Following the news Purplebricks has been sold to Strike for just £1 – pending approval by its shareholders – UK newswire, Newspage, sought the views of property market experts, below.
Rhys Schofield, Managing Director at Peak Mortgages and Protection, said “In completely unsurprising news, Purplebricks is to all intents and purposes no more. When they launched and were the new kid on the block they genuinely caused huge disruption with their low fee model, unburdened of the costs of an expensive high street office.
Gradually however, the novelty wore off, new players came in and estate agents no longer feared going up against them as they got better at explaining that the cheapest agent isn’t really the one charging the lowest fee if they’re going to sell your house for thousands less. To compound the issue, the business has seen a huge talent drain as their best staff have seemingly left en masse to go and work under other self-employed models as it’s much more lucrative and rewarding. This has been a business that’s been circling the drain for years. It’s only taken as long as it has courtesy of a booming housing market.”
Kundan Bhaduri, Property Developer and Portfolio Landlord at The Kushman Group, said “Purplebricks’ £1 sale to Strike has exposed key challenges faced by online estate agencies: profitability struggles, competition from traditional firms, consumer perception issues and financial setbacks. Traditional agencies have also done well to adopt digital services in the past few years, increasing competition for online-only players. Meanwhile, consumers have shown a preference towards personalised service when selling their most valuable asset. Yet, online agencies claim to offer convenience at a cut price, while traditional agencies provide expertise and face-to-face interactions. That said, hybrid models, blending online and offline elements, do hold promise. Adapting to evolving consumer preferences and market dynamics is crucial in the present market. Striking a balance between convenience, technology and personalised service remains key. Purplebricks’ fall serves as a reminder to industry players to embrace innovation and cater to the ever-changing needs of the market.”
Clive Read, Owner at Goldmanread, said “Purplebricks failed in its mission for a number of reasons, specifically mismanagement. Their agents were initially on self-employed contracts but found themselves working long hours trying to manage multiple sales, not earning a great deal more than if they worked for traditional agents. The technology that promised so much didn’t bring the expected cost savings and perhaps most importantly ignored the fact that buying property is an emotional decision that needs human input. Purplebricks also expanded internationally in the US and Australia with disastrous results. This result would seem to leave the market for online estate agents as one that favours a hybrid approach, in which consumers can pick and choose the level of service they want and pay accordingly. Strike have done well out of the purchase, as they’ll be able to take advantage of PB’s technology, customer base and data whilst retaining the most productive staff. No doubt there will be redundancies across both groups.”
James Cooley, Director at Cow & Co London, said “Purple bricks model was flawed once sellers realized that putting a property online was the easy part. Property market conditions are ever changing due to many factors, so listing a house for sale on the property portals does not always guarantee a sale, or indeed guarantee a sale at the best price. Purple Bricks were one-trick ponies. There are many estate agents in our industry that can list houses for sale but simply cannot do the rest of the job. I watched many of them move to purple bricks as they could list houses, however, many were poor at doing the second part of the job. All they had to do to get paid was a list house! Purple bricks had no real interest in selling the house, as they were paid regardless. A total recipe for disaster, especially when market conditions change. Sellers across London realized this sooner than the rest of the country, Purple Bricks have been pretty nonexistent in London for the last few years. Sellers wised up!”
Andrew Simmonds, Director at Parker’s Estate Agents, said “Buying or selling homes online has proved to be very difficult for people. What we are seeing today is one debt-ridden online company taking on the debts of another one. The online model simply doesn’t work because it does not put the customer first. People need someone with knowledge of their locality to help them buy or sell a home and take them through a process that they thankfully only go through occasionally. We have staff at Country Property in South Gloucestershire who know the difference in the market in each and every town and village and the same at Parker’s Estate Agents where our team live and work in North Somerset. That local model and knowledge is lost with the online agencies. The demise of Purplebricks shows that people are returning to the traditional estate agent and valuing the service they receive.”
Jamie Lennox, Director at Dimora Mortgages, said “Low-cost models work in a buoyant house marketing, but when the tables turn and conditions get challenging this is when traditional agents are in their element. With fewer properties selling, consumers are less likely to want to pay an upfront cost with no guarantee their house will sell and more are opting for a percentage paid upon completion. Ultimately, reducing the homeowner’s risk of losing money. Strike buying them for £1 is an odd move, with them already haemorrhaging money each year, so how long this becomes a viable business is to be seen. It could be seen as a desperate move to save face in the cheap online agent model.”
Riz Malik, Director at R3 Mortgages, said “Purplebricks, joining the prestigious club of companies sold for a mere £1 like BHS and Barings Bank, serves as a reminder that even the most promising concepts can fall from grace. While the notion of disrupting the estate agency industry seemed appetising, Purplebricks bit off more than it could chew by attempting to gobble up the market too swiftly. Traditional estate agents can now heave a collective sigh of relief, as the company that threatened to devour their breakfast has not been unable to substantiate its concept. Let’s hope Strike, the fortunate beneficiary of this one-pound club, learns from Purplebricks’ mistakes.”
Samuel Mather-Holgate, Independent Financial Advisor at Mather and Murray Financial, said “Purplebricks may have been valued at billions of pounds, but it was never worth that. In an era of sky-high tech valuations on unproven business models, anyone with a concept and a computer could have been a millionaire. Now the concept has been thoroughly tested, the value and worth of Purplebricks is in its sale price. The cost of selling a house, through the time involved and the marketing it deserves, is in excess of the fee they charge. It’s a model that won’t work and Strike could be the next company to be bought up for a nominal value.”
Justin Moy, Managing Director at EHF Mortgages, said “It’s such a shame to see any business fall from grace in this fashion, but this does show the strength of the traditional estate agency businesses across the UK, and how price is not the only consideration when selling your home. As a market disrupter, it did its job, but as a long-term venture, without making huge changes with its pricing model, this was always going to happen. Strike has a similar model, and is nowhere near making a profit yet, so this is a very risky venture, more so for those people using their platform. Shareholders will lose sleep, estate agents will say ‘I told you so’, and Strike have a lot to do now.”
Imran Hussain, Director at Harmony Financial Services, said “Purplebricks have been going, going gone for the past few years due to poor performance and a model which simply does not work as selling property is a results-based business, and charging clients upfront and then never doing anything results in outcomes like this sold for £1 says everything the business cost less than a latte anyone that has been involved at a senior level should not be allowed near any property related business again as the so-called disrupters have proven their model simply does not work as most traditional agents get paid once the property is sold and completed.”
Lewis Shaw, Owner and Mortgage Broker at Riverside Mortgages, said “LOL. Pass me the popcorn. The Emperor’s New Clothes springs to mind.”
Jonathan Burridge, Founding Advisor at We Are Money, said “I am afraid that quality generally costs more. Spending money on slick systems and massive marketing campaigns at the expense of appropriately remunerated staff leads to what we have seen today. A good, professional “traditional” estate agent charging 1% provides a great service at a great price.”
