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Purplebricks: Estate Agent Today's experts look behind the latest figures

Here it is - the industry’s verdict on the latest set of figures from Purplebricks.

The agency doesn’t play by any of the rules we’re familiar with: who worries about completion rates in the UK when expansion in Australia and the US are priorities? 

In return, the market doesn’t quite know what to do either: Purplebricks’ share price quickly rebounds from public criticism of the company on the BBC, yet drops two days in a row after what most people regard as a successful first six months of the trading year. 

Either way, the firm now has 74 per cent dominance of the online sector, hugely increased revenues, and appears well on the way to meeting its ambition of becoming Britain’s largest estate agency by stock.

So once again Estate Agent Today has assembled its panel of experts to give considered, authoritative opinions on the most controversial company in agency today.

Our thanks go to our contributors, and thanks to you, too, for reading - and please feel free to add your views.

Ian Wilson, chief executive officer of The Property Franchise Group:

Purplebricks: Estate Agent Today's experts look behind the latest figures

“I’d say it’s a good set of results where it counts - which is the size of the LPE footprint and the trading volume. The rest of the online players are not getting any traction and Purplebricks is probably one-year away from becoming uncatchable.” 

“There is no evidence yet that customers are (en masse) dissatisfied with what they have purchased. Purplebricks remains a textbook example of the power of a single, national brand and clear customer proposition." 

"The industry has to wake up and smell the coffee.”

Mike DelPrete, a US-based PropTech expert:

“Purplebricks should be commended for two things: its large scale and strong growth. Doubling the number of instructions at that scale is no easy task, and is unmatched by its peers.” 

“Purplebricks is doing more business, in a shorter time, than similar models [US portal] Redfin (which has raised $300 million and is listed with a valuation of $1.98 billion) and Compass (which has raised over $750 million and is valued at $2.2 billion). Redfin launched in 2004 and Compass in 2012.”

“But make no mistake, success in the US market is far from certain and will be achieved along a different path than that taken in the UK and Australia.”

Anthony Codling, equity analyst at Jefferies International: 

“The success or failure of Purplebricks will rest on their ability to sell homes, whilst charging a non-returnable upfront fee. Until they are willing to disclose those statistics, which as a data driven company they must have, I believe the jury remains out with respect to the effectiveness of their model.”

Purplebricks: Estate Agent Today's experts look behind the latest figures

“I do not doubt that Purplebricks is the clear market leader of the non-traditional agents, which suggests that in terms of winning listings their strategy has been more effective than their peers."

"Basing growth on TV regions, growing from a regional player to a national one was a canny plan. Most of the others attempted a national footprint from day one, which stifled growth as they spread themselves too thin.”

“Purplebricks is no longer just about the LPEs – you actually have around one person back at base for every LPE on the road – most of whom sit in one big office rather than in a network of offices close to the customers they are trying to serve.” 

“To my mind, this is more about Purplebricks having to strengthen its infrastructure and adapt its model, putting in more lifeguards if you will rather than traditional agencies being able to treading water.”

James Dearsley, PropTech influencer and partner in PropTech Consult:

“On a top-level look, these results are looking positive for Purplebricks, further validation that the online/hybrid sector is gathering steam with a few major players leading the pack.” 

“I am concerned that still there is no mention of sale numbers. However, perhaps some conclusions can be drawn by their claim that they have now have 20 people in staff support. If they are selling that many, surely they would need more than this to cope with the sales progression?” 

“The outlook on Australia shows great growth and perhaps in the US it is too early to tell at this stage. There are signs that this model could possibly work elsewhere which paves way for others to enter, but I fear for the long term in the US.” 

“The money needed to scale that operation up successfully and gain some form of brand equity, which is obviously forming well in the UK, could cause a serious hole in their balance sheet in coming years.”

Chris Wood, industry campaigner and managing director of PDQ Estates:

Purplebricks: Estate Agent Today's experts look behind the latest figures

“Michael Bruce repeatedly stated that they sell (complete) on 88% of all property listed. They have since made statements that this figure is higher. Independent data from GetAgent suggests a rather different figure. A lack of evidence to substantiate a claim made by the CEO of a PLC suggests that they do not have the evidence to substantiate the claim made. 

“The statement is clever in that it avoids mentioning any growth into the traditional market which, last year, showed call-centre agents were losing or, at least relatively static. Purplebricks clearly dominate the call-centre market share (circa 5% of the UK market as a whole) however, if they are to achieve the growth they promised to investors (albeit outside of the timescale advertised) they will have to start eating into the remaining 95% of the market which will require more spend and, I would suggest, much more transparency in the success they make much of.”

Iain White, industry consultant and mentor at Agency Mentors: 

“If the results were good, would the sales data be published or would it still be too early to have representative completions data? I believe they are shying away because the results are not convenient for them and would allow a real cost comparison between the upfront fee model against payment on results model.”

Purplebricks: Estate Agent Today's experts look behind the latest figures

“The media spotlight on Purplebricks has given the customer food for thought about transparency and it does look like their instruction volumes are not increasing despite the reported increase in the number of LPEs.” 

“These figures show us that Purplebricks’ marketing message has worked better that the rest and that they are the dominant force for those choosing the upfront payment model."

"Logic suggests consolidation or collaboration is inevitable among Purplebricks’ competitors and perhaps new models and tech are being readied to fill the obvious gap between the traditional and upfront consumer options.”

“Traditional agents are entering an era of collaboration, consolidation and transparency. This, coupled with great tech will signal a whole new breed of lean, capable and genuinely local experts who know their area and have the tools, marketing budgets and back-up to service customers properly.” 

“That said, recruitment is a big problem for all estate agents. The trick isn’t having lots of people, it’s about having effective people who are passionate about what they are doing. Work-life balance is a real issue that our industry needs to face up to, and at present is largely ignoring.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman: 

“Not surprisingly, Purplebricks appears to be taking a growing share of non-traditional online agency business. However, the lack of real evidence of its inroads into traditional agency via sale completion numbers, as well as the proportion of listings it actually sells, continue to cast doubts on the proposition.” 

“My personal view is that Purplebricks may find favour with sellers of similar houses or flats in blocks where a ‘going rate’ is established but will struggle on larger, more individual properties, especially as the property market softens. Traditional agents will then have a better opportunity to demonstrate value and service to their customers and potential customers.”

  • Ian Smith

    Bulling their way to the top !!!!!!!!!

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    Is Anthony Codling serious when he keeps stating "Until they are willing to disclose those statistics, which as a data driven company they must have, I believe the jury remains out with respect to the effectiveness of their model"

    On 23rd March 2017 Jefferies produced a report entitled "Portal Juggling Part 1: What's That All
    About?" and stated "Working with Rummage4, we have details of every property listed for sale on Rightmove by the main corporate agents (both hybrid and traditional) since the beginning of
    November 2016. We are tracking the performance of each property and later in the year
    hope to report the efficiency and effectiveness of each agent"

    Over a years worth of data and he still doesn't know the number of sales for Purplebricks or if he does then isn't telling anybody for some reason.

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    He probably does but is unable to verify with PB - Read into that what you will....

     
  • David Bennett

    Let's face it, Purple Bricks are here to stay. Embrace it. The public like it, because like most things today, they steer towards cheap, rather than quality. It is a sign of the global recession we may still be climbing out of. In any sales environment, the obvious is to shout from the roof tops about success. It begs the question, why are PB not crowing about the level of sales. Simple - there aren't that many. It's success is attracting instructions, at c£1,000 a time. LPEs pick up referral fees for legals and mortgage. Great business model and one which investors love. There won't be many high street EAs that wouldn't like £1,000 upfront, for every instruction. It might encourage over valuing, to beat the competition - oh, wash my mouth out!

    Happy Christmas everyone.

    Kelvin Francis

    I like your point that PB can gain many instructions by over valuing. Until they come forward with completion numbers, that is an 'ace in the hole'.

     
  • Simon Shinerock

    So this is a very interesting and topical subject. Firstly, isn’t the stock market fickle? The price of PB shares rises on hot air and then collapses back in the face of reality. Never mind about that though, short term share price fluctuations aren’t the issue here the issue is whether or not PB is going to build its market share, lose it, or remain fairly static. My take is that it can’t and won’t keep the up front only model, if it does it will peak and wither. Once it introduces a back end fee and properly supports its vendors with negotiators and progress chasers then it will have some chance of longer term success. However there is a big question mark over whether there are real economies in the model long term. It may be that the best PB can achieve is to become a second class agent with broadly similar costs to a first class one. I believe it’s more likely that high st agents will bridge the tech gap with PB than PB will bridge the service gap with high st agents. In the mean time my advice to high st agents would be to stick to the knitting, use tech to improve your service, increase your margins and lower your costs but on no account introduce a dual proposition

  • David Bennett

    Didn't Countrywide introduce a hybrid - like PB, with upfront fee, but the difference being a choice to have (and pay for) full back office support, for sale progression etc? What happened to that model? Brilliant in concept, but is it/did it work?

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    According to Countrywide, it's been a roaring success. But that could mean anything.

     
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    CW have shelved it and admitted they have made mistakes.

     
  • David Bennett

    On paper, the Countrywide model should work. Best of both worlds and giving sellers choice.

  • Kelvin Francis

    The Stock Market is all about making money. If there is any doubt, some will start to sell, hence the fall in share value. However clever the concept was and however well the idea was sold, it is running out of time. It is unlikely to succeed in any meaningful way in the US and that will be their Achilles heel, the step too far. Full marks for imagination, drive, ideas and effort, but as soon as the investors decide that the peak has been reached, they will want to put their funds in the next growth vehicle.

  • icon

    none of the commentators mentioned only 20 in the back office fort sales support it must be low. That is not necessarily true, I was advised that sale progression does not matter at all let it just happen when it happens no need to progress it - that says it all. I don't believe someone could be called an estate agency if they don't do half of the job (I say half from when Abbotts lost half their fee via court when someone was unwilling to pay full fee as they did not progress the sale and the judge agreed). I believe being an estate agent needs a proper definition as no consumers think that all agents to what Purple Bricks do, which couldn't be further from the truth!

  • David Bennett

    Perhaps agents need to shout from the rooftops. 'Sellers - do you want a full sales and after sales service, including RM, Zoopla etc, accompanied viewings, long opening hours, sales progression, including following the sales chain, delivering keys on Completion day etc etc, or do you just want a listing on RM and you do the rest yourself? After all, how hard can it be, when you have never done the latter, before? If you had, you wouldn't do it again!'

  • icon

    PB's post sales charter https://www.purplebricks.co.uk/terms/post-sale-charter

    I can assure you, contrary to what some disgruntled reviewers say on TrustPilot, they will strive to get your property sold for you. Just like traditional agents, some LPE's will not be as good as others and some post sales team reps. are not as good as others.

  • David Bennett

    Respectfully JL, estate agents only get paid, if the sale goes through. What is the incentive (apart from a moral one, of course), with money upfront? Reviews are written, just as the property hits the market. Just like an early love affair, but with time, the relation probably goes off the boil and guaranteed, a very different review would appear.

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    Until traditional agents start shouting about No Sale No Fee things will just carry on. When was the last time you saw an agent advertising Strictly No
    Sale No Fee-absolutely 0% to pay if we fail to complete your house sale at a sale
    price you expect.No upfront charges/no credit agreements/nothing/zero/paid only on results.

    We don’t sell we don’t eat !!






  • David Bennett

    So why don't estate agents shout about it? PB are riding rough shod over the market. PB only tell part of their story , but it is the part sellers want to hear! They need 'outing'. I would have thought NAEA Propertymark and The Guild would be doing this, on behalf of it's members.

    Iain  White

    Do traditions agents publish there sales stats ?

     
  • Iain  White

    The Countrywide model failed because it didn't use a single national brand. It didn't have a great marketing strategy and it didn't spend millions market it.
    Not to mention how poorly it was implemented and how little incentive to sales force had to embrace it

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