Purplebricks' share price moved up over two per cent yesterday on the strength of its latest trading statement - but its performance was the subject of more sharp criticism from other players in the industry.
Speaking in a debate on agencies at the annual Future: PropTech conference in London, Northwood managing director Eric Walker said Purplebricks' performance had indeed been a phenomenon but that it needed to sustain and expand.
He said it seemed clear Purplebricks was eclipsing rival online operators, but that there was not yet evidence that it was expanding the overall size of the online sector beyond five per cent.
But the biggest criticism of the hybrid came from Matt Robinson, the creator online agency Nested, who described himself as an "insurgent" in the industry. "My take is simple - Purplebricks is Ryanair for estate agency" he told some 400 delegates at the event.
He said there were three problems with the Purplebricks model. Firstly, its fee structure created a race to the bottom; secondly that it was creating an arms race and was "prepared to spend more than anyone else"; and thirdly that it produced a Ryanair image.
Robinson, whose Nested operation is described by some as a chain-breaking estate agency operating without High Street premises and offering guaranteed sale prices to clients, then claimed that Purplebricks provided his firm with clients who failed to sell through the hybrid.
In the same debate Alison Nunez, divisional managing director at traditional agency Andrews Property Group, said that her agency, too, "picked up a lot of failed clients" who used online agents, which did have some impact on fees.
At a separate debate in the same conference, Colby Short - founder and chief executive of agency comparison website GetAgent - revealed that he had looked at 500 new listings on Purplebricks in January 2016 alongside all those properties listed on rival services Tepilo, HouseSimple and eMoov at the same time.
"Purplebricks' home owners completed on just 57 per cent of the listings from that month. HouseSimple fared best but only completed on 58 per cent, while eMoov and Tepilo were down at 51 and 48 per cent respectively" says Short.
The discussions at the conference - attended by some 700 people including 400 industry delegates and around 300 PropTech professionals - followed the release of Purplebricks' latest figures showing a rise of instructions of some 83 per cent and a further increase in its number of Local Property Experts.
Angels Media was the official media partner of the Future: PropTech conference and Angels' content editor Conor Shilling compiled a detailed summary of the agency debate involving Eric Walker, Alison Nunez and Matt Robinson.
Also in the debate were Rob Symes of Rightmove, Kristjan Byfield of Base Property Specialists and Richard White of rental platform Goodlord. The debate was moderated by Estate Agent Today editor Graham Norwood and you can see the full debate summary below.
Panel: Rob Symes, Rightmove, Eric Walker, managing director, Northwood, Kristjan Byfield, founder & chief executive, Base Property Specialists, Alison Nunez, divisional managing director, Andrews Property Group, Richard White, co-founder & chief executive, GoodLord, Matt Robinson, founder & chief executive, Nested.
Moderator Graham Norwood kicked off the discussion by referencing two of the biggest PropTech themes that have developed during his time as editor of Estate Agent Today. The first is portals and specifically who owns agents' data, why agents pay to list and the issue of data scraping. The second is the emergence of online estate agents and whether they have denied quality of service or pioneered technology that traditional estate agents should be looking to emulate.
The panel were then invited to introduce themselves and their companies and explain how PropTech is influencing their business. Matt Robinson of Nested kicked off the conversation by saying that his firm is an estate agency that 'puts its money where its mouth is' and provides movers with the opportunity to make their next purchase before they've sold their existing property.
He said that as well as traditional property sellers, Nested is keen to 'work with more agents'.
Robinson said that he felt one of the biggest challenges facing the industry is how 'new insurgents work with incumbents' in order to create the 'best outcome' for consumers. He stressed that agents should be adapting to provide 'whatever is right for the consumer'.
Alison Nunez, who joined Andrews just six months ago, said that the 80+ branch chain is currently 'revisiting customer experience' and where to bring tech into the process.
Northwood's Eric Walker then said that he doesn't 'care' about the threat posed by online agents. "It's not that we're complacent, far from it," he said. He went on to suggest that online estate agents generate '95% of the headlines', despite having just '5% market share'.
Walker said that he is more interested in the 95% of the service that is available to consumers.
He then went on to explain that online agents have implemented some 'innovative tech', saying that 'everything they're good at, we plagiarise'.
The Northwood chief then said, however, that he believes his firm has been a pioneer in the PropTech space. He said his firm had been using tech solutions such as Fixflo, Yomdel and ValPal long before online competitors.
Richard White of Goodlord said that when he used to be an estate agent he found that too much of his time was spent in front of a computer sending emails, doing the same processes.
He also said that being a tenant is not always a 'great experience' and that at the moment neither agents nor renters are 'winning'. He said that his firm is on a 'big mission' to help everyone – give agents more time to 'do what they're good at' and 'make renting less shit'.
Kristjan Byfield said he started his one-office agency as he felt that there was an 'appalling attitude towards tenants'.
He said that the 'evolution of tech' has made it easier for agents of all sizes to provide a better service. Byfield argued, though, that agents have a 'responsibility to look outside the tech box and work on best customer service'.
The discussion was then passed to Rob Symes of The Outside View, which was purchased by Rightmove last year. He said that over the last ten to fifteen years PropTech solutions have focused on connecting agents with sellers and buyers, but that the next phase will focus on the 'transaction stage'.
Moderator Graham Norwood then asked the panel to comment on the day's biggest industry news story – Purplebricks reporting that it had increased its number of instructions by 83%.
Matt Robinson said: "My take is simple – Purplebricks is Ryanair for estate agency." The Nested boss then outlined three problems he has with the Purplebricks business model.
He said that their fee structure encourages a 'race to the bottom' which affects service, that it is creating an 'arms race' where Purplebricks are prepared to 'spend more than anyone else' and that 'no-one likes to fly Ryanair'.
Robinson then went on to say that Purplebricks provides Nested with one of its 'best sources' of customers. He said that people 'pay £1,000 to not sell' and that his agency then 'picks up the pieces'.
He said that he envisages Purplebricks to achieve further growth but that he doesn't see it as a 'tech business' but rather an 'agency without a shopfront'.
"Providing great outcomes for customers is the only way they can be successful," he said.
Alison Nunez agreed that Purplebricks will 'continue to grow' and 'get traction'. She noted the controversial hybrid agency's 'phenomenal marketing budget' and said that it focused on generating new business rather than 'service and the end result'.
She echoed Robinson's assertion, adding that Andrews 'picks up a lot of failed clients' who used online estate agents. She said that 'this affects us from a fee perspective'.
Eric Walker stated that he sees Purplebricks as a 'phenomenon' but that they have to 'sustain' their momentum.
He argued that Purplebricks has 'expanded in the online space', but hasn't necessarily taken market share from traditional agents.
Walker then said that he doesn't think online agents will reach the market share of 30% predicted by some, noting easyProperty's plight as well as its infamous mock funeral for traditional estate agents.
A question from the audience was then put to the panel. It centred on whether agents could justify charging 1.5% in commission in exchange for listing on the portals.
Eric Walker answered by saying that it's all to do with the customer service provided by the agent.
Kristjan Byfield said that people in the UK are 'obsessed' with agents' fees. He argued that a 1.5% commission fee is 'results based' and therefore provides 'incredible value'. He added that agents' fees in the UK are cheap compared to the rest of the world and that it is a subject that he feels the general public have been 'misled' on.
Speaking specifically about Purplebricks, Byfield said that the firm's 83% rise in instructions is 'utterly irrelevant for their clients' and that some of their figures have been 'dubious'.
Another audience question posed how PropTech can improve the tenant experience after they have moved into a rental property.
Richard White said that the process needs 'better aggregation of data'. He said that better communication between agents, coupled with a 'richer dataset' could encourage a more open and transparent process, paving the way for a 'better tenant experience'.
Alison Nunez said that in the property management space online communication websites for block management have provided a ‘big step forward in a tech sense’.
Kristjan Byfield said that the Property Software Group product PropertyFile has had a huge impact on his business. He said that it has provided a solution for overseas landlords who had problems accessing data out of UK office hours.
He also said he has been asked by numerous tenants why all agents don’t provide this service. Byfield explained that tenants don’t always want to take personal calls or emails during their working day and that this solution provides ‘acknowledgements’ and ‘push notifications’ and works to ‘resolve little issues’.
Graham Norwood then posed two additional audience questions to the panel: What tech have they tried to introduce in the last year and have they experienced any barriers when trying to introduce new tech?
Rightmove’s Rob Symes said that the key point is that ‘tech is just a tool’. He talked about the ‘high-tech, low-tech paradigm’ and how the best technology solutions – like Uber and Airbnb – have effectively teamed complicated technological processes with low-tech consumers solutions.
Agent Kristjan Byfield then added that he felt a range of ‘small changes’ can make a ‘big change overall’.
Rob Symes said that too often people get ‘excited by tech’. “Maybe it’s cool, but does it actually work?” he said.
Byfield then added that sometimes people see technology as a ‘Hail Mary’ that solves all issues when it doesn’t. He said it’s great that PropTech firms are focusing on specific market issues.
Eric Walker said his firm hasn’t experienced any barriers to introducing tech solutions. He added that there are a lot of ‘fantastic PropTech providers’ and that tech is making agents ‘more efficient’.
He then went on to talk about the impending ban on letting agent fees charged to tenants. He said that agents need to analyse how much income they are going to lose and that in this scenario, ‘tech is our friend’.
Alison Nunez said that Andrews has been working with a live chat facility and onboarding company. She said that these solutions give her agency’s staff ‘more time to speak with people on a personal basis’. She added that services like tenant referencing have become so ‘streamlined’ that they provide more ‘transparency’ and ‘one on one’ time for agents.
Matt Robinson said that people are changing and they want to sell properties in a ‘different way’. He said he doesn’t want to use the service his parents used 20 years ago, he wants to ‘interact differently’.
He added that agents using PropTech should not always be about efficiency and ‘lowering costs’.
Robinson said the best thing he has learnt from his own data is ‘who his customers are’, ‘who they are going to be over the next ten years’ and why they use his service.
Graham Norwood then asked the panel which agency activity they would want technology to improve.
Alison Nunez said that she would like to see a more streamlined sales progression process.
Eric Walker said the biggest issue is to do with affordability. He said there are ‘savvy buyers’ but no one ‘can afford to buy’. He said that tenants should be ‘rewarded for paying rent on time’ and that rental payments should be included in credit scores.
Kristjan Byfield said he would like to see technology improve lettings regulation and compliance. He noted that the rental sector in the UK is one of the most legislated in the world. He said he wants to see something bring ‘transparency and compliance to the fore’ in order to ‘drive up standards’.