Why Purplebricks is killing it right now
What is Purplebricks’ aim?
Purplebricks provides a full estate agency service at a low cost, by removing the expensive offices and fleets of cars that you usually see in high street agencies. The one-off fee is payable either at the start, or can be deferred for up to 10 months. If your property doesn’t sell within 10 months, then Purplebricks will continue to market your property for no extra cost until it does sell. In addition, they offer to do the viewings for you (additional cost of £300) but if you’d prefer to do it yourself, that’s okay too!
For the home seller the process starts by booking a property appraisal online. Then a Local Property Expert, working for Purplebricks, will guide and advice you along the way. Purplebricks manages to offer such competitive prices by not having a physical office; they work remotely and go directly to the seller’s home for face-to-face interactions. After the appraisal meeting, if the seller is happy to use Purplebricks the Local Expert will create a floorplan of the property to give a rough estimation of how much the property might sell for in the current local market.
“Purplebricks' goal to build a modern global estate agency business demonstrates unrivalled ambition and, in just four years, huge progress. We look forward to the years ahead with excitement and confidence."
Purplebricks has been one of the property industry’s leading online and hybrid agents in the UK, before expanding to Australia and the US. What sets Purplebricks apart from the rest is its low fixed fee for selling and letting properties, which will save you thousands instead of using a high street agency. Plus, Purplebricks provides you with your own Local Property Expert who will list your property on all major property websites (such as Zoopla and Rightmove). This agency is open 24/7, ready to answer any burning questions at all times of the day or night.
Below are a few customer testimonials to back up just how efficient, professional and flexible Purplebricks really is:
Mrs C B - We’ve had a very positive experience buying with Purple Bricks so far. The estate agent George who we have been working with has been very responsive and helpful throughout. It is helpful to be able to contact the company when it suits and there is a feeling like we have someone to ask whenever we have a question.
Alan Howe - Even though we paid a flat fee for the basic package, which included real estate photos and floor plans, we still had a 24 hour a day point of contact to help us through the process. We received multiple offers within 2 weeks of the advert going live. We opted for Kayleigh to handle the negotiating [free of charge]. She was brilliant, keeping us informed every step of the way. We knew exactly what we were paying for upfront with no hidden costs.
Purplebricks’ UK revenue is up 81% and 74% of online shares!
in July this year, Purplebricks claimed to be selling more than three times the number of homes of its nearest rival
Purplebricks total number of UK Local Property Experts increased from 440 to 630 from just a year before The total number of UK Local Property Experts is 630 from 440 a year earlier!
Looking to the future, Purplebricks says group revenues are expected to reach between £165m to £185m over the next year “with medium term expectation of exceeding 10% of total UK market shares”
Purplebricks “stunning growth”
Using a presumed average commission of 1.4 per cent in the UK, Mike DelPrete (strategic advisor in real estate tech) calculates that the amount of commission paid to UK agents annually totals some $4.6 billion (roughly £3.33 billion). That contrasts with $4.7 billion in Australia (with an average 2.0 per cent commission), and $62 billion in the US (where commission is typically 5.0 per cent, although the average property price is below that of the UK).
The market leader amongst online operators is easily Purplebricks, which DelPrete says has 16,000-plus listings as of February 2018, compared with a little over 3,000 for Yopa and under 2,000 for most other online operators - and in some cases, well under 2,000.
Looking at Purplebricks itself in more detail, DelPrete says it now accounts for about five per cent of the total UK residential transactions market, with around 60,000 houses listed annually - this makes it not only the largest online operator, but the largest agency of any kind since the collapse of Countrywide’s share.
He also claims each of Purplebricks’ Local Property Experts is listing nearly 100 properties per year, a figure that has remained roughly stable even during the period of expansion of LPEs from around 200 in 2016 to 450 by late last year.
Purplebricks vs. CountryWide
By contrast, DelPrete then chronicles the declining fortunes of Countrywide, well-known to Estate Agent Today readers who will have followed its volatile share price, market share and branch closure programme in recent years.
Countrywide has been the hardest hit estate agency by the “stunning growth” of Purplebricks and other online agencies. This has brought immense pressure on Countrywide’s business. These online agencies have captured 6% of the market in the U.K., and continue to grow.
The chart below shows share price changes over the past year and a half for Countrywide and Purplebricks:
Due to the tough competition coming from Purplebricks, Countrywide now offer a service on par with the online agencies. It can tell the market and prospective customers that it also offers a low-fee, online offering. However, customers don’t seem to be buying the new service and the markets aren’t buying the strategy.
Purplebricks takes on the US market
After launching in the US this time last year, October 2017, Purplebricks has decided to broaden its horizons by opening office in the US. The business model in the US is similar to the UK and Australia (where Purplebricks also operates). Purplebricks charges a listing fee of $3,200, plus the typical compensation paid to buyer’s brokers (typically between 2 to 3%). Sellers must pay the fee either upfront or at closing, regardless of whether their home sells.
Dreaming big - after expanding into the US market, Purplebricks has already started to take root in California, Las Vegas and New York, the biggest markets in US real estate at the moment.
Purplebricks have barely been operating in the US for a year, but they are a force to be reckoned with. They are now a large, international player with huge drive and experience and the cash to back it. Purplebricks may not change the real estate game overnight, but they are here and they are willing to challenge the status quo.