The sale of Purplebricks for just £1 has been a major blow to the online estate agency sector. Once valued at over £1 billion, Purplebricks was one of the most successful online estate agents in the UK. However, the company's rapid growth was followed by a period of rapid decline and it eventually filed for bankruptcy, being taken over by rivals Strike for just £1.
For most this was no great surprise as the online estate agency industry has been in a state of decline for some time. Purplebricks was just one of the many victims to the point where the market share of online agents is now relatively small.
So, what went so wrong for the online agency? They basically failed their mission to disrupt the market.
The online agencies hit the market offering ‘low fees’ and of course customers lapped this up. However, it soon became apparent that most online agents failed to offer the same level of service or expertise as the high street agent and in today’s social media and review-led world, word quickly got out and people started doubting whether it was worth cutting corners on such a huge transaction.
The personal touch and the local insight that the high street agencies provide wasn’t there and why would it be when there’s no incentive? Unlike high street agents, who work on a ‘no sale no fee’ basis and take the money only once the sale has completed, the online agents takes their fee upfront. It makes no difference to them whether the sale completes or not, which is probably why you see so many complaints of online agents being slow to respond to queries. Your high street agent, on the other hand, will pull out all the stops to get that sale and win the fee!
However, in today’s property market it goes beyond getting that sale (or a rental). There’s so many rules and regulations to adhere to and it’s unlikely the online agent will be there to guide you through these; it’s the traditional agent who will be there (in person if you want) to hold your hand and keep you right legally. For instance, here at LPS, our director is also a qualified property solicitor and ensures any property deals are kept on the right side of law.
When it comes to estate agents, you definitely get what you pay!
Some people were still willing to take the risk to get the ‘low cost’ fees, but those low cost fees have become less low cost. Online agencies said they could charge lower fees as they didn’t have high street premises to pay for, but they soon realised they had much larger marketing costs which had to be factored into the fees. Suddenly, with higher fees. there was even less appeal.
The failure of Purplebricks is a warning to other online estate agents. The sector is becoming increasingly competitive and companies that do not offer a high level of service and value will struggle to survive.
Jane Gervin, head of marketing at LPS Real Estate, said: "Property is one of the remaining industries where people are more important than technology, and long may it last.
"At LPS, we pride ourselves on being a traditional agency that embraces technology for the benefit of our clients. We use cloud-based systems, have 24/7 digital client log-in for those that want it, we utilise digital maintenance system and we promote our properties via the portals and social media, but most importantly we deliver a great personal customer service and will continue to do so."
If you are interested in working with us, please contact Karon on 0151 236 7771.