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TODAY'S OTHER NEWS

What now for online agents after shock closure of Connell's Hatched?

The shock immediate closure of Hatched, the online agency heavily invested in by Connells, has raised question marks over the online sector’s future.

Hatched was acquired by Connells Group in 2015 to be run as an entirely separate enterprise to its core high street business. Since then, it has received a programme of investment including new premises and the doubling of its staff.

Some observers say the closure represents a possible turning point for online but Purplebricks - in a statement to Estate Agent Today last evening - suggested it was business as usual irrespective of the Connells Group decision.

“Purplebricks has in the last four years built a sustainable and profitable UK business based on a new, fairer, more transparent model which has saved our customers over £108m in commission payments in 2017 alone. We are successful because we get results for our customers, with recent data showing that we sell more houses and complete on properties more quickly than any of the other top 10 brands” a Purplebricks spokesman told EAT.

“Our ongoing investment in technology and people continues to win over more customers, driving further market share growth. Purplebricks is proof that the right people and quality execution has been key to why we are the most successful estate agent in the UK in such a short time” he continued.

EAT also asked Emoov, Yopa and easyProperty for comments, but all declined.

However, one senior figure from a leading online agency did say - off the record - that the Connells decision was a sign of a shake-out within online; he insisted the closure was merely a sign that the sector was consolidating. 

Another online executive told EAT that Connells had not spent extensively on marketing Hatched - regarded by many as key if an online agency is to win business and become a recognised brand. 

Yesterday David Plumtree, Connells Group agency chief executive, said: “We have thoroughly tested the hybrid model and have reached the conclusion that it does not produce a viable economic result ... with the cost of customer acquisition being one of the main barriers to being able to deliver a profitable return. There is much talk of ‘disruption’ from hybrid estate agents, but from our experience we have found it significantly lacking when compared with the level of customer service, support and expertise that our high street operations provide. Ultimately, an upfront fee obligation – payable irrespective of whether a property sells or not – is not the right solution for the customer.”

Online as a sector has had mixed fortunes in recent months.

The market leader, by far, remains Purplebricks but its share price has dropped. Over a two year period it remains over 60 per cent up on the stock market but shorter-term share performance has been weak - over the course of the past 12 months, Purplebricks’ share price has dropped over 40 per cent and over the past week it has dipped around 15 per cent.

Meanwhile Emoov remains buoyant following its recent £100m merger - effectively a takeover - of Sarah Beeny’s Tepilo agency and online lettings platform Urban. However, there has been no further news on any possible floating on the stock market, which chief executive Russell Quirk says remains an option for the future. 

Yopa, which calls itself the second largest hybrid agency when measured by listings, received another £20m investment over the summer. Savills - an existing investor in Yopa - pumped in further cash, alongside three other firms including DMG Ventures, the corporate venture arm of Daily Mail and General Trust, and LSL Property Services.

LSL, in a statement to shareholders earlier this year, reported that its net bank debt rose 45 per cent to £46m thanks partly to £20m invested in Yopa.

Meanwhile for some time Jon Cooke, chief executive of eProp Services - the parent firm behind easyProperty - has insisted that within a short time there would be only two or three major online operators surviving after a period of consolidation, and that his agency would be one of them. 

Poll: Will another online agency close before Christmas?

PLACE YOUR VOTE BELOW

  • Chris Arnold

    Wot, no comment from rent-a-quote Quirk!
    The sunk costs just keep on sinking.

    Rob  Davies

    Rent-a-quote Quirk! Love it.

    Harsh but accurate.

     
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    In the high street trust and good service will prevail but with margins going further south

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    Got to laugh. Purple Bricks transparent pricing.

    Home report is double the price, if you don't use their solicitor you are charged £300, if you want viewings you are charge £300 and so on and so forth. The Ryanair of Estate Agency. Online clearly has it's place for the clients that really think they are saving a few hundred pounds in the beginning but don't realise the thousands they are losing at the end by not employing an strong / expert negotiator who's fees are typically offset by the extra money achieved. And since when was Purple bricks profitable. lol

    Babonday Brian

    Strange really that media dont pick up on this. If ryanair sent people on planes with no wings and then charged them an extra 100% of ticket price if they wanted a seat on the plane there would be uproar. maybe tabloid media show their lack of intelligence by not reporting this.

     
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    The amount of money being poured into these on line "experiments" is eye watering. Q-If one of the medium to large sized traditional network operators invested the amount of money these guys have in a service TV/Media based advertising campaign around no sale no fee would they not increase their market share massively ?but would they make any money ..I am not an expert but in business is there not two ways to make a profit ? the only winners here are the guys at the top.I bet no one at Board level looses their job at Connells for the complete waste of money that was Hatched -the only people who lose their jobs are the poor "foot soldiers" yet again.I feel really sorry for them all-as is life-accountability rarely hits those on the Board.

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    Major Tom, your absolutely right. Partly because of the outrageous levels of SDLT, there are not enough transactions happening for cheap and nasty agency in the UK. THEY ALWAYS FAIL.

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    The main problem for the high street is the high street. Constant moaning about the online agents. If you think online won't work why do you all spend so long talking about online. Just keep cutting fees I'm guessing the number of High street agents closing will far outnumber the number of online agents that close.

    Hatched close is just a publicity stunt by Connells if they don't use the tec from hatched in High Street they are crazier than I already thought.

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    Eventually high street agents will pick apart the online offering (god i hate both those terms) and take the best bits of tech that are offered, a new strain of agent will enter that doesn't think in terms of online or traditional, just in terms of whats the best offering for my clients and does it help me make a living. These will thrive. Simple really.

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    Your right.
    We are already on this

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