Online agents will take market share not by being cheaper, but by being better.
The prediction has come from Sam Mitchell, who became CEO of HouseSimple six months ago.
He took over from Alex Gosling, who moved to become president of the firm he founded with his wife Sophie in 2007.
Mitchell was the youngest ever director at Foxtons, a regional MD for Your Move and, briefly, CEO of UK Sotheby’s International Realty, before becoming head of lettings at Rightmove.
This January he took up his role at HouseSimple, which has been heavily backed to the tune of some £18m by Carphone Warehouse founder Sir Charles Dunston and his business partner Roger Taylor.
In his new role, Mitchell speaks like a man on a mission.
He believes that the home buying and selling process should be hugely simplified, and he does not rule out HouseSimple being the number one agent in the UK – although he admits that this ambition would be “a stretch” at the moment.
He told EYE: “I’ve spent almost my whole career selling properties, although in traditional agents.
“I believe that for online agents to succeed, it will not be enough to be cheaper – we must also be better.
“If we are going to take more market share – currently around 7% – we need to put people really in the centre of everything we do, so that they feel more in control of the transaction.”
He said that the aim is for HouseSimple to reduce the selling process to six clicks.
Nevertheless, he has his IT team on the case, likening it to Steve Jobs’ insistence that when iTunes launched, users would be able to find what they wanted with one click.
He thinks technology will fundamentally transform house buying and selling: valuations and viewings will routinely be booked online, and sites will have ‘buy now’ buttons.
One of the first things Mitchell did on arrival at HouseSimple was to ditch the pay upfront model – it had charged £695 upfront, or £1,495 on a ‘no sale, no fee’ basis.
He said: “I read EYE each morning and it’s clear to me that the main vitriol shown by your readers towards online agents is that they charge whether they sell the property or not.
“Purplebricks is a listing agent, but we’re not, and I genuinely think our proposition is better than theirs. Plus we don’t tie people in to conveyancing.”
Another soon-to-be differentiator is that HouseSimple’s local property experts will no longer be self-employed but employed – “We’re making the transition now”.
He plans to grow revenue, do a lot more marketing, and move into lettings.
Over what he calls “a matter of years”, he sees no reason why HouseSimple should not be the UK’s top agent.
“We are not in this for the short term,” he says.
But doesn’t this depend on the patience of the backers?
He agrees that, with “a big job on our hands”, none of this would be possible without substantial backing.
Unlike many of his peers in the online sector, Mitchell is relatively cautious about the future, believing that around a third of traditional agency branches will close over the next few years, with the online sector taking up the slack.
He told EYE: “I think that within the next three to five years, the online share will be 30%, with more offering a hybrid type of model.”
He is also sceptical of claims that there will be further consolidation in the industry, following Emoov’s acquisitions of Tepilo and Urban.
Consolidation sounds logical, he says, but he hints at limited opportunities, querying why an online firm would buy another unless it had a better brand than its own.
It is not possible to be better than #local agents. It just isn’t.
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Possibly one of the most arrogant things I’ve ever read on here, which is some achievement.
There are many, many local agents that are absolutely terrible. A lot of them because of the belief that they can’t be improved.
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totally agree, I think that comment is ONE reason why some of the online models might just succeed
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Unfortunately NAD and DK it isnt arrogance it is the truth.
You are correct there are many awful High St agents around, but for all their bluster, PB, EMoov, Teplio, HS are in this grouping. In my experience these hybrid/call centre agents dont offer anything like the service a good high street agent offers. They dont check chains, dont often clarify a buyer position, dont do anything proactive about selling a clients property or progression a sale. These are all things a good estate does and does well.
So to clarify the Call centre brigade are as good as some awful high street agents, but will never ever offer the high level of service that a good professional local estate agent does.
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#NAD32 – You think Robert May is refering to all local estate agents?
You must be new here.
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In your rage you’ve whacked your keyboard a bit too quickly and not realised I might have information available to me not available to you. I haven’t specified traditional are better. I said #local. Where I’m sat now the local agent works from a non ITZA office and is purely online.
So strong is #local around here the nearest corporate office is 60 miles away.
It is not possible to compete with agents who know and are known trusted and respected in their local community. That might be an online passive intermediary but they will only be #local to one of the activity centres they claim to cover.
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Sounds great, but how are they going to pay for all of this goodness on an average fee of £1000……Once again, the numbers don’t stack up?
zzzzzzzzzzzz………. I get bored of repeating myself.
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Volume and market share is the only way it will work, and enough money to keep funding the building of the brand. That is the greatest risk they all have at the moment…. He does make a fair point, cheap will open doors, but the property owning democracy will not stand for bad service and results. And of course there are lots of un plugged agents to chose from now…you know the sort with a glass tower and an 0800 number
Why are they here in the first place…because clients believe that fees are too high for what they get from a real brick estate agent…so the industry does need to take a long hard look at itself! We need to be better. It speaks volumes when I had a chat with a fund manager the other day, and he had the cheek to say agents earned too much out of each sale…I reminded him of what his compound fees do to his clients…equating to 75% fees of payments over a term. BAM in the best batman fashion !!!!!!!!!!!!!!!
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I never understand the differentiation inferred by the word ‘hybrid’.
The real difference is between ‘Full Service’ and ‘Call Centre Service’. One is locally based and knows a great deal about the immediate area sales microclimate…..the other is there to try and save money at the cost of knowledge and experience.
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Sam Mitchell’s approach sounds like a far more measured and pragmatic approach to this particular business model and, to coin a phrase, it might just work!
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They are all get rich schemes. Honest agents tried the online model even 12 years ago. We even charged upfront in 2008 and stopped after a few weeks because if felt immoral.
Only the founders and shareholders benefit when they cash in shares.
The customer loses 1000’s on their home through poor negotiation skills and reduced asking prices.
You can’t d I y your home sale and govt. Should wake up and protect its citizens
Good day!
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I stopped reading after the mention of ‘Buy Now’ buttons. If only estate agency was so simple.
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Could estate agency not be simpler, or is that just a beautiful dream?
What if vendors were willing to produce a ‘Home Information Pack’ that included an independent homebuyers survey report, photos/VR-tour, the title, property information forms, searches, management pack and grant of probate (both where applicable), and the EPC; why would a ‘buy-it-now’ button not work for chain-free sales?
Seemingly, homeowners have now come round to the idea of paying £1,000+ to market their home, whether they sell or not…
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‘Could estate agency not be simpler, or is that just a beautiful dream?’
If you could take out all interactions with real people and exclude any personal emotion, you might have a chance.
‘Home Information Pack‘
We’ve been here before.
‘Seemingly, homeowners have now come round to the idea of paying £1,000+ to market their home, whether they sell or not…‘
Really?
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I have had the pleasure of meeting Sam a few times.
He is focussed and intense in the roles he lands, but he does not last long in them. I think this is his sixth position in almost as many years. I wish him well but doubt very much if he will be there in 18 months.
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If someone backs you to the tune of £18,000,000 you can basically say what you ****** like, truth or **** because at the end of the day you’re going to walk away with more wedge in your back pocket that most of us mere mortals will see in our lifetime.
Morally wrong but seems to be the way the world is heading, spin a yarn, get a bunch of hoorays to stump up the cash on the emperor’s new clothes then slip away after selling a few million shares .
No mention anywhere of the customer who gets dragged into a cash making scheme that they will never benefit from !
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“I read EYE each morning and it’s clear to me that the main vitriol shown by your readers towards online agents is that they charge whether they sell the property or not.”
No, Mr Mitchell – your clarity is badly misplaced.
The fact that they charge “regardless of sale” is only one symptom of the pestilence that has infected our industry.
“The main vitriol” towards ‘online’ agents is due to the abject misleading, misinformation and general *********** (credit: Jonnie) that they openly use to secure the business that they then do little to bu99er all with other than slap it on the portals and see what happens – because they simply could not exist without the internet.
But then having come from a company that secures its business by the same measures it is hardly surprising that someone like Mr Mitchell would be so morally anaesthetised to these things that they wouldn’t notice them coming in a souped-up Sherman tank.
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