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TODAY'S OTHER NEWS

Purplebricks delays changes to fees structure until the autumn

Purplebricks says changes to its fees structure - possibly becoming less reliant on controversial upfront charges - has been delayed until the autumn.

A statement to shareholders this morning says: “We have a business model that is based on value. It's unrivalled in the marketplace and offers consumers the opportunity to sell their homes for a fair, fixed fee. 

“This single-minded proposition has got us to where we are today and created a business model that has resulted in Purplebricks becoming the largest estate agency brand in the UK. However, we also recognise that, to extend our market leadership, we'll need to evolve our pricing. That means looking at different pricing strategies to reduce the up-front fee and splitting the payment between listing and completion.

“Following an in-depth pricing study in the first half of the [financial] year, we had hoped to pilot a new pricing structure in early 2020, but the lockdown has delayed this to the autumn.”

However, chief executive Vic Darvey, in the same statement, has given an indication of what the change may be later in 2020.

He says: “I believe reducing the level of the upfront fee will widen the market opportunity significantly, although a fixed fee element will remain a critical part of our success, as hybrid adopters remain more motivated to sell their homes. Reducing the upfront fee will reduce the barrier for many customers in instructing us - while higher fees on completion will allow our Local Property Experts to earn more from each sale, ensuring our self-employed model will not only remain sustainable but become more attractive to the best talent in the industry.”

Concern about its pricing policy might have been heightened by its loss of instructions - they fell 23 per cent in the year to the end of April, most of which was well before the Coronavirus lockdown.

The rest of this morning’s statement - which covered the hybrid’s performance over the past year - reflects the Covid crisis and market fall out that has hit the entire industry.

Purplebricks group revenue was down 2.4 per cent compared to the previous year to £111.1m with an operating loss of £9.4m - much higher than the £1.5m loss a year earlier. 

Revenue plummeted 10.7 per cent to £80.5m. At the company's financial year end - so before the sale of its Canadian business last month - it had £31m on the balance sheet, compared with £62.8m a year earlier.

The sale of the Canadian business in recent weeks has contributed £30.6m to the agency’s coffers and the firm says “our exits from the Australian and US markets have allowed us to concentrate on our key operations.”

The statement this morning also reveals what Purplebricks did to bolster its finances during the lockdown period.

In March it furloughed some 50 per cent of its employees - and a similar proportion of its staff in Canada, using the Canadian equivalent scheme - while the agency’s board and executive team took 20 per cent salary cuts. 

“Our variable cost model has proved to be a significant advantage during this period - we have lower overheads than most of our competitors, and we can flex up and down with the market over time to manage demand” says this morning’s announcement.

The company also created a fund of up to £2.2m “to provide support payments to our self-employed agents, many of whom operate as limited companies, so were unable to furlough or claim through the self-employed income support scheme.”

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    I am a current employee of Purplebricks and it’s a crying shame that they publish facts that are not true. I for one was not offered a single penny of support financially through “lockdown “ - my life has been hell with no support at all from the company. Furthermore to see PB hoping to win popularity by shouting from the rooftops about their self employed staff fund is a further kick in the teeth.

  • Clive Tattersall

    So, Purple Bricks have sold off their Canadian interests, they have reversed out of the American & Antipodean marketplace. They have lost millions year on year & this year sales have plummeted. They have been in serious trouble through a damning Watchdog report, they have been fined & warned on numerous occasions by the Advertising Standards Agency. They have not only misrepresented themselves to the public but to their investors also. Now, they are re-thinking their business model in an effort to develop more business, quite amazingly it's getting nearer to what conventional estate agents offer but they still want some money up front! Of course they do, because it's the only way they have been able to survive to date on this skewed business model. We all knew that payment up front not only removed any incentive to work for the best deal for the client it compromised sellers too because once it was realized that PB were not effective vendors were reluctant to sack them because they were seriously out of pocket. This last desperate attempt to keep their heads above water will delight agents because we can now expose them for who they truly are & that is not estate agents. Goodbye Purple Brick Road, get your bags packed it's time to go, it's going to be a long walk home but at least a proper estate agent can now sell it for you!

  • Hybrid Agent

    Hi Clive
    There's still a continued mis-understanding in the industry and the markets of what "Hybrid" Estate Agency actually is...Not 'Online ' or 'Internet Agents'. Actual estate agents working locally from home offering better service with great tech to give a more appropriate and fairer priced service...the future!
    Read "No.1 B*stard Estate Agent (someone no longer in their original form) How to Evolve in Property Selling" its on Amazon..
    It explains the true workings of the concept of the home based agent using the tech correctly with very little if any 'back-up' required. Understand the concept of the two types of clients we all see, the 'May Sell' people or the 'Will Sell' people and you will conclude that the way hybrid agents charge is not wrong for the services when provided to the correct clients. It's a great model and serves it sellers really well when used properly, the agency industry could do with waking up to that.

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