Something familiar is happening in the estate agency industry. Innovation is at its heart and this week was a catalyst that I’d argue heralds a turning point in modernising the way that property transactions are undertaken.
You may have heard me say this before. Well, in 2009 I truly believed that a certain new business model would transform the way that home sellers sold property.
I was wrong.
Just a few hundred million quid later and with many casualties, the fixed fee, so-called online estate agency sector has but one player left out of dozens and that’s YOPA with Verona Frankish crushing everyone else and now adding a brokerage model to her proposition. As are LSL.
Emoov, House Network, 99 Homes, Doorsteps… all perished. Yes, Purplebricks still exists as a Frankenstein of House Simple becomes Strike meets the Colour Purple but it’s hard to know what it is any more especially with rumours that it’s going ‘full DIY’ and, as it got sold for the same price as a bag of penny chews, it’s hardly a contender for any longevity awards.
On Wednesday it was announced that Steph Walker’s TAUK, The Agency UK, had acquired Chris Buckler’s The Estate Agency.
Not only does this ultimately halt any confusion over who’s who in name terms given their similar labeling, but this move by Steph and Andrew and their investor team of Kenny Bruce and Harry Hill, is smart (and may have even been inspired by a chat with Steph in the Two Russells podcast studio a year ago.
The TAUK stakeholders herald the deal as a consolidation play. A strategy straight out of the Alex Chesterman book of company roll-ups which is, I reckon, the beginning of the self-employed sector getting really serious.
There is no coincidence that Steph, Andrew and Kenny are all ex-Purplebricks. The PB team back in 2014 also grabbed the nettle by raising big money and powering onto the online agency stage with sharp-elbows out having sat for a couple of years observing the space. The result was a business that took market share from al estate agents but in particular the online guys and a PLC valuation that reached £1.2bn.
To replicate this may be more challenging than then. Because whilst the unit economics of the self-employed space are far, far better than the discounters of ten years ago with proper fees and far lower customer acquisition costs, there is a big player in the sector that has arguably already ‘done a Purplebricks’ and grabbed a huge market share advantage of agents and therefore transactions.
Enter stage left Adam Day. No one can disagree that Adam has propelled the UK version of eXp into the stratosphere with c.700 self employed agents – more than all of the other players put together. His proposition, tech, culture and his personality backed by a $2bn NASDAQ quoted US parent are a potent combination. Adam is THE big success in this space and Steph, Andrew, Chris and Co will have to work very, very hard and smart and spend proper money to get anywhere near him.
However, this time it’s different and maybe they don’t need to ‘win’?
In the online days, our maximum market share peaked at 8% of all UK property transactions based upon a customer proposition that was about cheap fees and a ‘punt’.
At full fee, arguably the UK’s best agents now ‘eating what they kill’ and low, low overheads, not only does the consumer not have to pay a self-employed agent or platform upfront or risk a cheap service for a cheap fee’ but the P&L numbers for agent and platform alike are good. Very good in fact. Totally the opposite dynamic actually.
I may have been wrong in my prophecy of the winning business model before but I’ll tell you this… the self-employed sector is going to grow. A lot. It may not get to 50% market share or even 25% vs branch based agency – but it doesn’t need to. The self-employed guys are not a threat to the high street, in fact their perceived superior service levels are complementary.
Note that the UK is just about the only country that DOESN’T have self-employed agents dominating their market.
So, rising tides float all boats so to speak and there’s going to be more than one winner here. TAUK, eXp, YOPA… they’re all well placed to earn a LOT of money in the coming years.
As the adage goes, watch this space. No, really. I’m right this time.
Russell Quirk is the opinionated co-founder of ProperPR, the property public relations agency, which represents a number of well-known estate agencies, including TAUK, eXp, and Yopa
Fast-expanding estate agency acquires well-known self-employed brokerage
