“I’m Russell Quirk, and I’ve failed” - with those words, the former chief executive of Emoov has begun to explain how his own agency collapsed and why the wider online estate agency sector has dramatically contracted in recent months.
Speaking at the FUTURE: PropTech Conference in London yesterday, Quirk described his presentation about the failure of onliners as “a weird kind of therapy”.
Although the Emoov brand has been purchased and now continues as a low-profile online agency under new ownership, Quirk’s original enterprise under the Emoov name began in 2012 with a fixed rate fee of £295; by the time it went into administration at the end of last year that figure had risen to £895.
Quirk told the audience at FUTURE: PropTech that when he launched Emoov he was “very positive about the prospects of the online agency sector”, based on the belief that onliners who charged less but did “a decent job” would create a valuable market.
However, he admitted that his original prediction of a 35 per cent market share for online agents was “completely and totally wrong” and - citing Rightmove data - their current seven per cent market share after 15 years of online operators and £150m spent on marketing was “frankly astonishing“
Quirk then outlined three reasons why market share was so low and why online agents have been perceived to have failed.
Reason 1 – Competitor numbers: Quirk explained how in the early days of online agents there was an appetite for the service, an opportunity to operate unopposed and the chance to grow market share quickly. However, after this initial period, competition grew significantly and it became like “lots of ferrets in a box fighting over the same morsel.”
He then quoted more Rightmove figures suggesting that even after recent high-profile online agency collapses there are some 55 still operating in the UK - with them all “pushing, vying for the same growth” a healthy market has become impossible.
Reason 2 – Cost per customer: To explain this reason, Quirk told delegates that there was a big difference between sales and lettings, with the latter offering more opportunities to onliners.
However, he said that between “money shoved into Google” by online agents and the market reality that people now move less frequently, the online proposition falters, with agencies’ spend on marketing being “completely and utterly unsustainable.”
Quirk then gave an example around the cost of Cost Per Click Google advertising for the phrase ‘online estate agent’. He said at the time of Emoov launch in 2012 it was £2 and by the time Emoov closed in late 2018 it was £50.
He revealed that online agents such as Emoov, Housesimple and Yopa have had to spend “millions a month” to acquire around 800 new customers each month.
Reason 3 – Psychology of pricing: Quirk said one of the main issues onliners faced was the belief that they were ‘too cheap and too good to be true’, especially as consumers became more suspicious of the sector’s success rate. Even so, Quirk told the conference that he was still a strong advocate of the remaining online agents who delivered what he called “a great service.”
As for the future, the Emoov founder claimed the online sector could reach 10 per cent market share but would not exceed that - however he warned that traditional agents who wrote off PropTech as a result were simply wrong.
He told delegates that 50 per cent of traditional agents ignore PropTech and - making a thinly veiled reference to Countrywide - he claimed this group had their heads in the sand.
Quirk claimed another 40 per cent knew they should do something to add technology to their service model but were unsure what; the remaining 10 per cent were doing something.
In a question and answer session after his presentation, Quirk added that the upfront pay regardless model when it purports to be no sale, no fee promoted by some surviving online agents today, was “fundamentally wrong” but admitted that sellers wanted a payment choice which included that option.
Inevitably, Purplebricks came up via a question from the floor: Quirk insisted that the controversial agency had blown traditional agents away when it came to brand building, but at a cost - tens of millions of pounds - which could not be sustained.
* A review of the conference by our PropTech contributor James Dearsley can be read here.