Thanks to online competitors, the days of going to your local high street estate agent to peruse their catalogue of homes may soon be as antiquated as using the Yellow Pages to find a plumber. And smack dab at the centre of this massive disruption are online outfits such as Rightmove (LSE: RMV) and Purplebricks (LSE: PURP) who have the £4bn estate agency industry firmly in their cross hairs.

Rightmove, the country’s largest portal for property listings, may have been started by the largest estate agents, but together with chief competitor Zoopla, it has largely replaced these very estate agents as most customers’ first stop when looking to buy or sell property. Rightmove’s business model of offering its services free to the public by charging estate agents to list their properties has proved effective enough that estate agents banded together in 2015 to launch their own competitor,

One look at Rightmove’s staggering 75.1% operating margins and 19.7k strong customer base will tell you why Savills, Knight & Frank and others felt forced to do this. However, Rightmove’s first mover advantage and 77% market share have left OnTheMarket in its dust. Rightmove posted a 2% increase in customers, 15% increase in revenue and full 17% bump in earnings per share in the past year despite this new challenger.

With significant market share, insanely high margins and little chance of being dislodged, Rightmove will continue to be a persistent thorn in the side of traditional estate agents. Although shares trade at a princely 31 times forward earnings, the company is forecast to continue growing earnings by double digits for the next few years and has committed to returning all free cash flow to shareholders through dividends and buybacks.

Hybrid model

If the likes of Rightmove weren’t enough to worry estate agents, the increasing array of low fee online agents popping up will be enough to keep your local agents awake at night or give them nightmares when they finally get to sleep. Purplebricks has stepped into this market by offering a hybrid mix of online sales portal and local estate agents while still offering a very low, flat fee for selling property.

The company’s packages start from £798 to sell a property, and the average fee with add-ons works out at £1,080. This is a far cry from the nationwide average fee paid to traditional agents of roughly £4,000. Where many customers may be leery to entrust such an important task to online-only outfits, Purplebricks’ 165 self-employed agents are there to provide the local expertise and hand-holding many customers desire.

So far, despite only beginning in April of 2014, Purplebricks has snapped up 60% of the online market share, which is estimated to now cover 5% of all property sales in the UK. With a target of doubling the number of local agents by April of next year, the company is in a great position to take advantage of the increasing number of online-comfortable, cost-conscious house sellers.

Purplebricks only went public in December though, and has released one set of half-year results. While I certainly like the model and am intrigued by the prospect of disrupting a £4bn market, I’ll be waiting to see more financial information before considering buying shares.

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Ian Pierce has no position in any shares mentioned. The Motley Fool UK has recommended Rightmove. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.