Strike, formerly Housesimple, is in the process of making substantial job cuts, with a number of positions across the business at risk of redundancy, a well-placed source has told EYE, as the online estate agency adjusts to tougher housing market conditions.
After seeing other online firms, such as Purplebricks, announcing major cost-cutting measures and redundancies, EYE has been informed that Strike wants to adopt a similar approach, following the recent economic downturn, which has compromised the agency’s operating model.
The agency currently has more than 450 members of staff across Strike and Strike Financial Services, with over 150 role redundancies being proposed as the company looks to reassess and significantly reduce the size of the teams across the business.
EYE understands that Strike also plans to remove face-to-face valuations in the southern region due to high marketing costs and relatively low brand awareness in these areas. The company will rely on virtual valuations instead.
But the firm will continue to operate a face-to-face service in the northern regions of the country, and so these teams will be largely unaffected by this process.
Aside from large-scale job cuts and reduced spending on marketing, Strike will also seek to find opportunities to increase revenue, and that will almost certainly mean higher fees in the near-term.
It has also emerged that Strike has been working with an outsourced team in South Africa since April last year. That relationship looks set to continue, albeit with some changes.
EYE has made several attempts to get hold of Strike over the past few weeks but without success.
‘EYE has made several attempts to get hold of Strike over the past few weeks but without success.’ – Just like every client then…….
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A period of static or falling property prices is never welcome; it is nonetheless inevitable. We know that property prices have been a bubble for a couple of years. So, as much as we may not like it, we can expect lower prices in 2023.
Why is this happening?
We have finally left a long period of ‘easy money’: a period of large fiscal deficits, where government spending significantly exceeds revenues and low-interest rates.
We can trace the beginning of low-interest rates back to the Asian Crisis of 1997 and the Russian default and LTCM collapse in 1998.
The new millennium arrived, and we had the Dotcom meltdown in 2000 and then the Credit Crunch of 2008-9, which started in the US housing market and soon became a full-blown international banking crisis.
In terms of fiscal policy and interest rates, more and more extreme measures were required. Printing money or ‘Quantitative Easing’, together with low or Zero Interest Rates Policies, soon became known as ‘easy money’.
While Central banks were attempting to keep levels of consumer price inflation in check, they ignored or turned a blind eye to asset price inflation – (property prices). Rising house prices are seen as a ‘good thing’ by people who own their property; it is not so good for people trying to climb the ladder, however.
Zombie companies that should have been allowed to fail were propped up with further funding. The Dotcom era, where money was raised based on ideas, was painful for investors who bought into a business plan rather than a company that made profits.
Now real returns can be made investing in real companies, this sort of business model is doomed to fail.
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Who’d have thought that selling properties for free wouldn’t work out well, eh?
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Rely on virtual valuations! That should work well! Honestly, do they really think people are going to take them on to sell their biggest asset ♂️
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Another “disruptor” going the same way as the others… the writing was on the wall from the outset.
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Who is actually surprised at this news…….
All their properties in my area come over way overpriced with owner own photos or very poor pics, stolen floor plans if one at all and shocking write ups.
Cheaper fees can work if the agent is a local one or works for a franchise running their own local business but this company is **** poor and will no doubt disappear very soon.
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Anyone from estate agency who ever thought this model would work, doesn’t understand what estate agents actually do, nor how important or valuable it is, from a non-financial perspective.
The same goes for all agent firms who invested in Yopa and PB. If you think that model works, you don’t understand estate agency. Prove me wrong.
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Perhaps the staff should go on…….Strike?
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What I find genuinely interesting is the ongoing pursuit of this model. Time and time again, low (or in this case free) fees simply don’t stack up. We know that globally the average fee is around 5%- so at an average of around 1.2% UK agents are around 75% cheaper- undercutting that, and still delivering a service, is proving time and time again to be impossible to achieve and find any semblance of a margin.
Strike/Houseimple is not a young/startup business- at around 12 years old- yet they have never broken even or made profit in a single year. Cumulative losses stand (as per accounts filed last Jan) at £54m and that was before their nationwide expansion. With accounts due any day the likelihood is that this figure has increased substantially- I wouldn’t be surprised to see this figure surpass £60m.
Given their model, I’ve been amazed they haven’t rolled out their own mortgage business, or acquired one, to maximise revenue from financial services- which is their real business model.
What I find fascinating in this case is- at what point do investors stop pumping money into a ‘disruptor’ model? I get an idea being heavily backed the first 3-5 years….but 12?
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Are we using the same argument for Goodlord Kristian?
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Always love a good Viking Comment… So much truth in what you say but a few other points to supplement.
60% of Strike sellers according to their own valuers and their website will purchase the photography package or “Marketing Boost” as it is now called. Originally this was priced at £400 or thereabouts from memory but now it has snuck up to £700. In addition they upsell hosted viewings albeit not as successfully at a cost of £800. The reality is therefore they are very much a pay upfront agent but have cleverly hidden this over the years the “sell for free” model has operated in their business. So it’s important to remember that they are bringing in some money upfront and of course still not able to make it work.
Their FS business is currently operated through Mortgage Advice Bureau. At one time I believe their team had grown up to 80 – 100 advisers and they are in the process of halving that which is reflected in the article we are reading today.
What these models have shown us over the years is that a good proportion of people looking to sell their homes failed to see the value in what proper estate agents do. We have to look at ourselves, as Mr Rollings wrote the other day, to consider why this is the case and start creating more value much earlier in the process and hanging onto our customers after their sale or let is complete. The good agents know this and have been responding which is why the “do it yourself/ cheap as chips” models are on the decline and long may that continue!
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The problem is EA has turned from a real sales job to a low wage admin job
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And one of those investors is I believe Channel 4 meaning that’s our taxes being set fire to. Laugh or cry, your choice.
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First Housesimple now Strike, what next, assuming there is a next (highly unlikely)
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