Online agent Housesimple is to sell all its properties for free.
The business – which describes itself as the UK’s fifth largest single-brand estate agency – says this will save on customer acquisition costs while it will monetise itself through referral fees.
Notably it is looking for earnings via its own mortgage service which it quietly set up in conjunction with the Mortgage Advice Bureau in January. We are told it now has ten brokers in place although it has yet to officially launch as regulatory authorisation goes through.
Housesimple will also earn money from services such as conveyancing.
Housesimple is backed by Carphone Warehouse founder Sir Charles Dunstone and Toscafund, and has chalked up huge losses, to the tune of £13.5m according to its last filed accounts.
However, CEO Sam Mitchell told EYE yesterday: “It is no secret that we are still in an investment and growth phase. We now have a pathway to profitability.”
Housesimple has been trialling a free home sales service in northern postcodes since the start of this year, gaining market share and claiming to have increased listings five-fold.
Mitchell said: “We started in Yorkshire in January, and within three months we had become the number one agent in the region, overtaking Purplebricks, which was no mean feat.
“We then launched the free service in the Granada TV area in the north-west, and that has also proved very successful.
“While the service is free, it has allowed us to acquire customers at a cheap rate – a fraction of the price it was costing Emoov.”
These trials will now be rolled out permanently across these regions, and then into other regions in the coming months, eventually taking the free offer nationwide.
The next roll-outs may not necessarily be tied to ITV regions but are likely to be areas with dense city populations, for example the midlands and the south, said Mitchell.
Housesimple says that based on the average property price in the UK of £226,798, sellers could save over £3,000 in commission.
Sellers will still receive the service they do now, including local expert valuations, photos and floorplans, listings on Rightmove, Zoopla and other portals, a ‘For Sale’ board, negotiations and sales progression, and the support of a dedicated team from valuation through to completion.
Mitchell said of Housesimple Financial Services that most sellers will buy again and need mortgages; also that every property listed attracts ten to 15 potential buyers who could also need mortgages.
On top of that, Mitchell told EYE of plans to launch a home-moving concierge service to both buyers and sellers, which will earn money from services such as change of address notifications and utility switching. He said: “Even if we don’t sell a particular property to a particular buyer, if we have offered a good service, they will want to go with it.
He added: “It’s time for change in estate agency.
“We believe selling a property should be a great experience and that’s why we are making it simple, transparent and free.
“The ability to sell a home through advertised listings and professional support, without paying any estate agent fees, is unique in the UK.
“Housesimple is the only company to offer this service and we expect it will quickly become the most popular way to sell a property.
“This is a bold move but one that has been tested. Within just six months of trialling this offer we’ve increased our property listings five-fold and are now one of the leading agents by listings in cities including Leeds, Sheffield and Manchester.”
Housesimple emphasises that sellers and buyers will not have to go with its “no-obligation selected services”.
Under the voluntary code issued by the National Trading Standards Estate and Letting Agency Team, referral fees must all be specifically and clearly revealed.
Mitchell said: “Like most estate agents, we are generating revenue from ancillary services, but as we don’t have expensive branches and we use technology to make us more efficient, we can pass on these savings to our customers by not charging fees to sellers or buyers.
“Our goal is to offer our free service nationwide, but we’re not extending our service to the whole of the UK in one go because we think demand will initially exceed our ability to service all our customers.
“We are therefore building up our coverage in Yorkshire and the north-west and will start to roll out to other towns and cities in the coming months.
“We know that people don’t just want cheaper, they want better. We’ll continue to offer an outstanding, fully managed service from a dedicated team working together to sell homes quickly, easily and for the best possible price.”
Housesimple was founded in 2007 by Alexander Gosling and Sophie Cronin. Gosling was chief executive but is now president of the firm. The business is headquartered in Colchester, Essex, where it employs some 100 people; around 25 LPEs are employed in the north and north-west.
The areas where the Housesimple service are currently free are:
- LA (Lancaster)
- BD (Bradford)
- HG (Harrogate, Ripon)
- YO (York)
- PR (Preston)
- FY (Blackpool)
- BB (Blackburn)
- HX (Halifax)
- LS (Leeds)
- HU (Hull)
- DN (Doncaster)
- WF (Wakefield)
- HD (Huddersfield)
- OL (Oldham)
- BL (Bury)
- WN (Wigan)
- L (Liverpool
- WA (Warrington)
- M (Manchester & Salford)
- S (Sheffield)
- SK (Stockport)
- LN (Lincoln)
- NG (Nottingham)*
- PE (Peterborough)*
- CH (Chester)
- CW (Crewe)
- SY (Shrewsbury)*
- ST (Stoke-on-Trent)
*Limited postcodes
Housesimple has four charges registered against it, two by Dunstone and two by Toscafund.
The business was loss-making to the tune of £13.5m according to its last accounts, as EYE reported in January:
Losses rise to £13.5m at online estate agency backed by business tycoon Sir Charles Dunstone
Comments (41)
On a brighter note….. I share this little “gem of nothingness”…..
I went to park my car this morning, near my Glasgow Hotel, before the rabid traffic wardens start spraying tickets everywhere!
Anyway, walking back to the hotel, I’m looking up at all the fantastic old buildings on the quiet’ish early streets, and it reminded me of coming into Glasgow City Centre around 5am on a Sunday morning, aged 14/15 with my Olympus OM10 that I had saved up £85 to buy …..it was loaded with black n’ white 35mm film, and I would spend 2/3 hours photoing Glasgow’s finest old buildings with no cars/buses or pedestrians about ……and then return home happy as pie and relish the anticipation of delivering the film to the camera shop on Monday to be developed and then collecting later in the week to see my results!
Happy times …..who knew that would be part of my future.
Have a Good Weekend one & all.
As I holiday this weekend in the fine City of Glasgow ( “Let Glasgow Flourish” ….goes the old motto ), my city of birth…..
…..I read this House Simple nonsense and can’t rid myself of the Neon Sign Vision that flashes…… “MIS-SELLING SCANDAL IMMINENT!”
I know Glasgow can be a little Twilight Zone on occasions however this HS madness masterplan should be fully launched across the UK on November 5th so we can all help pile the HS dosh onto the bonfires and watch the glorious result ……..this alternative “roll out” by HS is like watching some old fella fuelled by too much hooch, stagger from lane to doorway, discreetly emptying his bladder!
Purplebricks in the same time marked 23888 homes as SSTC (For comparison)
PaulC
Here is a comment from potentially one of those PB customers, posted yesterday as part of a (positive) review on Trustpilot:
“The only point I could mention as a slight negative is that we personally would have preferred to have chosen our own Solicitor rather then the one Purple Bricks assigned to us, this is just part of the arrangement for all of their customers.“
Simple ‘upselling’?
Or
Were these customers given no choice and the Agent benefited to the tune of several hundred pounds at their expense?
If they defer payment they have to use the PB conveyancers. So the customer has the choice of 10 months interest-free or pay upfront.
Or pay a penalty for not using their team, which I think is £360
That £360 for NOT using “their team” ……I think I would be dialling 999 for that!
We set up our own mortgage arm just under 3 years ago, thinking it would be the missing part of the puzzle.
I personally think we do an ok job of picking up business off the back of the agency.
Its been incredibly difficult to build a team of decent advisors, although we now have this. But we have churned through several which has been expensive.
We only seem to make money when life is involved as advisors and support team are not cheap to employ.
Despite turning over nearly £500,000 in that time, we currently run at a loss on the overall project.
We might start to turn the corner as we enter our 4th year but if House Simple think this will be a quick fix they are delusional.
Are they really going to pour millions more into the accelerating cash burn?
Which Mortgages are shutting down as they can’t make the numbers work to support just the mortgage and life business costs.
House Simple think they will make enough to fund the new mortgage team and fund the online estate agents (NEVER GOING TO HAPPEN)
CRAZY!
Up to the end of May, they had marked 1721 homes as SSTC, just can’t see that they will be able to generate enough cash
Fag packet time
If they were going to plug that gap with mortgage proc fees (average 0.0035% of mortgage loans) they need to write…. £3.85 Billion of mortgages…. assuming no insurance revenue or fees.
Or look at it another way… Let be generous and assume they get £1000 referral for their solicitors on every sale and a £500 mortgage broker fee on every sale and £500 average proc and £1,000 of insurance commission which ALL sticks forever. Best case they make £3k a sale?
Then let assume they sell all their properties tomorrow and they all complete and they all need mortgages…
£3k income * 1721 properties = a bit over £5 million.
Reality check time. They only sell 50% and only 75% of those are likely to need mortgages which, they won’t win the business of all of them. Best case scenario is their 10 mortgage advisers make £2,000,000 a year.
Telephone-based mortgage advisers banking 200k a year with low price and low mortgage value properties in Yorkshire…
That does not plug a £13.5 mil annual loss
I’d say you were banging on in your assessment.
Properties in our zone… 2.
Not going to break into a sweat about them just yet.
I’m going on holiday with ten to 15 mates next week. We’ve booked the hotel, transport, the golf course… packed our bags, worked out what to see, where to drink, when to relax, but all of us are waiting till we get dropped off in departures with our suitcases before booking our flights.
“…..also that every property listed attracts ten to 15 potential buyers who could also need mortgages.”
Bon voyage Housesimple!
You’ve got to love the irony of online agents having a race to the bottom on fees. housesimple.com wins! Delighted to read they’re taking large chunks of business from Purplebricks Group PLC. Why pay PB a grand to sell your home, when HouseSimple do it for free? I feel sad for all the innocent hard working people who are going to lose out in the end, but to watch the sector beat itself to the death is rewarding after all the damage they have inflicted. The best endorsement of full service hashtagestate agents yet.
Where do I start…… ?
No point.
Think Hot Air Balloon at 40,000 ft, and someone spots a 0% sized hole in the fabric.
Brace for impact!
”Oh, did you pack the Toilet Roll?” “No need, you’ll be empty before you hit mother earth!”
Can you imagine the money they are hemorrhaging right now? They were when they were charging a fee…
This can only be a final, desperate roll of the dice green lighted by Tosca and Dunstone (who has apparently been dismayed by the progress of HS). Disrupting the disrupters…
There are rumours circling that Yopa need to hit a certain instruction target by the end of this month otherwise they will not be getting further investment. My prediction will be no more HS and Yopa by the end of this year. Maybe a lot sooner…
Purp 93.90 @11.35am
Bit of a problem when you have spent 13 mill, are prepared to give your service away for free and still no one wants to use it.
From the article above:
“The business… will monetise itself through referral fees.”
From the HS website:
“No fees, no commission, no catch.”
I’ll just park this here and see what happens…
People have been saying it for years, and the evidence proves what people are saying. Online Agencies are dead/slowly dying. Why do people keep investing in a horse with three legs, being led by a blind jockey?
So faced with two buyers, one a potential ftb and the other a chain free, cash / high equity buyer (or maybe an investor / developer / landlord) with their own solicitor !
What they gonna do ?
I lost a buyer to these guys – kings of zero.
I later heard she pressed the ‘valuation’ button on HS website. Was then hounded every night for a valuation. Agreed to a date reluctantly.
Agent turned up, took rough photos. Property wasn’t ready. Carrier bags in living room etc.
Despite protestations, agent promised no photos would be used.
Next day her property was on Rightmove, with photos taken during valuation.
Price was too low/ zero consultatinon. Feeding frenzy ensued. Viewings booked. Offer was made before any instruction signed. Lady agreed (Why!).
On closer look, all customers locked in for 6 months after initial signup.
Traumatic experienece for somebody already in distress – but she didn’t have sense to back out either.
Passed on incident to RM – no response as ever.
HS – zero marks in every department…but at risk of taking the trade down the pan with it
“It is no secret that we are still in an investment and growth phase. We now have a pathway to profitability.” says CEO of company founded in 2007.
I wish PIE and the industry stopped referring these facilitators as estate agents. It’s a little like a sausage roll factory conveyor belt claiming to be a good restaurant owner. In this instance the common denominator is food – or pork in the sausage factory…you can’t educate pork.
£2000 conveyancing fees – oh and the conveyancing call centres are horrendous just like their call centre – takes them four days to check a chain!
Easy pickings for touting folks
Go get em
Goodnight Irene.
We modelled a free offering when I was at Hatched way back in 2011 ish with exactly the same thinking of making money on referrals fees
It does work from a profit point of view, but only if you get incredibly high referral fees and incredibly high conversions rates – as an example, every online agent I’ve been at couldn’t get much higher than around 10-15% conversion on mortgage lead to sign up – even when the master of mortgages bought Hatched, our conversion only edged up because we couldn’t get customers to do their mortgage over the phone – they generally want a f2f service on mortgages.
You’d need 50% conversion on leads with generous 30%+ kick backs to make this side of the business work, which in my opinion, is way, way higher than any online agent I know can achieve
Housesimple may have refined their pitch compared to my businesses, maybe they have better staff than I did. But I doubt it
Good luck though ♂️
@AdamDay, so in other words HouseSimple will also go down the pan like Hatched.
Quite possibly, yes, but I really don’t know…maybe it could seriously disrupt the market and destroy everyone, although I have my doubts…
However, something I don’t doubt, is that, unlike Hatched – which, by the way, whilst I owned it, was the only profitable online estate agent in the UK to grow organically, without a single penny of investment – Housesimple won’t successfully exit to the best and most consistent traditional agent in UK.
Bonkers! No.1 agent in Yorkshire though, want to sell your house for free? Ok lets go. Just aswell it’s not in York, theres a pretend agent there charging 2%.
This is mental though.
What have on line estate agencies and owning a football club got in common? Neither of them ever seem to make any profits and yet attract all sorts of people viewing them as marquee assets. Estate agency is a living and not some secret pot of easy money, which is why I can’t understand the mad scramble for it. No one makes a huge profit when they charge 1%, even with their secret commissions, so how on earth would you ever be profitable doing it for nothing?
Utter desperation…..
Sellers have a clear choice…. do they want a cheap (or even free) self service option or do they want a full service premium agent?
Its up to us to justify the difference between the two and how free will cost them money and possibly cost them a sale in the end.
The best thing about this news is that Purplebricks business model is finished in its current form and they will now be scratching their head to figure out how they will compete.
In Leeds their volume of listings has halved on the back of the Housesimple free offer so what comes next?
Interesting times ahead but remember people cream will always rise to the top!
if you want the very highest price for your property where your fee has motivated the estate agents to achieve just that – go cheap, that’ll bag it for you – hahahahahhahaah
Tw@ts, I’m getting sick of the word technology, it’s as if all of these chancers think they are Predator as the rest of us doing it properly wildly fire our automatics into the trees in their presence, utter garbage.
Thumbs up for your toretz moment lol.
I’m going to be VERY generous here and say they’ll be bump by March 2020.
I initially thought the end of 2019, but if they get some traction, it’ll attempt to push through the pain.
Now we know the true Market Value of the FSBO/Call-centre Listing Sector.
How will PB/Yopa respond to preserve their share of the crumbs?
What’s that smell in the air?
Ah yes, desperation.
Be good if pie interviewed a trade secretary/ gov’t. and found out why fake businesses with fake funding are even allowed to operate .
Jobs/ industry at risk , just because of some millionaires ego.
Also just did a search of Manchester. Scrolled down pages and didn’t see 1 housesimple listing.
Also, genuine agents need to start ditching m.a.b .
They are also conspiring with purplebrucks.
Interesting comment on the MAB bit…
I have my doubts about the MAB set up now…
Rats should be thrown off the ship before they sink it #mab #righymove #poopla
You can compete on price, or you can compete on service.