An expert analysis of the Purplebricks trading statement for 2016 reveals that the agency’s Local Property Experts each earn an average £41,925 per year.
Mike DelPrete - a former head of strategy at New Zealand portal TradeMe and now recognised as one of the world’s leading PropTech analysts - says Purplebricks has significantly increased its fleet of Local Property Experts from around 200 a year ago to about 450 now.
However, their average instruction rate has dipped from about 100 per year to 93 per year.
“Assuming each PLE earns £450 per insruction (the current cost of sales) that’s an average PLE ‘salary’ of £41,925” says DelPrete in a concise analyses of the agency’s trading statement.
This was just one of five key measurements made by Del Prete. The others were:
UK revenues increased by £24.6m while sales and marketing expenses increased by £1.5m, provoking DelPrete to favourably observe: “Now that’s scaling!”;
Customer acquisition costs, which DelPrete says is a critical measure for online agencies - dropped significantly from over £600 per instruction to less than £350 per instruction in the UK. On this DelPrete says: “Purplebricks’ sales and marketing is becoming more efficient”;
The cost of sales line has risen from £380 to £452 per instruction. “This most likely means Purplebricks is paying its LPEs more per instruction” he notes;
In the latest trading statement issued by Purplebricks, the average revenue and cost per instruction is roughly equal - a big improvement from the previous year, says DelPrete. That means the UK business is running at roughly break-even or with a very small profit, but he warns: ”This is still a business with very slim margins.”
You can see the whole analysis here on Mike DelPrete’s website.
Meanwhile over the weekend Purplebricks was at the centre of discussion in a note to the industry from the National Trading Standards Estate Agency Team, published in full below.
This claimed the Powys-based regulator had seen “many examples of online agents making unsubstantiated and inaccurate claims about their selling fees when compared to traditional or high street agents” and made reference to a recent judgement by the Advertising Standards Authority.
That judgement - released last Wednesday - upheld a complaint from Arun Estate Agents about wording on the reviews section of Purplebricks.com in July last year, featuring nine testimonials from consumers including claims of how much they had saved in fees by using the hybrid agency.
Estate agency businesses are being reminded to ensure that their advertising claims are accurate and truthful.
The National Trading Standards Estate Agency Team has issued the reminder following a ruling by the Advertising Standards Authority (ASA), which recently upheld a complaint about Purplebricks.
James Munro, Head of the National Trading Standards Estate Agency Team, said: “We have seen many examples of online agents making unsubstantiated and inaccurate claims about their selling fees when compared to traditional or high street agents.
“These businesses should ensure that they are making comparisons against like-for-like services. It is wrong to make general claims about savings when the headline price does not include facilities such as a sales board, floor plans, photographs, accompanied viewings, sales progression or other facilities which are normally included with traditional high street firms.
“We recognise that online-only agents have a role in the marketplace for customers who wish to do more of the work themselves but they need to remember that they are subject to the same legal requirements as any other estate agency business.
“Firms advertising estate agency services for a fixed fee of a couple of hundred pounds or less need to consider whether they are little more than portal listing services and should therefore be very careful when making comparative claims in their advertising.
“They also need to make clear the difference between an upfront non-refundable fee and a commission which is payable on completion.”