Online estate agency Strike, formerly Housesimple, aims to undercut traditional high street estate agents by offering vendors a free property sales service, but the business model is flawed, according to property commentator Russell Quirk.
The company claims that its business model allows vendors to save what it says is an estimated £3,800 on average by selling their home for free.
Strike, headed up by Sam Mitchell, chief executive officer, aims to generate revenue from third-party services and referrals.
The free service, which launched in Yorkshire and the North West in June 2019, followed by Nottingham and the North East in 2020, now includes a wide range of locations, with plans to soon offer its full service nationwide.
But Quirk, who founded Emoov in 2010, believes Strike is destined to fail based on its existing offering.
He believes that the model of making estate agency cheaper, as Strike aims to do, “doesn’t work”, as he learnt when he ran Emoov, which no longer exists.
In his view, Strike’s existing business model is “not sustainable or viable”. He also believes that branding is a problem: “[Strike is a] terrible, terrible brand name, and something that you can really mock if I were given such leeway”.
When quizzed by interviewer, Christopher Watkin, Quirk reiterated that Strike, as a business, “is not sustainable from a profitability perspective”.
He added: “Charles Dunstone and whoever else is throwing business at that business are completely deluded if they think it is ever going to make any money on a sustainable basis.”
Property Industry Eye has offered Strike an opportunity to respond.
You can watch the interview in full below:
Comments (31)
The Sooner the market cools down the better. the issue is at the moment a donkey tiled up in the corner of the office can sell a house.
market turns-all these listing agencies fail. when will these investors learn?
“…at the moment a donkey tiled up in the corner of the office can sell a house.”
No, NHGURU – in the scenario you refer to, the property sells itself… the donkey just brays loudly that the credit for the sale is theirs.
Any Agent with a donkey tied up in their office need to think to what will undoubtedly be coming over the horizon…
…and de-donkeyfy their premises accordingly.
Sell cheaply, but at what cost to the seller. Why would you gamble with your biggest asset and not employ a well rewarded professional agent that has the skill to create competition, negotiate and drive the price up to it’s maximum? Strike is a gimmick, a smoke screen of perceived value that won’t last. Just my view. More importantly it is a distraction from an improving offering to home movers (generally speaking)
jasonmichael
“Why would you gamble with your biggest asset and not employ a well rewarded professional agent that has the skill to create competition, negotiate and drive the price up to it’s maximum? “
Maybe because that’s not what a proportion of the homeowning public see Estate Agents to be? They don’t see “well rewarded” – they see “expensive and unneccessary”. Nobody knows how wrong that is – and has fought to change that view – more than me, but you cannot deny its’ existence.
Thankfully it has never been a widespread belief. But the Purplebricks’, emoov’s, HouseSimple-now- Strike’s et cetera of this world have spent countless £millions (of other people’s money) over the past decade-and-a bit promoting the demonisation of Estate Agents as sharp-suited, overpaid ‘house-mongers’ that add no value whatsoever to the selling process. The old saying that botty-waste sticks is no fallacy – and as the public’s perception of the part that a portal listing plays in the marketing process (via a marked deck of cards being dealt by the portals themselves…) becoming one of absolute necessity to secure a buyer, looking for cheaper ways of just getting that basic “necessity” is the name of the game.
Do you think that portals would bat an eyelid if every High Street Agent in the UK was forced to shut up shop? Not even maybe – they would welcome it with open arms. The online/hybrid model have no other tool in their box than the portals, and are their captive audience. The quickest route to Rightmove’s stated goal of £2500 per month ARPA (and Zoopla’s feeble claim to be riding on their shirt-tails to that holy grail figure…) would be if the High Street model gave up the ghost. What was left would pay up – and more – or wither and die on the vine.
Only in the last week or so Adam Day has stated that Rightmove is “good value in my eyes” (although he went on to eventually state that this view was in comparison to the cost of newspaper ads 20 years ago). To him they undoubtably are – he also stated that he is paying the equivalent of 50 branch subscriptions for his 230+ Agent network…
And let’s not forget – one of the main protagonists of cheap Agency was no other than the subject of this “article” – Mr Russell Quirk. Right up to the day his emoov business failed he was pushing the cheap Agency model; the ridiculousness of traditional Agency pricing and the lack of value that they brought to the table for homesellers.
A quote from the man himself, taken from HoA (November 2016):
“Joe and Jo Public have become, in effect, the agent. They buy what they want to buy, merely helped by the agent.
So why do you need an agent at all now if the info balance has shifted and transparency of data prevails? Because the agents’ job has become one of facilitation. As a conduit between buyer and seller and as a means of communication. The estate agent is now, by my contention, a concierge predicated around great communications and exceptional service levels. A hand-holder. A property usherette.
No longer do agents sell houses as such. And they should be paid accordingly.”
If the man was to be given a penny for every word he should be made to eat, he nor the next seventeen generations of Quirks would ever have to work again.
The Estate Agency Act make it clear that an agent must disclose any material interest in connection with the sale of the property to the vendor. They are also required to disclose before an offer is submitted any material fact i.e. mortgage arrangement/commission to be earned from the buyer/offer being accepted and notified in their terms of business.
This raise the ugly head and questionable practice of ‘Strike’. If they impose a requirement to purchase using third party service at a cost where they receive a financial benefit = illegal under the consumer protection regulations?
Are you telling me they will sell ‘no free’ and not put pressure on the buyer …… and go bust with no commissions coming in. I foresee the regulators taking a serious watch on what goes on.
We tried to buy emoov, I don’t think it was a bad opportunity. I believe we came second our bid was just under mashroom. But not entirely cash.
Surprised they haven’t done more with it.
We all learn in business from our successes and failures. Russell is no different. I think we can all sometimes forget this and maybe should cut him some slack.
His point here is valid strike can’t work long term and provide a good enough service and be profitable in any meaningful way.
But are the business backers thinking super long term build a brand become the biggest online agent then charge a small fee, then slightly more etc.
With rising minimum wages and costs in general I know I couldn’t make it work. But who knows.
Kristian – Would you agree the same should also be said of Goodlord? Millions of pound worth of investment and still losing millions per annum.
“…as he (Quirk) learnt when he ran Emoov, which no longer exists.”
Erm… I think you will find it does – in a fashion. Quirk’s failed “£100 million” business was bought out of administration for nineteen pence and a piece of HubbaBubba – but three years down the line and less than three dozen listings to show, I would imagine that the buyer (Mashroom) probably now regrets being the highest bidder.
Strike, or “*****” as they’re known as in my area, are an estate agent for people who simply don’t like estate agents.
First, you have a client who doesn’t see the value or benefit to using an estate agent, and so they simply want the cheapest option. So, they go with Strike and pay nothing. They then get a lousy service, which effectively VALIDATES there low opinion of estate agents.
In that case, everyone’s a smug old winner.
But as I’ve said many times before, the public aren’t stupid, and they can spot a phoney a mile off. Which is probably why they, and the other online agents struggle to gain any real meaningful market share.
Surely this is simply a question of long term commercial viability? The company (having rebranded from HouseSimple) has been in existence now for over a decade. Despite that, losses continue. January’s filings at CH shows cumulative losses of nearly £55m to date with £5m lost in the last financial year. However, those losses were when they were operating/marketing on a regional basis. The decision to go national, with a substantial TV campaign, will likely dramatically accelerate those losses. If they haven’t turned the profitability corner after 11 years- will they ever? At what point do its backers refuse to dip into their pockets again?
“…cumulative losses of nearly £55m to date with £5m lost in the last financial year. However, those losses were when they were operating/marketing on a regional basis.!
Sorry – but that’s not correct. House Simple were “national”, but then withdrew their offering nationwide and retreated to the ‘North’. Much of their accumulated £55 million loss was made when they were trading nationally – and don’t forget that was after several squillions of “investment” having been spaffed royally up the wall too!
There is much debate about whether the business model works, or not and not enough about the calibre of those in charge.
Just because Purplebricks, EMoov and Strike can’t make it work doesn’t mean to say the model is flawed – simply that those in charge weren’t capable of making the model work.
Lets face it the industry is full of people who like to hear the sound of their own voices even if they failed miserably with their own business or have never actually done the job themselves. The Quirkmiester has a point and as for doing something right, its not right, its “FREE”, of course the general thick public are going to use Strike or whatever they change their name to in the future, its “FREE”.
Is it sustainable? I don’t think so like a lot of businesses in all sectors that “want to change” how things work, it will be an annoyance for a period and then it will disappear…………..or possibly come back with someone else’s money under a different name.
The public aren’t interested in whether or not the agent makes money but what they are (or should be interested in) is how the ‘service’ they receive (questionable in my opinion in this particular example) is funded.
Are they being given best advice on mortgage requirements? Just how much is the referral fee they receive? What happens to their personal data? Is the conveyancer they’re referred to really ‘best in class’? Or is it a question of who gives the highest kickback – which is then simply added to the conveyancing charges that the client pays anyway?
As I said, the client doesn’t care if it’s a ‘ridiculous business model’, all they desire is the best outcome. Are they going to get it from Strike? I would argue not a chance.
So far as the lack of any real transparency on referral fees is concerned or how firms like Strike actually get paid is concerned, it’s an utter disgrace and the sooner this changes the sooner these companies with their misleading ‘sell for free’ slogans will disappear.
Not forgetting that good quality, reputable and professional full service estate agents more than cover their commission by demonstrating mastery in marketing, customer service and negotiation and thus deliver outstanding prices and outcomes for their clients that exceed their actual cost. Does that count as free?
Great thoughts and insight Mike
Mike, we are on the same page with this one.
People love the concept of ‘Free’ but as the adage goes, there really is no such thing. It will appeal (and be effective) for the die hard FSBO vendors who for various reasons won’t use an agent. In becoming king of that pile, it may eke out a profit, but not easily. It’s revenue model relies on upsells, upgrades, cross sells which I’m not a fan of in this sector as it lacks integrity and carries moral hazard.( just look at the referral fee bad read to date). Given the size of the fsbo/online sector and it’s limited penetration so far, it will be a long slog.
I can not disagree with you ‘AA’ – a well thought out comment
Given they are targeting directly people who cant see the value in paying an estate agent to achieve results you have to wonder how successful they are selling ancillary products and making referrals.
Strike is just another example of the commoditisation of a service to its lowest form. The same is happening with surveys and the increasing amount of desktop valuations.
Clearly the thinking behind Strike is that most estate agents are pretty lazy and that most of the profit is in added services. To some part this is true as many agents couldn’t sell their way out of a paper bag never mind closing the client for more services.
Yet again, the man whose incompetence took his own company down, thinks he knows how others should be run! Bizarre?? It’s almost as though he doesn’t want anyone else to succeed, because he couldn’t.
Putting aside the background of Mr Quirk, a question to you Mr (or Mrs) Carlsberg, what do you think to the long term viability of a no fees estate agency is, especially regarding the future referral fees (with which Strike are basing their EA model on?)
It’s not appropriate to glibly dismiss quirk’s past, claims, posts, comments or rudeness for the sake of discussion of criticism about one of his competitors.
This all feels a bit click-baity and troll-ish
Robert – I wasn’t asking the Carlsberg poster to dismiss Mr Quirk’s past, just put it aside Mr Quirks history – as i was just asking the Carlsberg poster about the viability of the Strike in their opinion on the topic (without the shroud of personality surrounding Mr Quirk)
Yet, you brought up some very valid points
Has Mr Quirk been wrong about things and rude – yes, I agree with you, he has.
Has he offended people? Yes he has – yet there isn’t a right in British law not to be offended
Is Mr Quirk trolling? Trolling is described as a someone doing something for trolls amusement, or to achieve a specific result such as disrupting a rival’s online activities. Some would say Mr Quirk is trolling, to some I can see why they would say that. Yet to others, he is giving his opinion. He doesn’t have another estate agency (he had to close his last one because it ran out of money – so that dos kind of give him an insight to running a national online estate agency – even if he did *** it up)).
Well he is known for his polarising points of view and looking at the number of views and comments, this is the sort of posts the Estate Agency population is attracted to…. and most people would agree it would be a dull old world if PIE was just full of those advertorial posts that Proptech suppliers chuck out.
Do I agree with Mr Quirk on his overall points of view? On some things yes, and many no … yet I create these videos, at my own expense, because i get to talk to interesting people that I hope others in the property industry will also find interesting. That doesnt mean you (or i) have to agree with him though.
Thank you for your thoughts Robert and thank you for all you do to fly the flag for this awesome industry
I find it objectionable that too many people are attempting to sanitize the past and align myself with those whose professional standing and practice he has besmirched, who are quite rightly irked by his repeated mention or presence.
He might have a talent for PR but what is going on here isn’t that; it is promotion of brand Quirk and an attempt to make what is unacceptable to a lot of the practising agency professionals (rather than their service suppliers) all chummy and forgiven without an appropriate apology. Acknowledging error is not the same as sorry
I’m not interested in opinion that changes to suit the occasion and that’s what is going on here. If he got a gig with a disruptor his spots would change from leopard to cheetah faster that cheetah can run
Take a look at Quirks twitter bio. He claims to have built a 100 million pound business! Emoov as we all know went into administration, owing investors ££££. Amazed people give Quirk and his opinions the time of day. Too many people have short memories.
Have they made a profit yet in the areas they’re open already? 3 years is easily enough time to cover your initial outlay and be in profit. Or are they just expanding using investors money? It’s like going to a restaurant and not charging for the food but only the optional drinks and optional service charge. What do you think the quality of the ingredients would be?
I like your analogy of the ingredients – although looking at the calibre of some of the agents on their payroll – they do have some some decent people.
Their boss, the lovely Sam Mitchell posted only a few days ago that Strike had either the most or second highest number of listings in the UK since the 1st January this year – they must being doing something right??
I suppose the question is EAMD172, can they get sufficient market share before the money runs out on advertising? Yet, they do have the Channel 4 TV deal (where equity is given away in return for shed loads of TV ads)
Only time will tell on Strike I suppose?
Quirk or Dunstone? Two of the great business minds of our age. Which would you put your money on?
Strike is both brilliant and useful. If I were an agent I’d thoroughly recommend vendors use them in preference to my closer competition.
“Sorry we charge a fair fee for the professional service we offer, if you’re looking to save a few quid save a lot and use Strike; they offer a similar service to the other agents you’ve mentioned but don’t charge anything to whack you home on the web and wait for a buyer.
As for the viability of the model, they must be doing something less unviable than those who have closed; they’re still trading
I actually find this lot the worst of the lot. They mislead the public with their “free” offering. They mark up solicitors fees by around £600-700 – I have seen a copy of their terms of business sent to me anonymously by an another agent. I don’t like anything they stand for. Also, they are not viable, they are running at a huge loss on borrowed investor money. How these people are daft enough to keep throwing good money after bad beggars belief.