Purplebricks will take 10% market share in both the UK and Australia, analysts at consultancy firm Hardman & Co said yesterday.
However another analyst, Anthony Codling of Jefferies, traded verbal punches with Purplebricks boss Michael Bruce, with Codling noting that yesterday’s trading update did not provide sales figures.
Codling said: “Once again Purplebricks has chosen to major on growth in instructions without telling us how many homes it has actually helped to sell.
“We continue to be surprised that this simple question is left unanswered.”
But Bruce claimed Purplebricks is selling more homes “than ever before”.
He said: “We are selling lots of houses and giving great service. I am happy at the level of properties we are selling.”
The Hardman & Co report to investors said that the hybrid agent is “rapidly closing in” on becoming the third largest UK agent.
Last November Purplebricks laid claim to fourth place, putting itself behind Countrywide, Connells and LSL, and ahead of Spicerhaart, Foxtons, Kinleigh Folkard & Hayward, and Savills.
Hardman & Co said that Purplebricks will become the UK’s third largest agent by the turn of this year.
It also believes Purplebricks will achieve break-even point in the UK in the second half of next year.
In Australia – where Hardman & Co describes the opportunity as “that large” – it thinks Purplebricks will chalk up an £11m loss in the first two years before making a profit in 2020.
The report also drew attention to Purplebricks’ business model, saying that a sale occurs when the seller instructs Purplebricks and is not contingent on a house sale.
The report summarises Purplebricks as a “disruptive model” continuing to make solid UK market share gains, and offering service “some 75% less expensive – and better – to the clients”.
Hardman & Co also noted that a significant share ‘lock-in’ holding period expired recently, with the remaining lock-in expiring late this year.
This could, for example, mean founders and backers selling shares, and releasing more of them on the market.
When Purplebricks launched on the stock market last December it was with a £240m valuation but only 20% of that figure was made available for trading.
Yesterday, shares in Purplebricks bounced up and down in value, ending the day up 3.25p at 135p.
Comments (66)
First time posting here and just read pretty much every comment on here.
I am a hybrid agent, I don’t have a “shop”, but I live in the town in which I am selling houses. I have only been open for 8 weeks and as yet have let one property and have one for sale.
It amazes me the difference in how people think. A potential buyer looks online for their next house, they perform the search and find the houses they are interested in. They then shortlist them. At that point, they find out who the selling agent is.
When they come to sell their own house, all recollection of what they have just done goes out the window and all they think of is how important a town centre agent is. Didn’t matter one bit when they were looking to buy and doesn’t matter to any most (98% I believe it is) who start their search for their next home.
My model is the same as the high street.
No sale-No Fee
I currently have a fixed fee (but in reality does a % make a difference?) sell a house for £200k on 1% you get £2k commission, sell it for £10k less, it costs the high street agent £100. Is anyone honestly that motivated for maybe an extra £20 if they negotiate hard?
I do all the viewings (unlike some of the high street)
Every house has a floorplan at no extra charge (unlike some of the high street)
Extensive well written description (some of the high street don’t even put a description)
Numerous photos that have been edited (but unlike some I’ve seen, they actually still look like the actual house)
I agree with one of the comments that remarks on the “presence” of an internet agent, but in the same way Amazon, google, ebay, autotrader, were once unheard of, there will be a limited number of online agents that will become household names.
Whilst the internet agent will probably never take over from the high street, I do believe that it will become far more of the norm to see boards with online agents names on and high street will have to adapt to it. The same will happen to car dealerships. 40 years ago, the shopping trip was all about the town centre, now the town centre is defunct. For example, unless you want a house, cup of coffee or mobile phone, there is no reason to go in the town centre.
I’m not saying the high street is dead, or the internet agent will destroy them, but I do believe that with the right amount of marketing and high “google” rankings, the internet agent will certainly start to take more and more away from the traditional agent. Its called evolution.
That is incorrect as I was working for Hambro (Countrywide) in 1986 when they introduced ‘No sale,No charge’. Most independent agents followed their lead well before the 1990’s.
Some agents do charge upfront to cover the cost of additional/premium marketing services but do not charge a commission if they do not sell a property The reason your response is flawed, as is PB and other on line only models charge the same amount whether the property sells or not,
No sale,no charge agents have to see the deal through to completion to get paid. On line only agents have no such motivation as they have already been paid! Indeed, it could be said that creates more work for no further fiscal reward.This must surely be bad practice?
That is why those on line only call centre models may contravene the Estate Agency Act which is designed to protect sellers and buyers from bad practice and monetary loss.
Presumably, if one or more on line agents went bust, 1000s of their customers could lose many £100’s? For these reasons above, the on line only agents shall have to introduce No sale, No charge.
Therein lies another problem as it actually appears to cost PB up to £2,700 for each and every instruction?.To offer a No sale, No charge service PB may have to charge something like £3000 to £3,500?……. much more than many independent, full service, branch based agents in the average market!
Oh come on everybody. PB isn’t interested in selling properties!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Its whole business model is based on getting instructions anyway it can. They do not need to care if the property sells or not or what the achieved price is.
Three decades ago the OFT had serious concerns over agents charging fixed fees as there was no incentive to achieve the best possible price as required by the Estate Agency Act. The only difference with those agents and PB was it was still reliant on a sale as it was mostly no sale = no fee, while PB take the money up front.
I’ve been asking two questions for a long time, with no answer:
1. How many properties listed are sold by PB (fall through rate)
2. What dividend has been given to shareholders for a return on their investment.
That piece of information about the Estate Agency Act would be really useful to find and highlight to vendors. Maybe I should have but I have to admit I didn’t know it was in the act. Can you point out where I can find it please.
AgentV
This is cut’n’pasted direct from the POWYS (NTSEAT) website “Advice for Estate Agents”:
“The Estate Agents Act 1979 regulates your work as an estate agent. Its purpose is to make sure that you act in the best interests of your clients”
’nuff said, methinks…
Woodentop, consider what you have just posted…….that is brilliant!
So do on line only, call centre, upfront fee agents contravene the Estate Agency Act as by charging upfront fees, whether it sells or not, breach this act as it is plainly obvious that they may not be acting in the best interest of their seller clients as it does not effect PB whether a property sells or not, let alone at the best possible price (see ajax buyer review above).
Call me stupid but has this act ever been changed to consider the on line, up front fee revolution?
This Act does make absolute sense!
Let’s await a response on this from ‘our’ local expert, TheHybridAgent.
No sale no fee didn’t kick in properly throughout the industry until the mid to late 90s. Brought in by Independant agents to tackle the large upfront marketing fees and cancellation/withdrawal fees that corporates charged.
Still to this day corporate agents charge marketing fees upfront, fixed fees and have cancellation fees within their agreements. Therefore your argument is irrelavent…
So in the whole of Australia – PB have wait for it…10 properties
Until this year I’d never even had “online” agency come up in conversation with potential clients, so my own experience is it has gained traction. However, a two minute analysis of the results of those (still few) sellers who have elected to go that route has quickly warned others off doing so. A 10%-15% success rate of selling, woeful marketing/photography and now starting to see demonstrably below market prices being achieved in the rare cases of a sale. The majority of cases seem to be adding £1,100 to their moving bill before experienced local agents come to their rescue.
On trustpilot is looks like they have very happy new on the market clients (obviously) and very annoyed buyers who hate them.
Purplebricks don’t need buyers with rip off business model but the sellers do….
PB have 50 or more positive reviews over any negative review on Trustpilot. All reviews can be edited at any given time by the consumer. The overall majority of customers are happy. It’s irrelavent that its newly marketed or not.
Back again and still avoiding smile please’s question on the other thread.
Really good point.
Bless You!
Surely to negotiate the best deal for your client and make it stick you have to earn the trust and faith of both seller and buyer?
It appears that PB (see Ajax posting above) are struggling with this EXTREMELY IMPORTANT aspect of true ESTATE AGENCY – being a good middle person.
Yet another reason why this model falls short as a sale creates more work after they have been paid!
Purple Bricks head office is about a mile from where I live. I have just done a search on their site and they have 22 properties listed in my home town. On rightmove there are nearly 1500 listed for all agents in the area. Robert is right when he talks about local presence! The critical thing in all of this is that PB was built from the ground up…..not to do the best job for property owners….but to make money for the PB owners and the Bruce brothers (who failed to make a success of a local high street estate agency chain round here). That is their weakness. We need to fight them, and all of the online agent threats, by concentrating on what does give owners what they really want….personal touch, great service, trust and the best end result. Google and facebook were never designed from the ground up to make the most money for their owners…they were built to provide the best possible function and experience for their users. look where that got them! Imagine if you could build the same thing for estate agency…a system that gives a consistency across a network of independent agents. That is what I really want to work on. I have loads of good ideas and I am sure that there are many agents out there that do as well. All I need is the expertise to help me build the software.
PBs proberbly do sell a large percentage of clients homes, the figures might be right up there to compete with the best. Youll never actually know.
THe reason this figure won’t ever be published is not because they are embraced about the actual number it’s because it will reflect as very l low percentage of their suggested listings they tell investors and other members of the public, . Double listed properties, resisted houses, spoof properties, those that have had a marketing break, whatever the title.
They proberbley sell 4 out of 5 listings and tell investors they list 45 ( same numbers just different format)
“Double listed properties, resisted houses, spoof properties, those that have had a marketing break, whatever the title.”
You know the title, Eamonn – you just can’t bring yourself to type it… ;o)
That’s correct. I adopting the same policy as Rightmove.
Can’t expect delaney to say portal juggling!
Which is not really different from your high street agent. The market is kind to us agents depending on areas still at the moment, my scepticism is when the market becomes tighter fewer buyers around and you have to “craft” sales instead of just chucking it onto rightmove.
proberbly? Heads Gone!
It doesn’t matter to them does it? They get paid just to put the property on the market. Who amongst us hasn’t obtained a fantastic sale result for a vendor after doing over 40 viewings on a property, negotiating with ten people making offers, and following through all the way to completion. All that is a lot of hard work that consumes a lot of time…and that does not work well in a PB type model where you wouldn’t get anymore for all that work than you would for just listing the property at too high a price, having no viewings to cope with, and then just dropping it until it sells to the first person making an offer. What should (and hopefully still does to most) matter to all vendors is the end ‘best walkaway result’. This is the message we need to get across as agents. You get what you pay for. We need people to trust that by paying more …they will walk away with more and if they change their minds at any stage it will have cost them nothing (apart from the £50 for the EPC)….as opposed to £798.
If they offer a great service for every1 in 10 clients then 9 will not come back to them.
This of course is true Property Paddy, if, the principal shareholders are indeed in it for the long term in the UK?
‘Hardman & Co also noted that a significant share ‘lock-in’ holding period expired recently, with the remaining lock-in expiring late this year’.
I wonder how the stock market would react, if any of these major shareholders, sold large chunks of shares, prior to making a profit in the UK?
Even if it were to apparently capitalise OZ ?
Well if they peak at 10% of market share then the direction after that doesn’t bode so well for them.
A successful estate agent works on repeat business. If they offer a great service for every 10 clients then 9 will not come back to them.
The true results are a long way off yet !
I meant
If they offer a great service for every 1 in 10 clients then 9 will not come back to them.
Stupid computer
LOL
Here’s an interesting comment from the perspective of a buyer posted yesterday on the Interactive Investor website:
My experience as a buyer of a maisonette on PurpleBricks is consistent with the negative comments about this company made online by other users. However, as a buyer, I can not complain as this may eventually enable me to purchase the property at a lower price than if it had been sold through a different company. The person from PurpleBricks who did the viewing pointed out the “communal garden” to us but fortunately I had checked the Land Registry which showed that the garden was private and it was also a completely different piece of land to that occupied by the “communal garden”. It didn’t help that the person doing the viewing lived about 30 miles away in London so he did not know anything about the area. However, the really frustrating thing from our viewpoint is that we have now had an offer rejected online but there is no way for us to negotiate using the online system. We have been given the number of the PurpleBricks franchise holder but when we phone up to start negotiations there is no answer – perhaps he is on holiday. We have now written to the owners to check up on a few further details of the property (we could not see the garage inside because it was locked) and I hope the owners will indicate to us the range of price that they may accept. I am almost certain that this deal would be done and dusted if, as is normal, we could negotiate a price with the agent as we would offer very close to the asking price but having an estate agency service which does not allow any negotiation is just plain silly.
Ajax – well done in being the first to point out the smoking gun.
Game
Set
MATCH!
The crux of the matter is that presumably as a ‘local expert’ to earn anything resembling a reasonable living you have to look after 100 plus property sales (or should that be listings?) a year spread over a distance of 30 to 40 miles. I think that would be an impossible job to do well.
Purple Bricks or Purple ‘something else that sounds like Bricks!’
Local Area Experts covering an area covering 3 counties armed with a Rightmove ‘Best Price Guide!’
I’ve never seen so many recruitment adverts on LinkedIn so they must be doing really well…Surely!!
Their ‘BS’ must be true…You only need to watch the TV ads to know that!!
Judge an Estate Agent that can sell your property, for its full value & beyond without marketing!
Good Luck to ’em though!!
If you are worried about them using the Rightmove best price guide consider this, the Rightmove best price guide is your data, your descriptions, your photos. By allowing Rightmove use of your dead file data after completion you are actually powering the passive intermediary industry and in doing so you are eroding your fees
People disgree with me on this but without a clue on valuation they are simply guessing. I tried the Tepilo valuation system this week it came up with a figure less than half of what it should be because the property isn’t in Land registry data and has never been on a portal.
The people who sell buildings insurance are more regulated by FCA than the people allowed to value the building, that is mad! Looking up a figure on a random number generator does not satisfy the redress schemes’ requirement to evidence a valuation.
Richard, I think that you mean good luck to their investors / shareholders, bless them.
I have seen perhaps 20 PB for sale boards in the last six months. I have only ever seen 1 PB sold board.
Not exactly setting the world on fire.
And you are someone tuned in, noticing the boards! The basic flaw with the model is the expense of a presence; less than 1 million household move each year, to win instruction without the subliminal presence of an office vendors have driven past 20 times a weeks and the reinforcement of years and years of For Sale and Sold boards is expensive. Firms like this do not exist to most people most of the time. Cheap is exactly the opposite of what they ought to be.
The fatty and skinny advert bloke pops up one minute as a much cheapness agent who isn’t actually local, isn’t actually an expert isn’t actually open 24/7 and doesn’t quite offer the savings they claim and then because of a delightful kick in the teeth it looks like he has failed at being a cheap internet lister and become a postman. Even the media they are paying for is working against them because they used the wrong actor and their message is clobbered to hell by the same chap appearing in a different advert 12 minutes later- there’s no consistency!
Most of the public aren’t moving most of the time so to hit lucky the telly adverts have to continue or they will forget what Purplebricks are quicker than they work out if the bloke works for Lidl, Purplebricks, J20, as a newsagent, postie or a Monster Wrong’un
I have to say it made me laugh out loud when I saw ‘Mr Bruce’ in the other advert the other night. He is obviously a man of many talents and particularly capable of multi-tasking.
look at all the jobs ‘Mr Bruce’ has to take. Maybe he’s trying to keep the business afloat himself…
PB have THREE properties in my core area 2 sold, 1 for sale.
PB will be strong in certain areas and weak in others. The one thing you have to give them credit for is the amount of press they are generating and the amount of Agents constantly talking about them shows they have succeeded on some scale this year.
“PB have THREE properties in my core area 2 sold, 1 for sale.”
THREE out of how many total, LA 201625?
What’s the average % SSTCs to total units where you are?
There’s 424 units in total, 242 are SSTC, many of them have actually already completed so the figures are slightly off.
Their presence is next to nothing, I do know the LPE for my area as we worked at the same firm a few years back albeit different offices, and he hasn’t taken on a great deal but I do know he’s been out to a decent enough amount.
SO…
They have 0.7% of the total instructions;
They have 0.8% of the total sales.
The figures you put forward for them are so insignificant that only basic comparison is possible – and they aren’t doing anything that the others don’t seem to be achieving.
What SSTC ratio do you achieve? They, according to your ‘stats’ are on 66.67% – higher than the area ‘average’.
Let’s see how the figures stack – and how much better or worse they are at doing their job than you?
You read my post as if it was loaded. I was just giving an example of how they were performing in my town.
Talk about a dog with a bone!
“…dog with a bone!”
Who? Me??
You got it in one, sunshine! Top of the class – your turn to hand out the pencils.
I’m that annoying frickin’ Jack Russell (albeit a Supersize one…) that seems to have a sole purpose in life – to gnaw away at ripe, juicy ankles.
And I never get sick of chewing.
There’s a valuable lesson here…
…you REALLY shouldn’t let this dog see the smallest morsel of bone.
What you say “Agents constantly talking about them shows they have succeeded on some scale this year.”
True ! If we are honest with ourselves it may not be purplebricks that ultimately toll the bell signalling the demise of the high street agent but it doesn’t mean the high street agent will continue on as before either !
I think what is annoying PB is agents might be talking about them on this forum but hardly anyone else is.
No 1 cares. Most people can smell bull and use local agents anyway.
You’re deluded…
Hybrid agents are thriving through word of mouth and marketing.
Everyone and his dog are talking about them. From forums, TV to social media. It’s even a hot topic in high street morning meetings. They’re building brands that are sticking in people’s minds.
High street agents have taken to social media and forums to spread lies and rumours in the hope that it will slow the momentum down. It’s actually doing the opposite.
Even PIE realise the topic will drive major traffic to their forum/Blog. That’s why it’s mentioned at least once a day…
I’ve read your post here and can only repeat your first sentence right back atcha.
Enjoy the wave you believe you and your type are riding right now. You know what happens to waves, right?
A wave…
You can’t be serious?
Was the Internet a wave?
Technology has changed everything we do in our day to day life. It isn’t a wave it’s a generation change. We’re all inpatient people and if we can find a way to make anything and everything we do more convenient we will.
The industry evolved due these changes in technology and consumers habits. Hybrid estate agents have taken advantage of the changes to their advantage.
Adapt and ride what you think is a wave or you will drown very quickly.
Any new agent that opens its doors will take a few years to be in profit. That’s the nature of the business. It just happens that hybrids are doing it on such a mass scale that the numbers are much higher.
Offering to sell property for £599, £699, £799 (upfront naturally) is the wave I refer to. Many discount/budget agents have crashed and burned over the past 30 years or so. If fee really was the most important factor, bucket shop agents would control the market. They don’t really even exist anymore. There might possibly be a much bigger FSBO segment of the market too. What really is important is PERSONAL SERVICE and service is not cheap. When the investor’s millions have run out and there’s no-one left willing to fund further TV/Radio advertising, let’s see where this mass ‘hybrid’ sector you claim exists is at. Let’s see the levels of market share that has costs ten of millions of pounds to achieve and let’s see the levels of return this investment has produced for those stumping up.
Budget agents do still exist. On the high street all over the country. Undercutting each other daily to win business. Some even cheaper than the figures you’re talking about. They also don’t offer the personal service you’re discussing.
The vendor agrees to list the property with the lister who isn’t responsible for selling the property. The negotiators will have never met the vendor or visited the house they’re selling. To top it off most close at 5:30pm and don’t open Sunday’s. Extremely personal service…
The generation of modern consumers want the convinient service that hybrids offer.
As I’ve discussed previously they’re hiring at an astronomical rate. Increasing business every month. The traction hybrids are gaining is worrying every high street in the country. Referrals like with any agent make a huge portion of the income. They’re never mentioned when trying to work out how much money the hybrids are turning over. Business Investors will continue to back hybrids because they can see the response they’re having is huge.
You do know a £12,000,000 loss is a bad thing and boasting about relieving a kiddy of their pocket money is even worse? People are talking about the passive intermediary list it and leave it firms but not in a good way.
If you count “success” as being censured by the ASA and being reported to Trading Standards.
He said: “We are selling lots of houses and giving great service. I am happy at the level of properties we are selling.”
Of course Bruce is happy, he’s happy if they sell nothing – by then, they’ve already had £800, what does he care?
They haver to sell them as bad p.r. will stop instructions…it is no coincidence that they have the most price reductions on rightmove this month though. Basically 100% of their stock is reduced….that’s the criminal part
Over Value
Get the Money
Sell it later and cheaply as vendor has to stay with them.
Does this not show great and frequent communication with their motivated vendors?
Any villages looking for a missing idiot?
No, it shows you that
a) they can’t value accurately
b) they are passive bystanders and when a property isn’t selling, they aren’t able to take proactive steps and speak to their database of buyers in the area (as they don’t have one) to create interest. Instead, the only tool they have is to reduce the price
c) they buy instructions, knowing full well there is no jeopardy if it doesn’t sell as they have already been paid.
Brilliant Shaun,
Are you saying every high street agent values a property exactly right with no price reductions prior to achieving a sale? We both know that’s not true. The no sale no fee structure brought a culture of overvaluing throughout the industry to win instructions. Tie consumers into long sole agency agreements and start working at getting the price down a few weeks into going live.
Hybrid agents get motivated sellers making a commitment to paying the fee. Because they know their property will sell.
The database of buyers originally came through portals in the first instance anyway. Or is this built up from the queues of people each high street office has every day. Eager buyers wanting to be on the “special” high street database list.
The report also drew attention to Purplebricks’ business model, saying that a sale occurs when the seller instructs Purplebricks and is not contingent on a house sale.
I wonder if the poor members of the public would be happy if that hit the newspapers. It actually crystallises the business model that Purplebricks truly is. Money up front and nothing needs to happen after.
Purple bricks wwill never publish the real numbers of sales because it will expose them that the public are not getting what they think they are paying for. That said they( the public) are however getting exactly what they are paying for – nothing – pay peanuts etc.
I hope that Rightmove and Zoopla read this article because by allowing PB on their portals they are contributing to the public being wrong footed at a critically important time in their lives. As well as messing up the businesses of those thousands of real agents that have made them multi million pounds. A scandal
This is the most on point comment i have ever read on here.
Why are Rightmove and Zoopla allowing online agents who trade off our honest business model of no sale no fee and the cost of staff, rent and rates allowing such rip off merchants on their portal.
Surely legally they could argue that no ‘upfront’ agents are allowed on the site.
It is as bad as time share when you think about it.
Rightmove should be protecting the public and its main customers (agents) by blocking this business model.
Also we need a weekly click a ‘purplebricks’ adword day as well.
Call it a tax for not having an office!!
I thought most traditional agents believe that the majority of properties they sell are achieved without the use of portals…
If it doesn’t effect business why do you care?
“I thought most traditional agents believe that the majority of properties they sell are achieved without the use of portals…”
Why would you think that?
Were you not a “traditional agent” previously? Is that what you believed until you ‘turned’?
No I absolutely do not believe the majority of properties sell without portals.
I adapted to the changes. Their was nothing to turn from.
From the way they post, I suggest TheHybridAgent is new to the industry and has entered it via a ‘hybrid’ franchise.
You couldn’t be more wrong. I have been in the industry for 15 years…
Given the ability to monitor every agent or passive intermediary listing firm or FSBO portal rules avoidance system I would suggest someone really does need to find out, not how many properties they are listing but how many of the properties are fee paying listings. A property listed, un-listed relisted and unlisted ( but not portaljuggled of course) 10 times doesn’t generate £10800 it generates according to Purplebricks marketing £1080.
There is an apparent discrepancy of about 16% between the number of properties claimed as new listings and the number of properties that can be loaded into a spreadsheet and counted. Given that all this positive news is coming out when an expansion into Australia means even more costs and even more pressure on a firm that is over £50 million behind its own promises of delivering HUGE PROFITS by 2016 it does seem reasonable that someone audits the numbers claimed.
In respect of analysts, never trust a fox to tell you the chickens are in.
‘disruptive model” continuing to make solid UK market share gains, and offering service “some 75% less expensive – and better – to the clients’……. I cannot believe somebody can possibly make this statement and get away without being challenged on it. How can as a vendor having to do a load of work yourself on your property sale be a better service than ‘just leave everything to us start to finish – except for the packing of course…you’ll have to pack up when you move?’