The recent acquisition of Purplebricks by Strike and the apparent decline of Keller Williams in the UK might raise questions about the future of the so-called ‘new’ estate agency models that have obtained significant attention in recent years.

Does Purplebricks’ setback imply the demise of the online estate agency sector? And does the ongoing news of merged KW market centers suggest that the self-employed approach to estate agency in this country is already fading away?

Well, not really. Let me tell you why I think that.

First, it’s important to note that this piece is not intended to criticise PB or KW. Instead, it’s an exploration of why their individual challenges should not be taken as definitive signs of decline for their respective sectors.

The online estate agency model has seen a decrease in players since the fall of early pioneers Emoov and Tepilo in late 2018, followed by House Network, Doorsteps, and others. However, between 2019 and 2023, we’ve seen 695 estate agency businesses go bust, according to the Office for National Statistics and the majority of these closures belong to what we consider ‘traditional’ estate agencies. Yet, despite the significant number of closures, the industry does not seem to be anticipating the traditional model vanishing anytime soon.

I would personally argue that the seemingly prominent news of online agents and self-employed platforms shutting down is magnified due to the considerable attention they initially received when they emerged to challenge the traditional sector.

Not all estate agencies are created equal, and this applies not only to the so-called disruptors but also to the high street agencies. For instance, Strike and Purplebricks operate on different fee models, just as fixed-fee high street agents differ from those nearby who insist on sub-1% commissions versus those who adhere to a strict 1.5% or 2% approach further up the road.

The thing is, this is not a ‘winner takes all’ game and the reason that new and different business models can and will co-exist in our sector is because not all sellers are the same either.

My argument is that online estate agency, or rather discounted fixed-fee agency, has primarily replaced the private seller – the Gumtree or eBay ‘chancer’ who has always represented roughly 5% of sellers. It is no coincidence that their market share has settled around this percentage, and I see no reason to believe it will change. These sellers will always prioritise the most economical deal, regardless of risk, and they fail to recognise the value provided by a full-fledged estate agent.

As for the self-employed sub-sector, I am a little biased (admittedly) but I firmly believe it will continue to grow from its current count of around 1,000 agents conducting their own business in association with a platform. The potential earnings for self-employed agents are around 70% to 75% of fees charged, compared to a mere 10% in the corporate sector. It is simply too tempting for a skilled agent to resist and with the provision of back-office and customer facing tech from a central platform arguably there is no reason to launch under a high street franchise anymore as you can access everything you need independently and keep more of the rewards for yourself.

However, whilst the rewards for success as a self-employed agent are incredibly attractive, being a self-employed agent regardless of who their ‘sponsor’ is, requires a certain type of person. By that I mean that they must be the sort that not only works hard but that can self-motivate and be self-disciplined. Moreover, one that is willing to find leads rather than just being handed them and can work to a consistent system day in and day out to grow their business over time – this, frankly, is not all agents. Additionally, patience (and financial resilience) is required to get through the initial stages of getting your business off the ground before you can reap the rewards. In my experience the old adage that “the more you put in, the more you get out” is the perfect summary of life as a self-employed agent.

It is fascinating to observe that almost every agent in the US operates as a self-employed individual; it is simply the norm there. However, the UK market differs significantly from the US in terms of culture, legalities, commissions, and buy-side/sell-side dynamics. Perhaps the reason some American “real estate” brands have struggled to conquer the British estate agency market is their failure to grasp these distinctions, just as Purplebricks failed to realise that their discounted fixed-fee approach was unfamiliar in the US, Australia, and other countries.

I’d love your thoughts on this.

Alice Bullard is managing director of hybrid agency Nested