Online firm Housesimple is baffling local agents by continuing to offer vendors in Lancashire, Cheshire and Yorkshire a free service.
Housesimple is the online agent backed by Carphone Warehouse founder Sir Charles Dunstone and his business partner Roger Taylor. The pair have pumped millions into the online agent.
Housesimple is currently offering a no sale, no fee deal of £995, as well as its free deal for vendors in the north.
The move appears to have won it market share in the region at the expense of Purplebricks.
The business, founded by Alex Gosling and run by ex-Rightmove head of lettings Sam Mitchell, has five star reviews on Trustpilot.
It is not to be confused with House Network, whose problems have been well documented by EYE, and which is now in administration.
Housesimple’s accounts were filed earlier this year, showing enormous losses.
Yesterday evening on Rightmove, Housesimple offered 1,253 sales listings, with 987 available.
Below: Housesimple is offering vendors in the north a completely free service:
Below, how EYE reported the state of Housesimple’s accounts:
Losses rise to £13.5m at online estate agency backed by business tycoon Sir Charles Dunstone
Comments (29)
I swear I can hear the countdown timer music getting louder and louder….
Are they trying to increase market share to then go for more funding based on how much stock they are attracting? …….or implode if the money runs out?!
I’m picking my way through the Onliners War Games and listing New Stock at healthy fees, not volume, just a steady flow ……good income for a sale well executed. There is no point competing with the Desperados…. my £10k with 3 New Instructions today versus 10 x £995 that I may never sell?
Grinding out Listings & Sales …..it’s what good/experienced Local High Street Estate Agents do …….and I’ve got the time, expertise and positive financial return ensuring my clients best interests are my priority.
Purplebricks, Housesimple, Monkeys, Peanuts ……or Frank Sinatra? I’ll do it My Way!
It is accepted that not all listings complete for a number of reasons, the percentages vary from 50-80% but we know its more 50 than 80 so to absorb 100% of the cost with a 50-80% revenue paid on completion will only work if the fee is a minimum of £2,000, which is inline with Yopa’s offering, HS’s £995 is unsustainable whereas PB receives payment for every listing.
I don’t think HS is competing against PB, their model is more inline with the high street agent and 93-95% of the market is dominated by the high street with a pay on completion offering but vastly more expensive, Yopa are playing the long game with their feet in both boats with pay now or on completion.
If housesimples is offering no sale, no fee at 995 then it should generate lots of new instructions. If housesimples gain strategic market share then it will force competing businesses to either follow the model or move in to non competing business models (or go bust). However once housesimples gain market share, how do they capitalize their market and make a profit? One way is to increase their fees like a normal estate agent charges the other is to charge an upfront fee like PB either way they will lose their market share unless carphone warehouse peeps want to spend and keep spending until they go broke.
This is quite simply economic madness. Reading the accounts they have spent £28m until March 18 and burnt through a further £15m since. Based on a £995 fixed fee (when not giving the service away) and assuming referral income per sale of a generous £350 they’re receiving £1125 per sale achieved after VAT. With a gross profit of 60% and fixed administration costs of c£13.5m at the moment they need to sell over 20,000 houses per annum without increasing their cost base. Allowing for a modest rise in administration cost of say £3m to cope with a minimum 10x volume increase takes this target to 25,000 homes per annum. To get to a profit of say £4m which is only a 10% return on the investment to date points to a target of more than 30,000 per annum. The only way I can see this is if they can overtake Purplebricks which I just cannot see happening
If you read the terms and conditions of this offer they state:
“By signing up to this promotion you agree, at all times during which we are providing you with services, to have a for sale board erected at the property (unless explicitly prohibited by the relevant local authority).”
I can only think that they are going for the boards breed boards approach. Something like what Foxtons have done in the past when they have opened a new branch. Offer to sell for free, get loads of local boards and build the local brand.
House Simple’s boards will be too far apart for this to work. Or they would need tens of thousands to see the same effect. As long as the houses actually sell! Madness.
They can spend a fortune on TV advertising or spend a fortune giving away free listings, same result different ways of doing it. They have clearly decided not to play PB at there own game in an attempt to catch up. Like any loss making business they will be there until the tap is turned off.
Agents losing work to them should take a good hard look at their own pitch.
PB however …………. good that they are losing out.
They will lose these clients in a few weeks though as the houses will remain unsold and clients unserviced
Anybody watch Game of Thrones last night….the big battle with the undead…did it resonate with anyone?
Backers of HS, PB and Yopa seem to be hellbent on using their deep pockets to dominate the callcentre listing sector and force their direct competitors out of the market.
As some have previously stated, House Network traded profitably, until the TV adverts diverted customers to the disruptive threesome and they had to borrow to try and respond.
If Sir Charles, PB and the Barclays are going to continue funding this strategy, then further casualties are inevitable.
The question is will it be worth it – is there enough market for the three of them to share?
When a local agent opens up, they sometimes have a free or reduced offering to create brand awareness and a load of boards springing up. But when the buzz ends, local homeowners subconsciously remember the agent as they drive past their office every day, so the opening offer has a long term benefit.
When House Simples offer ends, they dont have a local presence, so they will still need to pump millions into advertising thus their freebie offering is wasted.
And after all this, how many “online” agents does the average vendor know beyond PB? Probably none.
Agreed. I don’t remember Apple having to give away free phones to get people to use them.
Not sure why these founders are going for such a stupid business model and industry.
Maybe it’s a misplaced hatred of estate agents bought on by the media that makes them think they are the people’s hero.
Totally misplaced propaganda, where agents are perceived as liars and rich…
Typical British attitude of kill anything that dares be successful.
Since brexit Iam done with this country.
Last breath before death!!
Smells like desperation and looks like a last resort.
I think the listing numbers mentioned in this article are wrong as HS have different profiles on RM with different props. I think it’s more like 3-4000 total
From what I hear, they’re paying their listing agents around £125 per instruction
They have around 15 listers in the free area currently I and saw that one of their listers had done 50+ in a month
That’s a £6,250 payday right there each month for the last 3 months
Multiplied by 15 agents, they’re paying out around £100k in salaries PER MONTH, plus all the other associated costs on RM and at their call centre, for a return of absolutely nothing!
They’re losing around £1.5m a month currently
If you look at Manchester & Liverpool where they were doing it for free a few months ago, their numbers were very high – 300 per month – but now the free thing has stopped they are down to around 50 a month in these areas. Still ok numbers to be fair, but expect that to reduce as sellers realise that HS can’t sell them because the listing agents are just overvaluing to get them on and earn their £125
Where are they advertising this deal? Is it just AdWords or are they physically advertising?
To be fair, I don’t know that in detail. But I would imagine Adwords – their retargeting is pretty good as their ads follow me all over the internet. Wouldn’t be surprised if they are doing local TVadverts on regional channels and/or Sky Adsmart, and then of course word of mouth will help as it’s free, so people are bound to talk about it
https://www.youtube.com/watch?v=Ao9boVVy52A
Bless You – not sure whether we can post links on here but if we can then this is the irritating TV advert we have to suffer in Yorkshire
There is no doubt they have picked up a huge amount of instructions on the back of this offer.
We measure the Leeds market very carefully and over the last 3 months whilst this offer has been running they have put over 100 units to market just in that area each month.
What it very interesting is the huge impact they have had on Purple Bricks who’s new instructions have pretty much halved in this location. Some very unhappy LPE’s will no doubt be the resultant effect.
Just when you thought cheap couldn’t get any cheaper… the race to the bottom is on for the onliners!
What’s the saying? ‘My enemy’s enemy is my friend’. Crack on Housesimple.
meanwhile the gov’t and local economies are losing out on millions in taxes and rates.
Hope gov’t have a plan in the populist free for all to pay their nurses and other public services with no vat or tax receipts.
Just to clarify, Nurses, Doctors, Teachers are not important – thye do not have enought votes
most important are the DSS and benefit tenants who are their main vote bank – nurses, doctors, teachers are a very low minority who are irrelevant
This simply HAS to go pop soon.
There is not even a shadow of doubt.
I feel really sorry for all the future (and current) sellers that are going to be screwed over once they go under.
Strange. People need service. Most ring an agent over 30 times in a normal transaction.
At what point does your average seller decid those 30 phone calls are just a luxury and ignore service over fee?
Do they even know ? Isn’t this where gov’t. Regulation should protect the public???
Exactly, and those are just inbound, multiply by those outbound, agent > seller and then all those phone calls to related agents/solicitors/lenders…and PIE please stop referencing trustpilot ratings at the throat of every article, we know what they are and it’s just annoying.
Scariest part of that sentence is that the seller calls the agent 30 times. Sincerely hope it’s the other way round if we’re calling it service.
These are Zombie firms – they are the walking dead trying to infect and survive to their next meal by eating the brains of real alive agents. They are staggering and dropping limbs and appendages as they writhe in their agony.
These Zombie firms have no soul, no heart and real purpose save to infect and consume all that stand in front of them they will still die a gruesome death but sadly take with them those they have infected.
*applauds*
“Scariest part of that sentence is that the seller calls the agent 30 times. Sincerely hope it’s the other way round if we’re calling it service.” #your_A_tit For the padantic. Agents call vendors 30 times,,,
maybe leave 30 messages, then vendor calls back 30 times… bless you ….