A massive media spend by online agents has helped them grow their market share from 1.1% to 3.7%.
The conclusion is from GetAgent, but according to City analyst William Packer this morning, the share of listings on Rightmove is larger, at 6%. In a new note to investors, Packer said that Rightmove regarded online agents as “more friends than frenemy”.
GetAgent has published a fuller version of its research into the market, after causing a stir by giving a short presentation at the Proptech conference.
It says that the growth in market share came between January 2015 and January this year.
All the major online agents raised their media spend last year, compared with the year before, with the exception of Tepilo, which cut its spend from £2.7m to £1.3m.
By far the biggest spender was Purplebricks, which according to media analyst Nielsen upped its spend from £8.5m in 2015 to £10.2m last year.
Noticeably, YOPA raised its media spend from £560,000 in 2015 to £5.4m last year.
The GetAgent research also reiterates its findings as to sales rates over the 14-month period to February.
GetAgent claims that Purplebricks completed on 57% of its listings, HouseSimple on 58%, while eMoov and Tepilo completed on 51% and 48% respectively.
A number of vendors went on to instruct a high street agent. The highest proportion was 17% of Tepilo customers.
GetAgent also found that those who switched to a high street agent tended to do so quite quickly – almost 10% within a fortnight, and the highest proportion, nearly 14%, within 42-56 days.
In addition, it surveyed a small sample of 45 online customers who expressed their views about their use of online agents.
A spokesperson for GetAgent agreed that the sample was small, but felt the answers – which included a view that the online agent used appeared to lose interest once the listing was secured – were interesting and worth sharing.
The firm plans to repeat the exercise. Most of the information, she said, was derived from a study of Land Registry and property portal data over a 14-month period.
It certainly makes for interesting reading:
https://www.getagent.co.uk/labs/online-agents
In this morning’s note from Packer, of Exane BNP Paribas, investors were told that online agents’ share of listings on Rightmove is now 6%, up from 3% in 2014.
I would contest those numbers (bearing in mind I have clean data with all the duplicates and doppelgangers removed) but lets run with it, it is after all just an Oooh and an Ahh from a sycophant in the crowd marvelling at the fine and intricate detail of the Emperor’s new robe.
Millions and millions and millions of pounds have been invested to disrupt traditional agency to absolutely no effect other than to reduce average commissions in 5 years by about 0.1%. That reduction very probably has nothing to do with the internet listing, passive intermediaries; basic economic considerations of house price inflation offset by general inflation means a fee % drop doesn’t equate to a real term fall in turnover for the same volume if instructions. The market influences turnover more than the looky likey disruptors. Election, Brexit, Election is the true disruption, though I guess if you are trying to make a case for the success of a project those are influences too easily forgotten.
The increased competition isn’t a significant consideration, whether there is 1 or 30 cheap listers competing for business only one of them could win the business but most likely at the expense of the previously cheapest agent in town. It is the cheap agent who has most to fear from FSBO facilitators, those are agents that will naturally come and go as they always have done.
Let’s assume the numbers are correct, the average success is no better than traditional agency. If 6% of vendors are using internet listers 3% pay out money not to sell their home. 3% of 2 million listings a year means 60,000 sellers shell out on the 50/ 50 gamble of saving money. Using the transactional average of cash extracted from vendors rather than the advertised ‘honeytrap’ number 60K vendors spend up to £63.6million not selling their home or add £63.6 million to their eventual bill when an actual estate agent sells for them.
Despite getting, according to this analysis, £63.6m to subsidise the loss leader fees of those that do sell none of the firms seem to be making any profit.
If the firms aren’t making any money and are failing to disrupt the industry how long will investment patience last? I might sound like the kid at the back of the crowd but I don’t think disruption is working quite as well as the tailors reckoned it would. Never mind investors in one firm have made some money, investors in others seemingly are chucking money at projects in the hope of eventually getting some of it back.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
https://en.wikipedia.org/wiki/Ponzi_scheme
“A Ponzi scheme… …pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources. Operators of Ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent.
Ponzi schemes occasionally begin as legitimate businesses, until the business fails to achieve the returns expected.”
“the perpetuation of the high returns requires an ever-increasing flow of money from new investors to sustain the scheme.”
“The promoter sells shares to investors by taking advantage of a lack of investor knowledge or competence, or using claims of a proprietary investment strategy which must be kept secret to ensure a competitive edge.”
“When a Ponzi scheme is not stopped by the authorities, it sooner or later falls apart for one of the following reasons:
The promoter vanishes, taking all the remaining investment money.
Since the scheme requires a continual stream of investments to fund higher returns, once investment slows down, the scheme collapses as the promoter starts having problems paying the promised returns (the higher the returns, the greater the risk of the Ponzi scheme collapsing). Such liquidity crises often trigger panics, as more people start asking for their money, similar to a bank run.
External market forces, such as a sharp decline in the economy (for example, the Madoff investment scandal during the market downturn of 2008), cause many investors to withdraw part or all of their funds.”
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Every online lister should have to declare their FACSIS…..Fee Average per Completed Sale including Investment Subsidy…. to enable investors to make an informed decision about whether to invest or not.
They should also have to declare their FACS before they make any claims about saving money for sellers and this should only be allowed to be compared to the which reported average high street fee of 1.3% inclusive of vat.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
An excellent suggestion.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Then every agent nationwide should have to publish:
Number of instructions
Number of properties sold
% achieved of first asking price
Time on market
Not all online agents are the same in the same way that not all high street agents are the same. The vast majority offer a service which is not necessarily guaranteeing a sale. As far as I am aware, high street agents do not guarantee that either… Perhaps ask for your fees up front as well? Then at least vendors would know how much you are going to charge.
The only players in the space that guarantee a sale are the quick sale companies and the new player Nested. Might be worth listening to the guy who launched Nested, he has already exited from another start up for millions…
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Then at least vendors would know how much you are going to charge.
Observer,
I think it is a legal requirement to disclose that at the outset.
Also why do agents have to disclose all that you say to enable a member of the public to make an informed choice about ‘full service no sale no fee’? If they don’t sell it doesn’t cost them anything, and the reason for the vast majority of properties that don’t sell is that the owner wants more money than any buyer is willing to pay.
At the end of the day if you claim to save the public money against a ‘no sale no fee proposition’ then not to declare your success rate of achieving a sale is both misleading and deceiving.
Would the FCA allow any mortgage broker to claim that for everyone that paid them a fee of £1,000 that, unlike their competitors, they could get them a million pound mortgage at a lower interest rate to buy the house of their dreams…..and then keep all the £1,000 fees from the customers they couldn’t achieve that for?
No, I didn’t think so!
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
“If they don’t sell it doesn’t cost them anything”
Utterly ridiculous statement.
Opportunity cost. Not being able to buy another home.
Time. It costs them plenty.
It is not misleading or deceiving in the same way that you saying you charge 1.3% + vat is not misleading…
Your comparison is ridiculous as online agents are just saying we will market your property, do this, do that for x. An estate charges y. Here is the difference. Make a choice.
Lots of them are choosing online.
BECAUSE THE HIGH STREET CANNOT PROVE THEIR VALUE
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Take the blinkers off!
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
I can prove my value every time, otherwise I wouldnt get instructed.
Yes you are right that not selling costs people time and money. It also costs agents time and money for which they do not get paid, which is why most of us try and sell every single property we take on.
When a property doesn’t sell it is because no buyer is willing to pay the price the owner wants. I would suggest that is true whether it is an agent or an online lister. However a local agent is more likely to find a buyer that does want the property, so the owner is less likely to waste his time using this route, and if it doesn’t sell the Vendor would have wasted a lot more time using the ‘part self sale online lister’ method.
However let us be clear about this….per property sold, until proven otherwise (through declared FACSIS), is more expensive the online listing way, than my average £2,000 no sale..no fee.
And for that, with us, the Vendor gets the full service from start to finish, including fully accompanied viewings, negotiated best sale price and contract chasing through to completion. Owners don’t have to do any part of the selling themselves apart from give us access for viewings.
The online listing methodology gives no incentive whatsoever for the property to be actively sold at the best price achieveable. Why do you think the online listers will not declare their success rates and FACSIS figures?
By the way the average 1.3% is inclusive of VAT not plus VAT
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
>I would contest those numbers (bearing in mind I have clean data with all the duplicates and doppelgangers removed)
What are you suggesting about GetAgent’s data Robert? Do you think they can’t check 500 listings for duplicates?
They have looked at 500 PurpleBricks listed properties from January 2016 and looked at the number that have completed in a 14 month timeframe which would be 285 if they are saying 57%.
If you are suggesting there might be duplicates in that sample of 500 then conversion figures would actually be higher as it would be 285 completions from fewer than 500 properties. Likewise if there were phantom listings or bats out of hell.
Buyer beware the salesman and their ‘sales speak’.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
cyberduck…
I hereby formally invite you, to comment on a story, that does not include the words ‘Purple’,’Bricks’, ‘purplebricks’, ‘pb’.We get that you are an investor in PB but all you ever do is complain about everybody else who doesnt agree with you and how ‘amazing pb are’.Either throw away the scratched record. Or start to comment on other stories as well.
PLEASE!
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Frown Please
Ducky has no further interest whatsoever in our industry other than his financial interest in Purplebricks’ share price.
Even as a vendor, he seemingly considers that a wildly optimistic pricing structure with several significant reductions to achieve an offer that, if I read what he said correctly, is somewhere in the region of what a High Street Agent told him would have been achievable a year or so ago, be in his opinion “a positive experience”.
Never before have I seen, or heard of, a duck wearing rose-tinted blinkers – but it just goes to show you that however improbable something may appear to be, nothing is impossible.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
These completion numbers seem high to me. In my area only around 35% of PB listings change to SSTC and no doubt a reasonable percentage of these will fail to complete.
By comparison, the better high street agents convert from FS to SSTC at between 70% to 80%
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
That’s quite good compared to my patch. All 4 PB instructions have failed to sell. 3 of which have since disinstructed them. Dire photos, over priced them, £1k down the swanny. It’s proved useful when “online” agents gets mentioned when out pitching to new clients.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Well said Robert. Also, to my mind, the full service indepependent industry has not yet introduced a ‘disruption’ to disrupt the supposed disrupters. But it is on its way!!!!!
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Given that YOPA raised its media spend from £560,000 in 2015 to £5.4m last year it will be interesting to see what coverage the Daily Mail give YOPA in the coming months now that DMGT have invested in them.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
What we really need it High Street agents to share our videos or contact us for a generic one to use for there own marketing https://www.youtube.com/watch?v=IZGxeatlw2Y #ConMisery
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
I dont get it…love the wig though… . great advertising for you locally though…wheres my script ? i ‘d share that 😉 ( and do one without the logo…. dont ask for much do i.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
I recommend everyone to watch this video. It’s well worth it!
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Well said Robert and the story really does highlight what lemmings some investors are. The information is there staring them in the face that years down the road, more and more millions has to be pumped in and NO RETURN. It is a scandal. The only winners are the brokers pumping up a lame dog and “investors who are share traders”, not in it for a dividend. Not forgetting the fat cats at the top. Sounds more like a banking scandal.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
You do understand that not many investors look for a dividend these days?
I suggest reading Ed Thorp’s book.
You might learn something about investing, compound interest and the rule of 72.
Or, as he isn’t a high street estate agent he is presumably an idiot who doesn’t understand anything…
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
LOL.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
The growth of market share for millions of marketing is not news. If any agent (of any quality) had millions to spend on marketing we too would grow our market share- shock horror. I still await the day when the fee earned rises above the cost of acquisition to a level that can maintain a profitable business. It will be intrigung to see how long a rope they get given. It will also be interesting to see what impact the immediate cease of EIF has on future funding for them. How many of these can keep losing millions each year, every year? I suppose only time will tell.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
“Purplebricks Group PLC (AIM:PURP): Dividend Growth in the Spotlight
Geneva Contributor | May 17, 201
Purplebricks Group PLC (AIM:PURP) currently has a 10 year dividend growth rate of 0.00%.”
https://genevajournal.com/purplebricks-group-plc-aimpurp-dividend-growth-in-the-spotlight/
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
I’m sure “Observer” will come up with some reason to support this is good news for investors!
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
PeeBee’s Saturday Morning Musing
This Get-a-Gent (sorry – old habits die hard and all that…) report states
“With £45 million spent on TV and Radio by online estate agents in the last two years, it might come as a surprise to learn that only 30% of people interviewed heard about their online estate agent from watching TV.”
OUCH! What it doesn’t tell you, of course, is the number of paid listings those Agents actually had.
What do we reckon, then – years 2015 and 2016; all of the ‘digital disruptors’ rolled into one big purple/orange/babysick-beige coloured lump to make a decent property pile? 40,000? Fifty thou? Sixty, maybe?
What the heck – let’s be uber-generous with our estimates (after all, statistics and wild exaggerations meld into one in the alternative universe we know as Call-Centre Agency…) and give them an EYE-watering ONE HUNDRED THOUSAND listings over a two-year period for the purposes of this exercise. That would more than cover their stated market share
A spend of £45,000,000 cut into 100,000 bite-size chunks breaks each bite down to a mere four hundred and fifty pounds.
What’s that – 60% or so of the average onlinie’s VAT INCLUSIVE listing fee?
Like I said above – OUCH!
But… hang on… the report suggests that from a representative sample of CCEA customers
“…it might come as a surprise to learn that only 30% of people interviewed heard about their online estate agent from watching TV.”
And radio doesn’t even appear on the radar or they would have mentioned it.
SO… that being the case, it would suggest that the cost (verified) per listing (TOTALLY unverified and blown up out of all proportion) brought -or should that not be bought – in by said media advertising lies somewhere around one thousand five hundred pounds.
As that annoying saying goes –
“Do the math(s)”.
Whatever figures you insert, OUCH! doesn’t even start to cover it.
When you think about it, the accountancy method known as EBITDA was probably created with them firmly in mind…
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Our interstellar mallard appears rather quiet of late. Is he a little ‘down’ or has he finally quacked?
(I’ll get my coat)
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
The prospect of a social media “discussion” with a vendor who’d been given a negligent valuation by a local property ‘expert’ with only 9 months industry experience (total), none local and who failed to get a single enquiry or viewing in 10 months is probably the reason why.Making a profit on share trading more than the value of the property in question was looking like an epic threat to the whole charade. With no ability to undermine her factual account of the pain, stress and suffering caused by listing system that will take any listing at any price it is no wonder he’s flown off. The possibility of discussion getting onto threat to the vendor of a CCJ for a failure to pay a loan the negative equity vendor wasn’t aware of will probably ensure he doesn’t come back in a hurry.
Pity really I was looking forward to clarifying that our system has now been independently verified in its ability to identify breaches of the portal’s trading conditions, separately breaches of redress scheme and NAEA codes of conduct as well as the activities that constitute breaches of CPR ( price juggling) and breaches of BPR (falsifying listings and performance statistics)
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Are you referring to me Chris?
I am still here and will be popping in from time to time but to be honest it’s just the same thing being said by the same people. As far as I’m concerned Robert May and yourself are wrong and as an investor with many years experience and a customer of PurpleBricks I’ve offered my opinion on all these discussions and am not going to continue on a daily basis as it doesn’t have any actual efect on anything. Essentially you are just talking among yourselves, reaffirming your oppinions on a daily basis.
It’s clear some people have a lot of free time on their hands which doesn’t say much for their actual success in business. I’m actually retired but have better things to do 🙂
On May 14th I tried to comment on your blog which now moderates posts and my post was not accepted. When I commented on your linkedin comments my response was removed. I would suggest to any new readers of your arguments that they ask themselves why my responses are being removed.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
probably because you are too biased and believe your opinions to be fact.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Just read the GetAgent article and interestingly they say here that “agreed that the sample was small, but felt the answers – which included a view that the online agent used appeared to lose interest once the listing was secured – were interesting and worth sharing” but then in the article summary they actually use this small sample of data to claim “remember that they are driven by the upfront fee”
To come to a conclusion based on a sample size of 45 is either naive or disingenuous and you have to ask whether GetAgent are independent and even qualified to make the conclusions they are coming to. PurpleBricks have had tens of thousands of customers and anybody with any experience in surveys know that somebody with a bad experience is far more likely to respond than somebody who is happy.
My own experience with PurpleBricks has been nothing other than positive. When my sale fell through based on survey results the Local Property Expert offered to call around and go through all the points on the survey with me. Luckily I managed to get the sale back on track but it’s clear to me that these LPEs are building a business and if any of them are short sighted enough to not be interested in whether a property sells then it will soon become clear to their local market and the company themselves.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
“When my sale fell through based on survey results the Local Property Expert offered to call around and go through all the points on the survey with me.”
Funny, that… it is more usual to “go through all the points” with the buyer. It is them who need reassuring of their choice of home – not you.
“Luckily I managed to get the sale back on track…”
YOU shouldn’t have had to. It’s what people pay their Estate Agent to do.
“To come to a conclusion based on a sample size of 45 is either naive or disingenuous…”
Ahhh – your signature tune! Very rare is it that you don’t manage to squeeze a suggestion that someone or other is being disingenious into a post. In fact – it seems that by inferrence of pretty much everyone you interact with being in some way, shape or form, it seems that your belief is that everyone is disingenious, bar yourself.
Funny, that… although I suppose I am offering a conclusion based on slightly less than a sample size of 45 so i know what’s coming!
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register