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.”
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Car crash business model, as I have previously pointed out, this is a people's business trading on the PE of a tech business, the big losers will be the average Joe investors who fall for the hype
Oh of course! Yeah those poor average joe investors who invested in a company worth 240million 18 months ago that's now worth 1.25billion. I feel for them, I really do!
Does Purplebricks own Estate Agent Today? I have never seen so many articles about one company on one site!!! Great marketing ploy!
They probably pay the editor a fixed fee to get their stories out every week.
Hmm, Purplebricks are the biggest hybrid/online agency operating in the marketplace and, as such, generate quite a lot of press interest. If the interest wasn't there, neither would the stories be.
PB seem to have taken over the agency everyone loves to hate mantle from Foxtons - who you barely hear a peep from at the moment - and Countrywide. Another punching bag will be along soon, just as RM and Zoopla have got a kicking in the past.
In my view, the criticism of PB is wildly over-the-top. With Foxtons, you could fully understand why they got under people's noses and some of their practices were openly obnoxious and controversial. With PB - ubiquity, naff adverts and colourful branding aside - I can't see why they attract so much opprobrium.
Absolute garbage report. Honestly do your homework Mr DelPrete. "Cost of Sales line has risen to £452", you don’t for one minute think this figure could be.......manipulated???? or even include costs which may not be LPE's. I say this from some authority as I was offered an LPE 6 months ago and scoffed at the ridiculous commissions being offered...let’s just say it’s about 25% of the £452 and you dont see much of the astronomical Conveyance revenue included in this figure. I would love to know if Mr DelPrete has a vested interest in the business and it's share price?
Anyone remember "Seekers" back in the late 1980s? They survived on listing as many properties as possible and at the time when the market was on a high they did well. What happened when the market tightened up in 1989 - 1992 though? The public became more savvy and quickly saw the flaw in the process that is to say they didn't want to pay up front whilst property prices were falling and property was struggling to sell. As a result the instruction levels for the Seekers model dried up whereas those of us who ran a conventional model estate agent had to make the choice; become overwhelmed with 100s of instructions or be selective. We became selective, increased our fee; remember the fee is paid on success not listing and our offices became more profitable than previously. I'm not suggesting at all that we will see a property crash such as the late 80s early 90s but any perceived change in the selling market will cause the public to stand back and think; will they part with just south of a £1000 hoping to hear from the agent again or instruct a professional locally based high street agent which has the tools to carry it through fluctuations in the market place? And Seekers? Disappeared without a trace sometime in the early 1990s I believe, never to be heard of again!
The LPE's earn between £175 and £200 per instruction. Then around £40 per mortgage and solicitor referral.
Just so yo know they then earn just £25 IF the property sells!!!!
Zero motivation to get the property sold.
Is this solid information? - Be good to use if it is.
You need to check your information source as it's currently laughable
Lots of - fully anticipated - criticism of PB here. While I sympathise with many of the points made, I'd be very wary of writing PB off on the basis of their business model. They have the money and investment to sustain themselves. What's more, the brand name is cutting through in a big way, arguably more than any other agent at the moment. Criticise them, denigrate them, despair at them - and their terrible adverts, commisery and all - but don't underestimate them.
Around where I live, I'm seeing more and more purple boards appearing. Every time I visit London, the boards I mostly see are for Haart and PB (clearly the colour purple is the way to go). If nothing else, they've got their sales pitch, PR and marketing spot on. Compare and contrast with easyProperty and YOPA, both also with significant investment and PR campaigns and backed up by big names - the easy brand in the former case and Savills and the Barclay brothers in the latter - who have not cut through in anywhere like the same way, despite TV advertising and heavy levels of PR.
Investment and money isn't enough - just look at OTM for evidence of that - it takes something else to enter the national consciousness. Timing, luck and good branding all play their part, but PB have also been canny in creating a love it or hate it TV advert, similar to Confused.com, GoCompare, Webuyanycar and ComparetheMarket. Sticks in your brain no matter what. You might hate it, but you remember it. That's the key.
With the profusion of column inches written by traditional estate agents, knocking PBs, clearly they are still rattling a lot of cages. And whilst agents whinge, PB just get on with it, thanking agents for the publicity and are still winning the hearts of buyers. PB is big and getting bigger. Embrace it and join the other hybrids. Countrywide - c£1,000 up front for the online model, then choose to jump on to the traditional high street sales progression service, paying an adjusted sales commission, still bagging a mortgage or 2 along the way. Brilliant. Who wouldn't want money up front?
Couldn't agree with this more every time an agent moans about them its a good thing for them means they are winning. We as agents either need to adapt or die, everyone will be offering a hybrid model soon enough. The market is changing the public have an appetite for anything online and lets face it anything cheap.
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