Purplebricks could be launched on the stock market next year, according to a report in yesterday’s Sunday Telegraph.
The paper said that such has been the strong interest from house sellers, that Purplebricks investors believe a float is on the cards.
The “hybrid” estate agency was launched in April by brothers Michael and Kenny Bruce, formerly of Burchell Edwards estate agents in the midlands, which was sold to Connells in 2011.
High profile backers of Purplebricks include Paul Pindar, chief executive of outsourcing giant Capita, and Neil Woodford, the star fund manager who pumped £7m into the company in August – said to be a 30% stake.
The Telegraph report said another investor was Errol Damelin, founder of the payday lender Wonga.
Purplebricks started by charging sellers an upfront fee of £599 inc VAT. However, as Eye reported last month, it now charges £799 inc VAT.
According to the Sunday Telegraph, the “average high street price” charged by an agent is £5,600.
Yesterday, on Rightmove, the firm had 949 sales properties listed, with 537 available. It had 62 rental properties listed, of which 32 were available.
The Telegraph report said: “So far, the agency has been instructed on 1,000 properties and sold more than 400. The company claims to have saved customers more than £1m in fees in its first three months.”
Purplebricks has no high street premises, but uses a call centre in Southend and a network of local “property experts”, all NAEA qualified agents.
Comments (30)
It just keep on coming back to the old chestnut of on-liners doing this cheaply. Works great for some people but as two decades (more than enough time) as proved, has not broken the 20% market share. Todays on-liners are doing nothing different than before. And history has proved sooooooo many times they cannot ever compete with the service and all things that entails as provided by the high street agent that does the job properly which annoys them to see cheap fix it on-liners meddling in their market place, most from reading their posts seem to indicate no qualifications or previous experience or very limited, call centres or back bedrooms. The OFT has a very keen eye on business practices and it will be interesting to see if due to many failures by on-liners will soon be brought into line with the high street practices which for many will be the end? The argument always seems to be over price for the consumer, which anyone who is successful will know is not a hurdle.
Oh and by the way CP as I am likely to get the reply "you didn't answer the question" People with bigger properties pay more. They pay more council tax, they pay a higher rate of stamp duty, their solicitors bill is higher and they pay more to sell their home. They expect more certainly and in this market whilst a sub £300k property will still have a few potential buyers, the bigger properties are struggling and require far more effort. Now is there anything else I can teach you while I'm here?
The only thing you could teach me RealAgent is arrogance and the art of assumption … but those are two subjects I have no interest in.
Arrogance is the value of online businesses placed by themselves despite no trading history on the promise of assumed potential which just isn't materializing. How many high street agents would expect 20 -60 times turnover even before they have actually recorded any turnover and expect people to invest on that basis? It really is truly astounding. I suspect a few miffed investors will be applying serious pressure very soon. Investors will have placed their money in a business with potential of growth when the arent even close to achieving their initial valuation. Is Easy property worth more than Marsh & Parsons when they sold having recorded nearly £8m profit? If they are – please tell me how a business with 300 instructions worth say £500 each is valued? Even with 30,000 instructions it would hard to justify.
RealAgent … you jump to far too many conclusions … the biggest one of which is that you assume I am a national online estate agent. WRONG. I am a local estate agent with 95% of my instructions within a 15 mile radius of my office … which just happens to be located (currently) on a business park not a high street in my local town … We do everything that our high street competitors do – we just charge less, far far less if a client chooses our fixed fee over our completion fee … NOW LET's LOOK AT THIS COMMENT OF YOURS … "Then finally we have the fees. None of your fees have been worked out on what it costs to properly market and then progress the sale of a property, they have, in fact, all been worked out on how many listings it takes to make money. Hardly in the consumers interest is it." …. So you, and all other EA's charging a % fee, have worked out that it is in the 'consumers interest' to charge TWICE as much to sell a £250K property over a £125K property – TWICE as much to sell a £500K property over a £250K property – TWICE as much to sell a £1M property over a £500K property etc., etc., etc. … Let me answer the question for you RealAgent … a % fee has nothing whatsoever to do with the consumers interests and everything to do with EA's lining their pockets with DOUBLE the money for what can often be HALF the work … we've all sold a £500K property in less than a week that flies through to completion compared to a £125K property that has hung around for months and then drags through to completion having been beset by problem after problem … And yet, the £500K seller can pay up to 4X the fee … You can talk about extra marketing costs etc., etc., for the £500K property but in no way is that so directly related to the value of the property that EA's have 'worked out' that a % fee is in the 'consumers interests' … It's purely to fleece the 'richer owners' of a % of their equity – and any agent who remotely tries to deny that is kidding themselves … The only reason why sellers pay these fees is because 1. they aren't paid up-front 2. they don't know of any alternative and 3. 1% or 2% doesn't sound much – until they get the bill which of course is +20% VAT … Joe Public thought they had to pays £1000s for flights until Ryan Air and Easyjet came along … and guess what … the big airlines tried to stop their landing rights (just like AM is doing by denying access to OEA's), said Joe Public wouldn't accept the out of town airports and lousy service that (of course) all cheap flight operators provided and that only the likes of 'traditional airlines' like BA etc., etc., really knew how to operate an airline … And we all know what happened next … So, RealAgent, justify % fees to me.
I wish the inland revenue had the same thought process as you. Someone who was on a min wage at a supermarket checkout paying the same tax as Alan sugar! Brilliant idea. Also everyone could pay the same poll tax, regardless of the size and value of the property? After all doesn't everyone use the same local civic amenities and services?….
Wilko – are you Bilko in disguise?? … Those analogies are a joke. Just explain to me why a seller should pay 4X as much to sell a £500K house over a £125K … I mean, with all of your EA experience the answer should just trip of your lips and be compellingly obvious … Why you need to dodge the question with your inane analogies is beyond me 🙂
It wasn't meant as an analogy! Just a wish. In fact I believe, and have said before, that your point is valid. Its' just that those who pay no, or little tax, are usually the ones who are most dependent on the state, and therefore cost more. You will, however always find plenty of people who aren't interested in the "value for money" model you have. I have never understood how some of the top end agents can get 2 or 3 % on multi million pound properties when they would, perhaps , sell with a good photo set on one of the international portals. We all know that a good house, in a good location, at the right price, is easy to sell in a good market. But still people queue up to pay high % fees to certain agents. Probably the same people that will pay £300 for a designer scarf this winter, when you can pay £20 for a reasonable one that will still do the job .
Oh ok so what you are really upset about is the big boys won't let you play with their OTM website??! I'm sorry CP but your arguments betray your amateur status. I accept that even an out of town office, but working one town is better than online only from hundreds of miles away, but adopting the "we are cheap" tag is pathetic because there will always be someone cheaper. Just ask Tesco and Morrisons. Cheap agents have been around forever, even in the 80's when there were 20 buyers for a house within hours of it coming to market they were and yet not one of them prospered. The primary reason why is that to offer a full service and a full marketing to clients means its costs to do that. Cheap agents mean compromise somewhere, whether it be with the breath of advertising, the number of staff to deal with enquiries, resources to follow up and see sales through, the cross selling via other branches, the extra buyers brought into the agent by having larger stock. You may not like it CP but that is the reality. We all started somewhere so I don't judge agents on what size they are or what resources they have because the plain truth is when I was a small two man band I couldn't offer what the larger players did I just had to hope the close up service was good enough to develop my reputation. But what I never did was went out there and sold myself on price and frankly I have zero respect for people like you that do.
RealAgent – I notice you didn't answer the question re % fee justification and that's because you can't … You don't even know what my fees are and assume – yet again – that I will be a £395+vat man – WRONG AGAIN … and as for this classic of yours "Oh ok so what you are really upset about is the big boys won't let you play with their OTM website??!" … I wouldn't join AM if I was on the high street (which guess what – I will be before 1st Jan!!) because OTM will be a massive disaster and will IMO do more harm to EA's who join than they can ever imagine … The fact that you have zero respect for me is irrelevant and actually shows an arrogance that only assumes that any low cost model in any business has nothing to offer other than price … any business that combines great service (or a great product) with a competitively challenging price can gain large market share either locally (as we are doing now), nationally or internationally … It's a proven and well trod business path and has knocked many higher price businesses off their perch … And you call ME an amateur … You have a lot to learn about business RealAgent if your vision is as narrow as portray it to be.
@Minnie, chris and any other online agent; . It is interesting that more than a few online agents have hinted to their investors that they would like to go stock market flotation route if possible. How could you feel comfortable telling potential investors that the value is in the future of online agency when the figures (2% of market) currently don't reflect a viable business model. Yet online agents are the first to criticise OTM for "not having enough traction" or "not getting enough traffic" on launch – OTM will generate more guaranteed income in their first year than any online proposition so why do the likes of PB EP and EM etc think that people should believe and invest in their "future" but not OTM's? Future.
The other reason I don't believe these business models work is the fact that I don't believe they will retain the staff in the field. At the moment its new and a few pot of gold hunters would have joined hoping to "run their own businesses" but the bottom line is: 1000 properties split between 39 reps (on their website) means an average on 25 properties in 6 months. Ok so lets make that 50 properties in a year, at the self employed rate of £300 per listing produces an income of £15,000 per annum. Where do the staff go from there, they can't employ anyone so they are left working 7 days a week with no income if they take holidays. They are in effect the industries equivalent of window cleaners (no disrespect to that profession intended). They have their own business, but can't expand. Realistically how many of them are still going to be working for PB in 12 months time when some of them were employed by high street agents earning twice that. It's the honeymoon period for PB, this is as good as it gets I feel.
Those of you who do nothing but criticize and ridicule online agents and forecast the inevitable failure of the 'unsustainable model' are making the same mistake that countless business people have made in the past … Paul H (I think it was) even went so far as to brand all online agents as 'charlatans' … online agents are here to stay, they will get bigger and take a growing share of the market – and any agent who believes otherwise is deluding themselves … It makes me laugh out loud every time I read an agent on here ridiculing the photos/descriptions of an online listing … What ARE you trying to prove?? That ALL high street agents have immaculate and superb photos/descriptions and ALL online agents are useless?? How stupid is that point?? … I have high street agents in my area – who consider themselves oh so proper – who have appalling photos, 5 line bland descriptions and no room sizes (never mind no floorplan) ALL ON THE SAME LISTING … And I bet that is the same nationwide … There are good, bad and indifferent high street agents and good, bad and indifferent online agents … trying to convince yourselves that because you are on the high street somehow makes you an exclusive resident of the ivory tower is laughable.
CP – there are some good and bad high street agents granted but i would say more good than bad. There are also good and bad online agents but in this case i would say more bad than good! – I think the issue most of us high street agents have are the outrageous claims from a number of onliners. The thought that PB can float after what they must also see as a less than dramatic entrance into the market place is laughable. Easylet claiming to have 60,000 expressions of interest and have about 500 properties almost 2 months since launch. And the vast majority (not all!) of online agents do very little proactive selling, chain building and sales progression. In my opinion all easylet, PB, EEmove etc are are hyped up businesses with more financail backing than sense. I am sure one day somebody will get the formula right but at the moment its just lots of hot air making ridiculous claims. It seems strange to me that Countrywide, Sequence, LSL have not ditched their high street offices with the massive staff overheads and transferred all there business to call centers……. Surely if online was the way to go one of these would have at least tried it……
You seriously have no idea what you are talking about. Why not do your homework before you comment. You are completely tunnel visioned in your view of online agnets
More like Micky Mouse comment…… How am i tunnel visioned? i think its a balanced view!
Because you have no room in your tunnel for anything different, anything that goes above or beyond your horizon. Open you mind and look at what the public want.
Spicer Haart and Tesco did try it with iSold.
I can hear the clammer of keyboards as people rush to answer that comment CP. Firstly you have chosen to visit a site proliferated by proper estate agents, those same agents that have listened to EVERY single online only firm tell us how they are going to destroy traditional estate agency and in some cases even tell us that THEIR way of doing things is better! Here's a few home truths for you, firstly WE ARE ALL ONLINE, we just happen to believe that to offer a professional and complete service to clients you need to be, local, have local and in depth market knowledge and do something to see a sale completes through proper staffing and resourcing. Of course the presentation you offer is criticised because that is ALL you are offering clients to sell their properties, so if you can't even get that bit right… The fact is, most agents at one time or the other, have marketed houses out of their area, so we know its a punt and that is exactly what the online firms are doing, taking a punt. That's not what customers would expect and yet every single one of you tells customers that RM and Z are enough. Its misleading and just not the case. Then finally we have the fees. None of your fees have been worked out on what it costs to properly market and then progress the sale of a property, they have, in fact, all been worked out on how many listings it takes to make money. Hardly in the consumers interest is it. One online agent will I'm sure, downscaled, make it. I hope for your sake you are working for that one!
Are these valuations akin to the dot.com bubble or can they be substantiated? How can Purple Bricks be valued at £21m after 400 sales at even the higher rate of £799 (ie £319K). My old Fulham office did over a million in sales alone – I wish it had been worth £21m. 😉
I thought you had to have a tried and tested business if you planned to float on the stock market. This company doesn't seem to have much in the way of profit stream so why would anyone want to invest in it? Reminds me a bit of the times when people invested massively in the "dot com" peak with the likes of "last minute dot com" etc…..nowdays people are a bit wiser …..aren't they?
Its only asset is the up front fee's and for that model to bring in the numbers they would need, ……… well they just don't add up. This is yet again another paper exercise to make a business look good, small investors will be fooled into following. One questions if the big guns have small print with first charges on any profits (a common practice)?
"Its only asset is the up front fee's and for that model to bring in the numbers"….and how long will sellers put up with that when they realise that there is just better than a 50/50 chance of a sale? A model that can only boast approx 50% satisfaction rate could never have a long term future. As it is an online agent there is no pro active sales approach (remember it is the sellers choice!) so this is unlikely to improve. No wonder they are looking at such a quick cash – out as they have probably worked this out themselves and want an out without losing their initial investment……a bit like Zoopla cashing in when they knew what was going to happen with their membership.
And of course thats less than a 50/50 chance of simply going under offer, because they haven't SOLD 400. So when you add to that the fact that sellers, fundamentally going it alone, will experience a higher than average fall through rate, I suspect that a further 200 will be back on the market.
Hadn't really thought of that….makes the proposal even worse when you add this into the equation!
I suspect this is a test the water article. They saw that the p*** poor offering that sleazy Property put forward attracted investors and I suspect the money men want a quick turnaround. The reality is they launched 2 years too late and the money they have pumped into advertising has got them the listings they have had so far, thats unsustainable and as the market hardens so instructions will fall for them dramatically. In my opinion they have to hope that they put one or two of the others out of business, which to be fair given the likes of Russell Quirk and Adam Day, seems like a reasonable shout.
@realagent your professionalism shines through,you are a credit to traditional agents keep up the good work.
And that Chris from someone with no estate agency background playing at being one. With what you have brought to the table so far, you epitomise everything that so called online only stands for, so please do keep up yours too!
Instructed on over a 1000 properties and sold 400 so at best 6/10 customers have paid £800 upfront and their property has not sold in one of the best markets in years ……. despite all the millions they have invested they feel this is a success and want to float! Only a matter of time until the nightmare stories come out how vender were conned out of money upfront and no doubt a channel 5 programme slating them.
Who would invest in a business that has no guaranteed income, also 'IF' the portals did not allow you to list, you will have a big screwdriver looming over your head, and yes, you're gonna get screwed!