Over the past 23 years, we have seen the rise and fall of many great online estate agents like House Network, Hatched and Doorsteps due to peaks and crashes in the economic climate. The market is highly volatile, especially regarding weak business structures and little consideration for consumer power.
Without giving a lesson on the basics of the Twenty-twenties, the new modern age is a forward-thinking and progressive era, where most people drive for honesty and transparency above all else. Businesses should be, in turn, following this trend and ensuring their companies reflect this.
Much like the fall of the once great Western Roman Empire, partly due to constant overspending, a lack of support and protection for its people, and consistent invasion from aggressive neighbours, many online estate agents are falling under the economic pressure of rising inflation and their rivals.
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Why Did Online Estate Agents Become A Powerhouse In The House Selling Market?
Online or Hybrid estate agents in the United Kingdom used to solve a pain point many house sellers faced when they wanted to sell their house — overly high estate agent fees.
The online estate agents would offer a pulled-back service for a fraction of the price and handle all the necessary areas of selling a house and creating what would be a ‘hassle-free service’.
However, even if these online estate agents set out with the best intentions, over the years, they would have to pivot their companies to keep up with rising inflation, mortgage rates and demand within the housing market.
How Do High Street Estate Agents Operate?
High street estate agents will take a commission once the sale is complete, usually around 1% to 3% of the sale price. If you sold your home for £200,000, you would have to pay up to £6000 after completion.
High street estate agents usually offer hands-on experience and will cover all the necessary work required to sell the property. They will also have excellent local knowledge as they work and probably live in the area.
How Do Online Estate Agents Operate?
If you sold your property for £200,000, you would pay an upfront commission between £99 and £999. Online estate agents could offer significantly lower fees because of the way they operate, which is entirely virtual.
Usually, they would operate out of an office and have regional representatives visit properties if needed.
Some agents would require the house owner to do most of the footwork, like taking photos of the property, negotiating offers and conducting viewings – but then they would market the properties on Rightmove or Zoopla.
However, if your property does not sell on the market, you will still need to pay the upfront fee. Online estate agents are typically nationwide, so in most cases, the people selling your property will be somewhere other than local and will make most of their considerations using property market data.
How Do Hybrid Estate Agents Operate?
Hybrid estate agents, the halfway house between the traditional high street estate agents and the online estate agents, would use the regional representatives to conduct house viewings and in-person valuations.
The pricing structure for many hybrid estate agents is more like the online estate agents, asking for a no-sale, no-fee-based commission.
Why Are Online Estate Agents Struggling?
Online estate agents like Purplebricks and Strike increased their market share over 2022; data from TwentyCi’s 2022 Property and Homeowners Report suggests that hybrid and online estate agents are drowning in lower value bands.
They need help to break into higher-value markets like London and the South East.
Online agencies make up just 1.1% and 5.3% of homes within the £350,000 to £1 million range but make up 9.2% of properties below £200,000.
Unsurprisingly, the market share was highest in Yorkshire and The Humber at 11.3%, as most online agencies operate their headquarters in Yorkshire.
If we look at the past 23 years, the market share for online estate agencies has remained the same, under 15%. Compared with the 35% market share for cash buyers, this could indicate that the consumer demand for cheaper alternatives isn’t a viable option.
Online estate agents may offer a solution to a problem the consumer doesn’t care about.
Currently, we are at the cusp of a recession, with some claiming it has already begun. We live in a cost-of-living crisis, with rising inflation and mortgage rates.
But, as people struggle for day-to-day cash, the market is reluctant to choose cheaper house-selling alternatives.
One major issue seen across many online estate agents is the claim of being ‘honest and transparent’ about its services. Many online estate agents claim to be the cheapest or free alternative to selling a property but hide the pricing structure behind the services.
For example, Strike, whose tagline is “Let’s sell your home for free”, isn’t accurate. Technically you could sell your home for free using Strike, but you would have to do all the photography, viewings, dealing with solicitors, and handling of negotiations, and all they would do is put your property on Rightmove or Zoopla.
If you want them to do the hard leg work and create a genuinely hassle-free environment for you, then you will need to pay additional hidden fees — not so free, is it?
Purplebricks Estate Agents
In August 2022, Purplebricks estate agents began to lose their market share to Strike after the estate agency increased its pricing by 20% and pulled its money-back guarantee.
Purplebricks increased its standard and pro package by £200 and its higher regions and regions pro packages by £500.
More recently, CEO Helena Martson has set forward a plan to increase the regional standard packages again to boost the company’s fortunes.
For properties in London and the South-East, the higher package will increase from £1999 to £2999, and the higher package pro will increase from £2499 to £3999. The lower packages will also rise over the rest of the UK in a similar trend.
In December 2022, Purplebricks had an employment cut of around 10% of its staff after redundancies were announced in October 2022. This comes after a long share price loss of 90% since 2018 when the company was valued at more than £1 billion — Purplebricks is now valued at just £35 million.
Strike Estate Agents
After seeing Purplebricks announcing primary cost-cutting measures and redundancies, Strike looks to follow in the footsteps of Purplebricks as the company struggles with the recent economic downturn that has compromised the agency’s operating model.
Currently, there are plans to cut a third of its workforce via a round of redundancies, significantly reducing its workforce, cutting out face-to-face services in Southern England, and reducing spending on marketing.
You need to look no further than their most recent reviews, which conclude a significant drop in the quality of service provided.
Are There Any Online Estate Agents On The Rise?
As with the fall of the Western Roman Empire, there was the rise of the Eastern Roman Empire, and It’s not all bad on the online estate agent front.
The pandemic, the economic downturn, and volatile rivals have allowed some online estate agents to reset and rise from the ashes.
There are still companies in the property buying and selling market that offer an ethical, trustworthy and honest service, like The Property Selling Company, Sell My House and Yopa.
These online and hybrid estate agents will help you to sell your property faster, with no hassle and, in some cases, no fees.
Sell My House and Yopa both operate on a standard & additional package basis, but they’re upfront about their fees and have a great overall customer experience. They can be great alternatives to traditional estate agent fees and services.
The Property Selling Company operates when you agree on the selling price for your property, that is, the amount of money that the property consultants will push for your home to sell.
If your property sells for more than the agreed price, then that is where The Property Selling Company will make its profit.
So whatever amount of money you agree with The Property Selling Company, you will receive, no matter the profit outcome for the company.
A common theme between the three companies is their outlook on celebrating teamwork, empowering staff and being passionate about customer service. While also being honest and transparent about how they communicate with each other and offer their services.
We spoke to Karl McKardle, Chief Executive Officer of The Property Selling Company, about his insight into how The Property Selling Company differs from other online estates agents like Strike or Purplebricks:
He said, “The Property Selling Company has been a long time coming; it offers a completely transparent estate agency service without all the hidden fees and provides you with a streamlined service.”
“The housing market has changed so much over the last few years that we saw it vital to come up with a solution that would be able to outlast the volatile markets. We wanted to create a service that would allow homeowners on all income levels to sell their house safely, securely and quickly.”
“We are continuously looking to grow The Property Selling Company and have a great vision for the company’s future. We very recently have had a complete rebrand of the website and hope to become a positive disruption to the online estate agent market.”
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