City consultancy Jefferies has made a blistering attack on Purplebricks’ sales performance and finances, saying “the arithmetic…still does not add up.”
Last month analyst Anthony Codling disputed the agency’s claim of a 77 per cent conversion rate, stating one in three of its vendors paid a fee but did not sell.
Now Codling has returned to the fray - with a vengeance.
In a note to investors he writes: “We hope that for their customers the saying 'all comes to they who wait' is true. The lucky 14 per cent who have sold their homes waited on average around 4.5 months between selling subject to contract and actually selling. For the rest the wait has been around 6.5 months so far and the clock is still ticking.”
Two months ago Jefferies analysed the properties marked on Purplebricks’ website as being ‘sold’ in Birmingham, Bournemouth and Southampton.
Now it has revisited them; the Jefferies note says that “due to time lags in the Land Registry database we only looked at properties which were registered as sold on or before March 31 2016. Overall we were able to trace 14 per cent of the properties classed as 'sold' between October 29 2014 and March 31 2016 to the Land Registry database.”
Codling says Purplebricks’ advertising message that ‘selling houses and supporting customers is what we do’ may be correct but he then says this does not happen “as quickly as we'd expect from their website which states that 'On average it takes us just 14 days to find a buyer’.” He suggests that if Purplebricks also quoted the average time it takes to legally complete the sale “potential customers could better assess the cost/benefit trade off of the attractive fixed fee.”
The analyst concludes his note by saying that Purplebricks’ current share value is “priced for perfection” and warns that “should the relatively new and innovative model stumble the share price may follow.”
But - in a final sentence showing that Jefferies is hedging its bets - Codling says: “However should the model bed down and sales accelerate ahead of our expectations, the shares may not currently reflect the true value of a disruptor.”
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It won't be many weeks/months before we see list only service providers from £99 to £199 to get a home on RM and Z. £x for pics + floorplan and an EPC.
As many budget Listers can't negotiate. Just taking funds up front. We will soon see good negotiators changing from game keeper to poacher as Buyer agents and screwing poor budget agents clients down £housands.
The we save you £housands will soon have a reverse meaning. Then watch idiot VCs keep backing budget models. Investors will soon run a mile from budget agent startups.
Totally agree with you Trevor!
People are being falsely lead down the 'we can save you lots on your fee,' rather than focusing on the more important issue of 'how much we can achieve for your property.'
I had a case where the cheap fee agents told the vendors they would achieve 115k for their home. We sold the property for 141k.
An extra 26k!
Smoke & mirror distractions from the cheap fee brigade will not be sustainable as the public start to see they are losing out with the end result.
Agree Carl. I can better that, one of our INEA agents just sstc a property at £510k over a certain budget agent valuing £350k-400k
I also helped a vendor the other week get a property down from £300k to £283k simply by being a better negotiator than the agent selling.
Keep telling people. They have a choice. A cheap estate agent fee OR the highest price for their house. Never both. Pay less than 1% commission at your risk.
Keep thinking that if RM & Z were to charge Purplebricks and the like the same way they charge traditional agents, they could not exist. Take SL7 that costs my SL7 office around £800 a month. They have one house for sale where the owners deliberately massaged the price upwards on the Z valuation model so the prospect of sale is limited so they must be losing money - or is it time that RM & Z consider levelling the playing field and charging us the same way as the 'disrupters'.
Carl, how many times have you read in the paper about a high street agent achieving 20/30/40% etc above asking price (the price they originally advised on). I am not an estate agent but understand how the internet has now given customers more control in everything they do, so why should estate agents be any different? Why should they person selling the 4 bed house pay more in fees than his neighbor selling a 3 bedroom house? They will both receive the same level of service and use the same marketing channels.
I have said for many years that the world of estate agency needs to lose around a third of agents as they are simply not up to the job or, in some cases, criminally incompetent. Of the remaining two thirds, around half are 'ok', with the remainder being excellent. If someone is selling what is usually their most valuable asset, it makes sense to employ genuine experts who know how to value, fully market, negotiate the best price and then nurse the sale through to completion. Genuinely expert knowledge and skills do not come cheap. In your example those properties may well be advertised on the same marketing channels but the level and amount of service and skill required to bring both to a successful and profitable conclusion may be immensely different due to individual customer and property circumstances and requirements.
Not true John. If you have 1 agent who does RM and Z, then 100% of the people who look on RM and Z would find it reagrdless how many agents had it. FACT.
But there is more to agency than RM and Z and budget. I work linking agents together. recently we had a main agent (1.5% rather than 1% sole/ or a budget £100's up front).
Where the property was subbed to 6-7 other agents 10 miles around the listing. 16 viewers came in. 7 via the main agent/ 9 from the sub agents in different locations with different mailing lists.
As such I'd say only 50% of the applicants where from portals and 50% from the other agents attributes including Hg St offices and local magazines/papers/ different applicant lists.
3 other agents valued. We achieved 3 offers from 3 different agents and £35k more than lowest valuation from a sole agent who offered 1%
MIght be different in Scotland but , the first thing I would say is that as an online agent we have two fully trained negotiators one of which has been a traditional agent for over 20 years , the second thing is given we do not have a million pound plus marketing budget the way we are increaseing our take ons is through referrals based on service. We are saving most of our clients in and around £1500 - £2000 whilst completing sales in an average of 12 weeks. I firmly believe that there will be at least to platforms in the future and both will work for the clients whom choose one or the other.
I beg to disagree, John. Different properties require different marketing to enable them to receive maximum coverage in the right places. E.g. a three bedroomed, 1930s semi-detached suburban house might do great on Rightmove, OTM/Zoopla, the local paper and all the usual marketing channels, but a 4 bedroomed period property, possibly listed and in a conservation area, or an individual modern home, need to attract different people and require more money spending on them on more specific marketing to find the right buyer.
I was referring to two properties on the same street, where the only difference is an extra bedroom.
I am a firm believer all house hunters (exception very high end property buyers) search online for property throughout the buying cycle. Even the "different people" will look online.
Instead of online and high st abusing each other - they should just let the customers do the talking and everyone focus on their own business and customers.
Agree Richard. Service cost should be relative to bespoke efforts to achieve best results.
Budget one cost fits all and the internet is the holy grail are not in best agency practice or CONSUMERS best interest.
Thanks Chris.
"the level and amount of service and skill required to bring both to a successful and profitable conclusion may be immensely different due to individual customer and property circumstances and requirements. "
The 3 and 4 bed are pretty much the same house accept the extra bedroom and price tag. Not sure why there should be a different "level of service/skill etc..." required or most importantly a different fee for each. Are you saying the guy with the cheaper house will not get the same level?
On the note of higher valued property. A successful businessman who has experienced negotiations in his own business world would more likely (imo) negotiate a better deal than most estate agents for their property. At the end of the day the estate agent does not have the final say.
Most agents are good guys, they are sales people at the end of the day - not a high skilled job therefore the internet is right to break down the barriers and give the customer the tools to get the price (which include the guidance of an agent if required).
We disagree and I'm afraid your lack of knowledge of the industry is such that I don't believe the time I currently have available today allows me to explain how that lack of knowledge is leading you to the wrong conclusions. Thanks for engaging
John,
I work close with agents, techs and legislators.
I do many trials with agents as to the way they market.
Most agents would get the same 90% of viewers if they use same details and same pics as the next agent from RM & Z portals.
The way I work with agents is to increase the 10%. If we accept that the 90% remains as a constant regardless of agent. The a main agent charging more, has more funds in the pot to allow sub agency.
If 10 sub agents all achieved a further 10% then you can have 90% + 10 x 10%'s extra applicant interest = more viewers = likely more offers.
Each agent will have some different USP's and different applicant buyer lists.
We now have many case studies where £10's thousands more are being achieved away from sole/lone agency and reliance on portals.
Most agents don't yet understand this, but more are looking closer.
We did a recent trial with a Countrywide office and independent sub agents. Only 50% of the viewers came from main portals. The other 50% came from sub agents having different mini outlets.
The price of the property doesn't really come into it as to this method working.
The biggest barrier is getting agents and the likes of yourself to understand there is a better agency model yet to come, using the web not only for marketing such as portals, but ALSO to help agents collaborate B2B their data flow.
John,
For someone who is not an estate agent you seem to have some rather insulting opinions. Have you ever been an estate agent?? If not, how dare you marginalise the good agents by saying their job is not skilled!! Good estate agents are good NEGOTIATORS and NOT sales people, which is why we are still in business. Regardless of what you think of us, we get the best possible price for our Vendors because we have a vested interest in doing so, and not only for the commission earned, but for recommendations also. How is it good for the client to pay regardless of whether their property sells?? Would you buy something to have it not function correctly and not demand your money back?? From what you have written here, perhaps you would find that acceptable, but I do not. Of course the internet is important in showing people what property there is for sale, but it has absolutely nothing to do with the selling of it.
Hi Terrence, you are very anti online/hybrid estate agent on every article I read here. Broaden your horizon and embrace technology.
"How is it good for the client to pay regardless of whether their property sells?"
The agent needs to be paid for their time regardless. With the no sale no fee model, the person whose house sells has to cover the cost of the agents time and resources spent on the house that he did not sell. And we all know some houses will not sell, though no fault of the agent on many occasions.
Seriously, we live in a customer first world now. Online is just another choice - the customer deserves to have a choice - whether they want to shop in Primark or Harrods - Foxtons or Yopa. No need to go round bashing one another.
Dear John (I have always wanted to write that),
Apart from being extremely patronising, you appear to have problems understanding even the blindingly obvious. I am not against Hybrid/online agents who do their job correctly. What I am against is companies who charge upfront for a service that does not get delivered, who basically rip people off. I am not against using technology to increase the service we offer to our vendors and buyers, in fact I embrace it. As you are having a problem understanding what "No sale, no fee" means, let me give you a simple breakdown. If we do not sell a property, the vendor does not pay us. We do not then increase our fees to the vendor of a property that does sell to cover our costs on a property that does not sell because that would be bad business. End of. Sorry if that is too complex for you.
I work in property law and feel I need to reply to this.. I would never list with purple bricks! I end up with these agents on a large chunk of my files! The post sales support team hopeless!! They are rude and frankly incompetent!! some guy called Wesley! Omg the less said the better! , I am guessing they are give a phone told how to uses it and that's all their training! Don't get me started on their local property "experts"!!
All they care about is a quick buck!! Typical of the Bruce brothers. Thankfully I think they will die out very quickly once people get wise to them and their cow boy tricks. I would rather pay 3% and get service than £800 and get the service they offer!
This is something as an agent i find infuriating. The way people compare Online Agents to the "Normal" Estate Agent. What most people don't realise is when Online Agents charge up front they have obviously a contract in place. Lets say 6 Weeks for e.g. Most sellers are not aware they then have to pay ANOTHER FEE if the online agent doesn't sell it within that time. Of course the seller has to agree to it again, but as a "normal" agent, if we don't sell the property in the time of the contract we negotiate in reducing our fee to keep the seller. This goes without mentioning the negotiators working for these online portals live within a 25 - 50 mile radius!!
Can i just ask why rightmove are displaying Purplebricks and Tepilo as local agents in the "find agent" search on rightmove? Has anyone else come across this?
Search now - Rightmove > Find Agent > Input local town or postcode... and watch them both appear..
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