Ian Wilson, chief executive officer of The Property Franchise Group:
Purplebricks has proven that the public has an appetite to take a risk and do a bit of the work themselves in order to save money on a property sale. Auto-trader did it for private car sellers years ago. But most of us still trade our second-hand cars through dealerships, for convenience and to avoid the risk of not receiving the proceeds of sale.
How many of the public are prepared to take the risk? The car industry model suggests around 10% are risktakers. That means 100,000 house sale transactions per annum are available to online agents operating a pre-paid fixed fee model.
You can see why Rightmove has little interest in swivelling its model toward private sellers.
At £1,000 per case, the revenue from mopping up all of the online market demand (let’s face it, if anyone could do it, Rightmove could) is around £100m.
It makes more money servicing 100% of the market by selling advertising space to its current mix of traditional and online players. So, is online agency a busted flush? I don’t think so, because the model that will work is no sale, no fee, just without the high street presence.
Ben Poynter, chief executive officer of Yopa, the low fixed-fee estate agents:
We expect the online sector to continue to grow market share in 2019 and beyond. We’ve seen phenomenal growth from Yopa and Purplebricks in just a few years compared to other agents who have been around for decades, proving there is significant demand for what we offer.
Will we collectively hit double digits next year? Perhaps, but if we don’t, we won’t be far off.
We don’t think a single online agency will become a portal. Buyers want to find all the properties in their area of interest in one place, not just those from one estate agent. No single agent will get enough market share to have all the stock across the country.
Pure online models have failed to scale to any significant size so far. Customers want local agents to advise them and that's the key to success for Yopa and Purplebricks.
Sellers have different needs and want advisers to satisfy those. There will never be one estate agency to service the whole market, there will be big and small, those focused on the high-end and those at the lower end, those focused on specific locations and those with different price points.
Mike DelPrete, a US-based PropTech expert:
The recent activity in the online agency space, along with the growing evidence over the past few years, points to a few key insights.
First, the model is only financially viable at scale. Purplebricks is the only company to have reached that scale. The companies that are fighting for second, third, and fourth place are money-losing endeavours.
With a model designed around efficiency, it's not possible to operate in a smaller, regional basis (unlike traditional estate agents).
Second, it's clear that overall growth in market share is slowing, which should be no surprise. This is why Purplebricks is exploring adjacent revenue streams. Real estate is a highly fragmented business; there's no reason to expect online agents to buck that trend.
Richard Rawlings, agency trainer, marketing consultant, and co-founder of AgentMasterclass and The Lead Hub:
Online estate agency has matured and most sellers are now aware of the ‘DIY’ option. Nevertheless, uptake has been lower than expected in a world where self-controlled platforms tend to prevail –Uber, Airbnb, Deliveroo.
Note, however, that it’s primarily the convenience of these services that appeals, as well as risk reduction, not necessarily price.
British agency fees are relatively insignificant, so the apparent saving of using an online agency has been insufficient to offset the risk of both non-results-based payment and not having a professional handling your sale.
The City’s expectation was that online agency was the way forward and traditional agents’ days were limited. But, as this has not turned out to be the case, the appetite to invest in online agency has faltered, reminding us of the dotcom boom 20 years ago that valued potential, not reality and resulted in the consequent bust.
Sam Mitchell, chief executive officer of online estate agents Housesimple.com:
The online sector will continue to grow as long as we remain focused on ‘why’ we exist. Too many competitors have stopped disrupting and morphed into traditional agents, without offices, that take money up front.
We believe passionately that the pay-up-front model is constraining growth in the sector, which is why we only offer no sale, no fee.
It’s very sad to see what’s happened to Emoov. Their problems lay with the proposition, which didn’t give consumers a reason to use them. What was their USP? They were more expensive than Purplebricks on a pay up front basis, and twice the cost of Housesimple on a no sale, no fee basis.
It’s difficult to see Purplebricks challenging the portals with just 5% market share. The network effect that Rightmove has is almost impossible to break.
All the buyers go there, so all the agents go there, so all the buyers go there...
The largest agent in this country is an online agent that didn't exist five years ago. The traditional market has reacted by reducing fees, and that may have helped slow their demise.
But there will be an inevitable tipping point as the online agents become normalised and the traditional agents price themselves out of business.
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
Sellers are more likely to try to save money by instructing online agents when the market is active. Many mistakenly believe high street agents do not work hard for their commission, especially when demand considerably exceeds supply for certain properties.
A recent report revealed that 50% of sellers withdraw within three months, which would cost them nothing if listed with a traditional agent. Otherwise, they would have paid for a very expensive listing service.
I was surprised that Emoov has gone into administration. It generated plenty of support from investors for a time but lacked sufficient marketing resources to build brand awareness and compete with Purplebricks.
If the market remains fairly subdued at the start of 2019, I do not expect online agents’ share of transaction volumes to increase.
I anticipate Purplebricks will continue to pose a similar threat to high-street agents in 2019 if its marketing continues at the same levels. I don’t envisage it becoming a new Rightmove or vice versa, although further blurring of the lines between the two is inevitable.
I expect more agents to offer a no-frills ‘lower cost up-front model’ in the hope that a large proportion will switch to the traditional service soon after.
Mark Readings, founder of online estate agent House Network:
For the past two years, the property market has been on a steady downward spiral. Even with overall decline in the industry, there have been two areas of growth, regional markets and online estate agents.
As traditional local estate agencies have come under pressure, the online sector has expanded by demonstrating strong consumer engagement. This growth will increase as homeowners, trying to sell in this challenging period, look for the most efficient, relevant and accessible mechanism for doing so.
The question as to whether or not Purplebricks retains its market dominance is unknown. The online model works very well with the right efficiencies, pricing, and diversification. By simply duplicating a similar marketing approach to the likes of Purplebricks, it leaves a business exposed to huge cash burns without sustainability.
Online agencies should not be about cutting corners on customer service and using technology to force sellers to action certain tasks themselves.
An online service that is far more aligned with the traditional values but uses technology to enhance the user experience is in my opinion the right model.
Education of the online market is at a consumer tipping point. The forward-thinking traditional agents will co-exist with different types of business models, including hubs without high street offices. Pricing is key and we firmly believe the price difference between all models will become smaller and homeowners will be choosing an agent based on service delivery and user experience.
Iain White, industry consultant, trainer and former Countrywide director:
It will be harder for online agents to grow next year, partially because savvy sellers turn to in-depth experts to get a great outcome when the market slows up. Secondly, investment and spend by onliners will slow and, as we already know, they effectively buy market share through marketing and not necessarily results.
The smart agents will be aware online is here to stay and will grow market share long-term. There is space for both models to co-exist, but only the best will thrive.
Purplebricks dominate the online space but are not the overall leader in many individual markets. They are still in a place where marketing spend dictates their growth, so if they keep spending, they will grow market share.
There could possibly be a blurring of the lines between portals and online agents. Some would argue this was always the mainstay of Purplebricks’ strategy and, in many ways, it makes sense. I don’t expect this to be an immediate outcome but would certainly suggest it’s lurking in the background somewhere.
The majority of clients still prefer the outcome delivered by a traditional service. This becomes more and more the case the tighter the market becomes. Not everyone wants cheap, most people want effective and I wholeheartedly believe traditional agents are much more effective.