are you sure you’ve got the right bloke.