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TODAY'S OTHER NEWS

Purplebricks faces takeover as shares slump, predicts analyst

Purplebricks faces an imminent takeover bid following the collapse of its share price, predicts a leading industry analyst.

Andrew Stanton has already claimed that some £481m had been spent in operation costs for Purplebricks since 2015 while it generated £363m in revenue over the same period.

After taking into account £187m raised from investors the firm lost £117m he says - although Purplebricks itself has disputed those figures. 

Some of Stanton’s claims were subsequently used by the Daily Telegraph in a story about £18m in upfront fees paid to Purplebricks by owners whose homes it failed to sell. 

Now - with the Purplebricks share price barely above 50p following the Coronavirus impact on the stock market - Stanton has returned to the issue.

On LinkedIn over the weekend he wrote: “The share price of Purplebricks which had been £107p for some time, is at this moment trading at 53p, following the Telegraph story. Given that the opening price for shares was 95.5p in December 2015, I feel that in a matter of days either [existing major shareholder] Axel Springer will take control of the enterprise or there will be a hostile bid. Watch this space.”

And on Twitter, Stanton added: “It’s taken five years, but now the game of purple smoke and mirrors has run its course. 22,000 unhappy vendors in 2019, and keeping £18m of fee money from those vendors who failed to sell. And how can reviews be so positive?”

  • Andrew Stanton CEO Proptech-PR    Proptech Real Estate Influencer

    Since the 2nd of March and my Daily Telegraph headline story 'Purple 'made £18M fees on homes that stayed unsold' - the share price has moved from 107p to at one point today 36p.

    Does this matter? people should have a choice right - if they want to use an online solution shouldn't they be free to do so.

    My answer is yes, but vendors about to sign the agency agreement should also be told that in 2019 in the UK though 60,000 listed with Purplebricks, 21,380 also took their homes off the market leaving behind over 18,000,000 of upfront fee.

    That would make many consider the financial ramifications of signing up with a pay up front fee agent in the first place. Traditional agents - no sale no fee, online agents (there are some exceptions) are different they mostly are all pay upfront and pray.

    The other problem Purplebricks now faces, is that traditional agents will be able to 'live' on the exchange income from their un-exchanged sales pipelines, online agents have no sales pipelines they rely on listings - which in a Covid-19 world may be few and far between, so their upfront cash model is about to crash along with their imploding share price.

    Hostile bid or Axel Springer. Clocks ticks.

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    The crazy thing about the actual sales agreed by Purple Bricks is that the progression isn't run by Purple Bricks but by the agents either side of the Purple Bricks sale. The number of PB sales that are being progressed by high street agents is phenomenal. I've been involved in several chains with PB in the middle and the only reason they have concluded successfully is down the hard work of the High Street agent either side. Maybe we should be invoicing purple bricks for all our hard work in keeping their sale together

    Keith Russell

    100% concur with this post. We once had a Purple Bricks client thank us for getting their sale through. Whilst nice to be appreciated, it is hugely frustrating that our client had basically subsidised the Purple Bricks client in essence and that our fees have been reduced as a direct result their very existence . It would be interesting to know how much revenue has left our industry as a whole due this type of "agency" offering.

     
  • Andrew Stanton CEO Proptech-PR    Proptech Real Estate Influencer

    Malcolm Parsons you are right at a recent solicitors seminar in London, a very senior official stated that if Purplebricks were in the chain it added 15 days to the pre-exchange process. I saw no data, but anecdotally my clients pretty well all say the same thing. Agency is a nebulous activity, finding the buyer is only part of the process, often the post sale being agreed part of the process takes the most time and care. Which online agents are not geared up for.

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    PB is a total scam - and the powers that be know that there are ‘agents’ out there that are committed solely to signing people up to their Ts&Cs with no intention of ever selling a property. The customer dissatisfaction comes from the fact that PB are actively marketing themselves as a competitive Estate Agent without ever providing a service that is comparable to that of an Estate Agent and then still trying to claim that they are legally entitled to their fees. It is a flawed/scam business model and I will be shocked if anyone takes them over - You only have to glance at the accounts to see that PB are paying out commissions on sales that they will quite literally never make - the model is totally unsustainable!

  • Steve James

    I'm no purplebricks fan but no way is their business a total scam. The concept of selling houses online is part the future and will work alongside traditional agents. Traditional agents have made a rod for their own backs, bloated, expensive and hasn't moved with the times but there is obviously a place for them as people will use them as they want a high street agent. Look at John Lewis and Amazon, some people prefer to shop at John Lewis, it's more expensive and you generally get good service and some people shop at Amazon for the speed and the deal. The sooner traditional dated estate agents up their game the better they will be become and attract customers who want more of a bespoke service.

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