Hatched, one of the first online estate agents, is closing with immediate effect after its owner Connells concluded the online-only/hybrid business model is “fundamentally flawed”.
David Plumtree, Connells’ chief executive, said the company had thoroughly tested the hybrid model and decided it does not produce a “viable economic result”.
The agency has now decided to focus on its high street operation.
The property services group, which has a network of almost 600 branches nationwide, acquired its subsidiary in 2015 after facing the threat of online firms offering cheaper fees for sellers.
Created in 2006 by Adam Day, who now works at Emoov, the sudden closure follows pressures faced by other online agents this year.
Purplebricks, which made a pre-tax loss of £26.1 million for the year to April, earlier this week announced its Australian division had moved away from charging an entirely upfront fee to allowing sellers to pay half upfront and half once the home sale is complete.
Connells declined comment on the financial loss the closure would cause the company but told the Telegraph it believes “high street estate agency offers the best solution” as it provides face-to-face accessibility and intimate local market knowledge “which is crucial in a more challenging marketplace”.
Anthony Codling, equity analyst at Jefferies International, said: “A model where homeowners pay an upfront fee to an estate agent, whether or not they actually sell their home, does not work.
“We continue to believe that the low cost hybrid model will work in the private sale (or for sale by owner) market, but at best it remains a niche product rather than one suitable for the mainstream housing market,” he added.