As scary Halloweens go, yesterday was quite a shocker for Britain’s online estate agency sector - and not in a good way.
During the day Purplebricks’ share price - which earlier this year was approaching an extraordinary 500p mark - sank another 3.6 per cent and ended trading on the London market at 177.7p.
“A slowdown in the housing market has caused investors to become increasingly cautious despite the continued transition of the estate agency industry towards online” says the Motley Fool investment blog, which claims Purplebricks has under-performed the FTSE 100 by more than 40 per cent so far this year.
Then in the evening came news that Emoov was up for sale; the Sky story which broke the news described Emoov as showing “signs that it is facing a cash squeeze.”
Sky, citing unnamed sources, said traditional estate agency Foxtons was in talks as a potential buyer.
As recently as July, Emoov chief executive Russell Quirk told potential investors that if the company was floated on the stock market it could be worth £120m to £150m and suggested revenue could increase multiple times in 2019; he also hinted at a desire to get involved with Countrywide.
However, when EAT reached Quirk yesterday evening he said he could not make any comment.
Yesterday’s news came only five weeks after Connells closed its online service, Hatched, with immediate effect.
“We have thoroughly tested the hybrid model and have reached the conclusion that it does not produce a viable economic result – evidenced by the results of those operating in this sector – and with the cost of customer acquisition being one of the main barriers to being able to deliver a profitable return,” said David Plumtree, Connells Group estate agency chief executive.
Emoov has been in the news frequently in recent months.
A few weeks ago Quirk penned a LinkedIn statement hinting that online agencies may not be able to break through and achieve the market share he once hoped. A few days earlier, Adam Day - ironically, the man who founded Hatched in 2006 - quit as Emoov’s head of estate agency.
Both were unexpected developments for an agency that had snapped up Tepilo and lettings platform Urban a few months earlier for a reported £100m.
Charlie Wright, the software entrepreneur behind Best Agent and a strident supporter of traditional and particularly independent agents, said in a comment on EAT last evening that it was never pleasing to see an enterprise fail but the Emoov sale “should make people reconsider what agency is all about.”
He added: “This is good news for conventional, full service, in-person agents who have stood their ground and defended their industry. You can’t commoditise personal service. Helping people move house is a complicated, emotional gauntlet that affects people’s lives. It needs the human touch, in person, to help ordinary people through an often traumatic process at a difficult time.”
London estate agent Rollo Miles, in another comment on EAT, said of the Emoov news: “Good agents need to make a living and the current race to the bottom in fees led by the discount up-front fee-charging agents has not helped the industry but only made it worse …The industry does need to change but online up-front fee agents are not the future."