ONLINE ESTATE AGENTS; IF ALL ELSE FAILS, THROW MORE MONEY AT IT

The disruptive impact from the wave of online agents is now coming to a head. The disruption has been clear and in many ways has been a long time coming. The industry as a whole has grown up a lot since the first wave of online estate agents began hitting the market.

However, this wave has now come to a head. Can these players sustain what is required to build on their disruptive nature and grow their market share? My guess is, probably not.

Purplebricks are fairly unique in the argument, they are very well established across the country and have at least managed to turn some profit in the UK after their many millions of £ in investment.

But the long term sustainability of nearly all the other online only players is very much in question, the Emoove bubble burst rapidly. 3 months after self-valuing themselves at £100m, they collapsed – a crazy valuation based on some kind of market share aspiration and clever technology. This was a business that was burning through £800k a month in running costs, and when you look at their revenue per sale, the calculation is a long way from profit, sustainability and even survival, as was evident.

YOPA as supposedly the 2nd biggest online agent has recently released a loss statement of £32m! impressive. Again, their running costs and revenue per sale calculation does not make sense. The volume of units that these companies have to sell is near impossible to match the type of spending required to keep this business model going.

And there are many more examples.

Saying that, there is a lot of smart money that has gone into these companies at a very early stage. My guess is this will have dried up somewhat since the collapse of Emoov. But unfortunately for the investors, the staff and the customers, the only way out or through for these guys is to basically throw more money at the situation in order to grow the brand and try and generate as much market share and as many “user numbers” as possible.

The upside to the overall market is the much needed shake up it has provided. The agency industry was archaic and overall service to customers just so poor. The industry is now reinventing itself somewhat, there is innovation and new business models being created which will benefit the industry as a whole, and its people and its customers.

Published by Jamie Gray | hello@nexaproperties.com