RIP Easyproperty

On the day Easyproperty launched its online service to sell your home for cheap, CEO Robert Ellice marched through the West End celebrating/mock-mourning the death of high street estate agents.

For me, there was no small irony in a start-up business mocking their incumbent competition for charging too much. Start-ups are, by their sheer risky nature, the most probable to fail and close down. 

And unfortunately for Easyproperty's staff, this particular start-up is behind the curve and constantly failing to play catch up:

Low fees - Late to the party, and still behind contemporaries (like Emoov) who have already moved away from the low-cost, upfront fee business model. You can take a look at Emoov's accounts here to see that the business model was born to die. Especially when you don't charge enough to pay your Rightmove bill.

Tech - Purplebricks have out-innovated all the online agents. Easyproperty raised £1m to build this tech. Looks like they decided to spend the money on stunts when they failed to build tech that mattered.

Publicity/PR - Russell Quirk, little genius that he is, has property journalists sewed up. He's the first and last comment they want, which means poor Robert Ellis will have to freeze his balls off a little more often to try and get a look-in.

Beyond lagging other online agents, let us tackle the fundamentals of why Easyproperty is going to beat high street agents to the scrap pile.

Low fees

If you're teling someone you'll sell their home, for less, you're telling them you'll sell their home for less.

When the rest of the world pays estate agents 5-6% to sell a home, the UK's average fees of between 1-2% are cheap. 

Most people don't want to undersell their home. It's their biggest concern when selling. Which is why Easyproperty won't ever get enough market share to magic up a way to make money.

All Easyproperty will achieve is to boost the coffers of Rightmove and Zoopla, by way of draining the pockets of their investors. (Read my commentary on: Hear Emoov, Buy Rightmove)

Low service

Yes, high street estate agents are typified by salespeople who couldn't get a better job elsewhere. But you don't want to instruct a 'typical' high street agent. You want to instruct the best. 

And so while there are people who instruct bad agents, you have to remember that online agents are worse than those bad agents. Why?

The bad agents only get paid if you sell your property. The worst online agents will take your money up-front to list your property on Rightmove. And that's it, regardless of whether you sell your home or not.

Online agents are the classic case of you get what you pay for. I'm sure there are people who can out-negotiate a high street agent. But how many of those people have a book of buyers in the local area who missed out on other properties and are desperate to buy yours? 

Local Local Local

While you want to buy in the right location, you absolutely want to sell with a local agent. Beyond having a book of buyers chomping at the bit for a property like yours, they want to get paid.

Yes, incentives matter. They don't get paid unless you sell your home. And that means they have to price it right.

I crunched some numbers on how long it takes to sell property. The key variable was whether the agent had to reduce or raise the asking price (because they got it wrong in the first place). I matched just over 250,000 listings:

The data is clear: most properties go 'under offer' relatively quickly in an average of 51 days.

But if you get the asking price wrong and have to change it, the average time taken to get an offer more than doubles. 

Imagine sweating on whether you'll get an offer for over 100 days? Nightmare.

Now imagine using an online agent and not even knowing the reason why no one wants to view or offer on your property? Shame on all those journalists that write about 'savings' when using an online agent.

The only person who has savings is the eventual buyer. They're very grateful, I'm sure, of they amount they saved buying your property.

Late

Above all, Easyproperty is late to the party, and brings no new party tricks.

Why should you care about Easyproperty?

Because they'll be a case study that estate agents everywhere will use whenever a homeowner says they're thinking about online agents: "Oh, you mean like Easyproperty? You heard they went belly up, right?"

 

READ MORE FROM THE REAL ESTATE PUNDIT