Purplebricks has admitted that its figure of 78% of homes it lists are sold is based on sales agreed – those sold subject to contract – and not on sales completed.
Lee Wainwright, UK boss of Purplebricks, was speaking on Radio 5 Live yesterday when his firm was accused of “taking the instruction, putting it online and walking away”.
The programme also heard, from independent industry commentator Kate Faulkner, that the “honeymoon” with online agents is now over.
In early trading this morning, shares in Purplebricks fell further, by around 6% to 395p. At noon today, further falls took the price down to 370p, down nearly 12% over the course of the morning.
During yesterday’s hour-long investigation into “online-only” agents, Wainwright criticised last week’s bombshell claims by analyst Anthony Codling of Jefferies.
Wainwright said the Jefferies’ allegation that Purplebricks sells only 51% of listings was “a very big claim – and it is not true”.
A report in The Times said that Purplebricks is considering legal action against Jefferies. According to the paper, Purplebricks is also investigating how its share price started to move down before publication of the Jefferies report.
Yesterday’s programme was presented by Adrian Goldberg with input from Guy Kilty, and started with Goldberg asking whether it was “a £1,000 coin toss” when customers went with Purplebricks, as Codling suggested.
He also queried whether customers should be taking everything they were told at face value.
Kilty pointed out that fees were paid upfront to online agents, whether the property went on to sell or not: “So it is a gamble.”
The programme said that Purplebricks’ sales rates were “better than the industry average” – but not the 78% it claimed.
Pressed by Goldberg as to how the 78% was arrived at, Wainwright said: “Sold subject to contract.”
Pressed again, Goldberg said that even by Wainwright’s own figure, it meant that one in five people were paying Purplebricks upfront “but not getting anything for it”.
Wainwright insisted that the reason Purplebricks had captured the public’s imagination and the reason for its growth was that “the old way wasn’t working”.
He also insisted that Purplebricks was not an online-only estate agent – the way the programme mostly referred to that part of the industry – but a hybrid, with local property experts providing the personal touch.
Kilty revealed that other online agents were critical of the Jefferies report, calling it “flawed” and inaccurate”.
Some case studies were included on the programme, with one couple claiming that after their initial Purplebricks LPE left the company, they heard nothing. They were tied into a contract and “felt stuck”.
They criticised the conveyancing service they had to use as part of their deferred payment contract and said that the 12 months that it took to sell their home was “a year of hell”.
Wainwright apologised for their experiences, but said 97% of customers were happy with the service, making it more popular than Disney or Amazon.
In another case study, Louis Houghton said he had been happy with the Purplebricks service. Of the three agents he asked round to value his property, the Purplebricks LPE was the least pushy and knew the area. In selling his home, he had saved up to £3,000 in fees.
Purplebricks was not the only online firm under the spotlight. Matthew Thomas, who tried to sell his Worcestershire property through Yopa, said that of six viewings, half had not turned up. He had repeatedly had to chase for feedback.
“When we needed the Yopa agent, he just wasn’t there … it was so lacking,” he claimed.
His property is now for sale with a local high street agent, and he is feeling confident.
Yopa, however, said it had been in touch with the vendor, who had received an offer of 95% of the asking price, which he had rejected.
The Advertising Standards Authority was represented on the show by Miles Lockwood, who said that one issue was that online agents were “not comparing like for like” when promoting their fees against full-service offerings.
He warned that the ASA is now proactively monitoring the “output of estate agents as a whole”.
Agent Noel Wood, of Peter David estate agents in Calderdale, Halifax, and Brighouse, told the programme of downward pressure on fees, including his own firm’s.
He said it could mean high street firms would be unable to afford good quality staff: “I worry that it is going to dumb down the industry,” he said.
Industry analyst Kate Faulkner told the programme that the honeymoon period with online agents “is over now”.
She said people should understand that many properties – she put it at 40% – do not sell, regardless of the type of agent they are on with.
She said: “Getting from offer to completion is a minefield – the resources and the skillset needs to be in place.”
Goldberg put it to her that with an online agent “The risk is that you have paid for a service and get nothing”.
Faulker replied that there were both bad online and high street agents: “With a traditional agent who is not very good, if they do not sell, you have paid nothing. That is where the reality is beginning to set in.” In the programme this was described as a key difference.
The programme attracted feedback as it went out live, including one text which said: “78% conversion rate is based on SSTC … properties not actually sold.”
The figure of 78% used in the programme contrasts with the 88% that Jefferies says CEO founder Michael Bruce cited in a Radio 4 programme in October 2016, when he is said to have claimed that 88% was the proportion of listings sold within ten months.
Yesterday’s programme can be found at http://www.bbc.co.uk/programmes/b09qdc1
Comments (42)
On the odd day off, anybody else noticed the lack of ambulance chasers on daytime TV? Was a time there was nothing but ads for those, public wised up
This story is FAR from over yet…
The adverse PR for the online discount agents is now educating the house selling public as to what Full service Traditional does – No Sale No Fee
I don’t know all of this ins and outs
If a sale is agreed and then collapses; is there still a conveyancing or admin fee to pay on top of the initial fee?
Do the conveyancers charge in any event?
Totally agree J1.
If it is a condition of their contract (conditional selling) that if you elect to use their conveyancers so as to be able to defer their upfront payment and they receive a £400 or so referring fee that fee must be marketed as part of the fee.
If the user then decides not to use the conveyancing service, possibly as a result of such poor reviews and is charge a £360 ‘admin fee’ that DEFERRMENT fee must be marketed as part of the fee.
These fees must be marketed equally and compellingly in addition to viewing charges and ‘Fee is payable regardless of sale’.
Users must be boldly informed in all marketing of the full cost consequences of not achieving a completion as clients may otherwise presume that as ‘proper’ estate agents they do not charge if they do not complete?
The business of comparing apples and oranges seems to be the business of Mr Wainwright
When he says that those who pay high street agents a full fee only subsidise the clients that don’t have to pay because they don’t sell, is surely a similar proposition to his own but in reverse.
The ones that don’t sell pay for the ones that do!!!!!!!.
He charges every client with no regard to whether they sell or not. He then offers an over-priced poor conveyancing solution so he can take a cut which he doesn’t declare in his adverts; and/or he sells his clients’ debt to a loan company so he has no risk at all.
All of this so that he can justify his disruptor strategy to a city that fails to understand that there will never be enough profit to support the inflated share price (lastminutedotcom springs to mind).
But actually boys and girls this is not his company, he has been wheeled out because the Blues Brothers don’t want to face the music anymore.
Thank goodness for Kate Faulkner and the fact that she was wheeled out late in the interview; a lady who knows her facts, understands the business and was prepared to defend no sale no fee, to advise the difference between sstc and sold and to admit that the honeymoon period for the on line listers was over and that the public were beginning to voice concerns over the whole online business model!
* this has been sitting on my screen since 0845 – so apologies in advance if someone has beaten me to it with some or all of the content*
Laydees and Gentlepeeps…
You have all witnessed the penultimate episode of the hit tragi-comedy “Purple Smoke and Broken Mirrors”.
Yesterday’s show saw lead character Mr Wainwright lose sight of the plot with probably his third sentence – and from there he was adlibbing it.
Badly.
Here’s the cold, hard fact that seems to have been missed.
All this goes back to the BBC Moneybox programme, aired on 16 October 2016. There, the point of discussion was whether Purplebricks actually did what it claimed on the tin. The programme briefly focussed on the plight of one couple – who had marketed their flat with the company and had received squat in return for their £000s.
Then – over to the real star of the show – Michael Bruce, for his response.
And the conversation between Mr Bruce and the presenter – which I transcribe below exactly as it was spoken, starting with a question from the presenter – bore the seeds that became last week’s unwanted fruit:
‘They pay you even if it doesn’t sell
Yeah… I
mean… No Sale No Fee is fundamentally
unfair it’s a tax on the seller. No Sale No Fee only helps one person that’s
the person who never sells and everyone else has to underwrite the cost of
those people.
So what percentage of your customers pay a fee – but their
property doesn’t sell?
Erm… very few
people… err…err we sell a… the greatest percentage of properties that we
take to the market than ANY other agent in the UK
So what is the percentage? I’ve seen estimates that it’s
only one in seven or one in three that sell.
No – it’s…
eighty-eight percent of people err… errr… sell their house prior to the
period of deferment which is ten months, erm… and… you know, at the end of
the day, we sell more houses a percentage of what we take to the market than
ANY other Agent in the UK we’re also the most positively reviewed Agent than
ANYONE else in the UK and THAT is because we have a strong reputation for
selling houses and getting the job done better than anyone else.
So – EIGHTY EIGHT percent of the people that list with you
SELL their home?
Correct.
So twelve percent don’t – so they’re the ones who in the
sense are subsidising them cos they’re paying what is now the eight hundred and
forty nine pounds and don’t actually get a sale.
Well – that… what I
said was eighty eight percent of people actually sell their house prior to the
ten month period – what I DIDN’T say was that twelve percent DON’T sell – all
those people will remain on the market and stay on the market until they sell
their house.’
That was OCTOBER 2016. The fact that it’s not particularly clear where that “eighty eight percent” came from (other than out of the cakehole of the Company CEO – which therefore makes it a wee tad ‘official-like’ in the eyes of various bodies, concerns and institutions…) is just slightly irrelevant – he stated it so that was the benchmark.
SO – Jefferies clearly saw an opportunity to prove him right – and ‘S’ all us detractors ‘TFU’ for once and for all.
They honed in on the next calendar month following the programme’s airing – which I would say is reasonable. If they were doing 88% in October then it is reasonable to expect the next month to have a not-too dissimilar degree of success.
Only their figures didn’t show that. Quite the reverse, it seems.
Only 58.7% of their stated claim figure actually ‘sold’ in the November listings check – using, that is, the accepted definition of the word.
But straight away, Mr Wainwright fudged over the fact that his predecessor uttered the figure that was the catalyst that set the ball rolling. HIS preferred figure – and, in fairness, the one which had been sold to The City in Trading Statements and Results notifications, was seventy-eight percent. And he stuck to that figure limpet-like throughout the programme – no matter how deeper it dragged him into the doo-doo that was waiting there for him.
AND that said statistic was for “sales agreed” – but steadfastly avoiding being drawn on the difference between “Sold” and “Sale Agreed.”
More and deeper doo-doo.
His attempt at discrediting the figure in the report was classic comedy. For example, he blustered out that the report was apparently skewed by the fact that it was “only one months’ worth of data” – should have been therefore able to crow that this simply showed that other months clearly outperformed what was already being heralded as an questionable achievement (slow reactions there…) and for the inclusion of “properties that were on ‘Marketing Breaks’.” Erm… isn’t it just a tiny bit ‘No 5h!t, Sherlock’ – that if a property is on one of your now infamous “marketing breaks”, then it ain’t chuffin’ sold! Or – that they might have sold AFTER the ten-month period or maybe Land Registry were taking up to three times longer to process their data than pretty much any other sale in the land!
To be fair – I’m sure if you take out all the properties that for whatever reason skew the result, eventually you will get somewhere near to the 78%. Of SALES AGREED-BUT-NOT-QUITE-SOLD…ish, that is.
Anyways… Kate Faulkner put the listeners straight on what we were all screaming at our wirelesses… or banging out manic Tweets to Radio5Live… that some say up to 30% of “sales agreed” don’t proceed to exchange of Contracts. Or, as the vast majority of non-Agents of the world know them, they don’t result in…
…A SALE. The whole point of debate. The four-letter word that is the expectation of a homeowner when instructing an Estate Agent.
A successful sale. Not a one thousand pound toss of a coin.
To give him credit where due – Mr Wainwright did exceed his predecessor in one respect.
The audible level of pure, white-hot blind panic emanating from his every pore was waaaay in excess of that displayed by Mr Bruce a mere fifteen or so months earlier.
whats missing here?
I know
Mr cyberducky !!
I regret only listening to the recording of the interview with Lee Wainwright and therefore missing an opportunity of texting a question to him, for a live answer. What I would have asked, would have been about the much vaunted 36,697, 5 star testimonials on Trustpilot. When are they sought? is it at the time of instruction? and is any incentive offered for them? Forgive me for being a bit cynical, but I can’t imagine the best Agent in the Land gaining that level of approval, let alone Purple Bricks.
Don’t worry I tweeted that question (or very similar) at the time he said it, but they didn’t follow through I am afraid!
Oh, don’t worry – I’m fairly certain that a lot of Purple people ‘followed through’ yesterday instead!
;o)
How can the chief exec of purple bricks, who claims 26 years experience in estate agency can state that “sale subject to contract” is the same as a property sale. This comment is as inaccurate as it is misleading and is creating a false economy for consumers who 50% of the time are likely to have to shell out a second round of fees eradicating the savings advertised. The reality is that most conveyancing issues arise after “sale subject to contract” which is when you need a dedicated local estate agent, who is yet to earn their commission on board! Very pleased that the ASA are picking up on all this!
The Duck and Dom show must have been scheduled into a later slot today . . . . .
I have mentioned this on another thread. The local ‘LPE’ will, as soon as an offer is accepted on a property change the property to exchanged. This occurs even if the property has only been live and available for a day. This has the desired affect to support their 78% rate and also with PB high fall throughs enables them to re-list on the portals as new to market.
I’m intrigued… Wainwright said ‘ 97% of customers were happy with the service’
Is that 97% of all that have instructed them? Does it include the 1 in 5 that don’t get a sale agreed? Does it include the nearly 50% of those who do get a sale agreed who don’t get a sale through to completion?
I am hazarding a guess here that the 97% of people that are happy with the service are 97% of those 50 odd % that have actually had a sale complete. So in reality what they’re probably saying is that less than 50% of people who instruct PB to sell their property are happy with the service.
So much for being up front and transparent with their information. It’s all spin!
In my opinion, high street agents just have to wait it out. 50 ish % of those who use PB won’t ever go back. High street agents usually work hard to maintain relationships so that they have a high chance of return business. It’s what helps to keep things ticking over. People feel a loyalty to an agent if they have been well looked after and cared about throughout the process. That’s the massive angle that the PB and other onliners are missing. They may get their money up front and not have to try as hard to reach completion, but they can then wave goodbye to those 50 ish % who are not happy and feel they have been duped and wasted their time and money because they don’t get anywhere.
Nobody panic – the personal touch will always win. A little more education for the public about what is actually involved in selling a property and what a good agent does wouldn’t hurt though…
“The ASA is now pro-actively monitoring the output of estate agents as a whole”. This is the most important thing here for us real estate agents to note. Misleading boards will be one of the first items I’m sure to hit the fan and Trading Standards are currently looking at the use of guide prices on private treaty sales which is causing many would be buyers buyers confusion and angst.
The truth will out, you can’t get half pregnant? Anybody within the industry (online budget agents included) will know that it is only job half done at Sale Agreed, it counts for nothing? The simple fact is, is that half our time is spent getting a sale through from STC to exchange of contracts. Why oh why would you spend half your working life doing this if YOU’VE BEEN PAID ALREADY and therefore not reliant on the completion of any sale in order to get paid?
PB only needs to list properties, not sell them, which actually makes it a fantastic business model for PB but not the customer!
The wheels will fall off and I for one am not losing any sleep over it, fast buck merchants come and then go………….
Did everyone hear the guy from the ASA saying it had to be perfectly clear on all adverts if a fee was being charged up front?
Can anyone spot where it does that on this advert?
Surley ‘perfectly clear’ means it should be given equal prominence to the ‘don’t charge commission’ on the voice over!
Agent V
Don’t forget PB’s new twist on transparency.
Don’t those fleeting warnings on their TV advert blend into the background so you can not actually read them!
https://www.youtube.com/watch?v=zPH0sG23eBI
When referring to their deferred payment option Lee Wainwright states “with no loan agreement”. On the iPlayer at 25.02. Did their CEO just lie on air?
Mr and client you have two options;
1). A ‘Coin Toss Listing’ with advertising and limited service which is where evidence shows you have a 1 in 2 chance of completing your sale, but you have to pay anyway, all be it a reduced amount,
or
2). A ‘No Sale, No Fee’ Full Service marketing package which costs more but is where you don’t pay a penny until we have achieved and completed the sale at a price agreed by you.
Are these PB guys for real?
Using SSTC as the basis of sales is so Jack Nicklaus: “Drive for show”.
If you want respect how many hit the bottom of the cup? “Putt for doagh!”
Wainright mentioned more than once his 26 years in the industry, so he knows exactly what a “sale” is and he knows full went it isn’t the same as a “sale agreed”. As such, his 78% answer is a blatant attempt to mislead and decieve the public.
The Jeffries report was clear that it’s analysis was all about instruction to completion so to try and counter their case by talking about instruction to Sale Agreed is just a nonsense and thoroughly underhanded.
It’s also disappointing that an investigative journalist specifically targeting the industry didn’ know the difference and as such, entirely let Wainright off the hook.
If an investigative journalist can be deceived by smoke and mirrors, what chance the public?
Those who understand the industry will know that typically around a third of Sales Agreed won’t complete and if you apply this to PB’s 78% it comes in at around 51%, so it looks like Jeffries are spot on.
How many times in the interview did he say ‘the traditional model is not working’? Really? How come it still accounts for well over 90% of transactions in this country then?
He even seemed uncomfortable about saying it, as though it was one of the ‘whoppers’ on his list that he had been told to say!
BSOS23PC
What is ‘sstc’ in purpleworld anyway? Is it someone in a position to proceed eg closed chain with a ‘ftb’ at the beginning or that most rare of buyers the ‘cash buyer/unicorn’?
I suspect that PB wouldn’t know; just wanting to make their ‘poor’ statistics look as positive as they can. The truth of the matter is that, if you want to save on fees you pay up front. If you don’t get the service, you have to do somrhing else. But please do not think that Purplebricks is or can be what a traditional agent is or can be. It will make no money for investors in terms of dividend and certainly not while its share price looks like ‘lastminute.com’ in its ‘honeymoon’ period or ‘bitcoin’ to a considerably lesser degree. It is noteworthy that the message is getting out there.
Buy cheap- buy twice. It does the PB senior management little credit to continue to try and pretend it is what it isn’t. Is it all about share price and making a few quid from those that trade? Looks like it to me imo!
I thought Lee Wainwright showed his inexperience as a CEO, he seemed very unprepared for clearly obvious questions. Like many others on this site, I also call on PB to confirm the % of listings completed to THEIR customers, easy enough stat PB!
Let’s be honest shall we: a regional M.D. of Countrywide likely has less experience of running a business than the independent agent running his single office operation. The latter has typically decided to ‘go it alone’, remortgage his house, get an O/D, sign PG’s, negotiate a lease, and that’s before deciding on image and the myriad of stuff that then follows. The list of responsibilities is considerable and experience is priceless! IMO obviously.
I have sympathy for Mr Wainwright, he was the one who had to defend what Mr Bruce had claimed 14 months earlier, the odds were stacked heavily against him before the program began.
As someone who has been in position for less than a month what could he do? In my opinion when faced with a report from an analyst of Anthony Codling’s standing and integrity the last thing you should do is intimate any impropriety on his behalf. The City and the journalists who cover the City have known him a lot longer than disruption or Purplebricks has been a bubble.
It is easy to be confident within your own circle, to be all macho and threatening however with a couple of significant forecasts under his belt that went against group think wisdom the City listen to and respect his viewpoint even if they don’t always agree with it. The bloke was doing his job and he did it well and did it fairly
Unsympathetic I’m afraid. Doesn’t it come with the salary? If you don’t agree with what’s been said before; don’t take the job, imo
Simple facts that anyone who has seen an episode of Dragon’s Den would know – do not walk into the den without knowing the figures of your business inside out, upside down and back to front because if you don’t you will be made to look stoopid!
Had not done his homework or revision, deserved to fail and boy did he fail!
“Had not done his homework or revision, deserved to fail and boy did he fail!”
Actually – I honestly believe he knew the figures good & proper!
Think of the relevance of the saying “Better to say nowt and look a fool than say something and take away all doubt.”
I would suggest that what little was said, was sufficient for purpose.
Loads of embarrassing things from yesterdays Radio Five piece. Lee Wainwright seeming to claim that selling a property after 12 months is an achievement in some parts of the country? The fact that he is trying to say that after 10-12 months the 51.6% doesnt account for stc and exchanged (like waiting that long to sell is another achievement).
Most days I get asked by purchasers and vendors what the difference is between exchange and completion, a very valid question. But they all know the difference between agreeing a sale and completion, shame this hasnt been explained to the Purplebricks CEO in his “27 years worth of experience”
No disrespect intended but; 20+ years at Countrywide? Is that 20+ years experience or 5 years of experience repeated 4 or 5 times. Is this an example of someone brought aboard to add some modicum of substance when he only has a local and rather closeted knowledge? Countrywide was a ‘burning ship’ when he left and you can’t blame anyone for abandoning ship but is it a case of ‘frying pan & fire’!
Sold/Exchanged Contracts or Concluded Missives if in Scotland.
It’s that simple. SSTC/Under Offer etc is NOT Sold in my Accounts!
The difference here is that they don’t care about Bona Fide Sold because they have already been Paid!
So, lets have a Truthful Answer to a Straightforward Question Purplebricks!
How many Properties did you actually Sell last year – the definition of “Sell” being Sold where Contracts were Exchanged and the Seller received the Sale Price/payment?
It’s a really simple Question…..?
We’re waiting for your Answer…….
And ‘What percentage of properties that you charged a fee to sell did you actually then COMPLETE the sale on? …..and that means not including ones that went on to complete their sale through another agent.
Purple Bricks SSTC
Otherwise known as stuck in limbo land for months due to a lack of after offer backup.
Nobody cajoling, chasing, or in fact simply ‘doing’.
PB SSTC, otherwise known as the yawning gap between space and time. Silent.
I agree Chris.
Ironically, if Purplebricks were actually a little more open and transparent about their conversion from instructions to exchanges ratio over a year, they may have more credibility. Currently, this confusing picture encourages the view (rightly or wrongly) that they are intentionally wanting to mislead.
My mother always told me – If you always tell the truth you don’t have to remember what you said.
“Listings to completions 88%”
“listing to STC 78%”
Both statements from a PB PLC CEO. Something doesn’t add up.