Purplebricks – What is really going on?

Laurel and hardy sad gifPurplebricks is one of a raft of new-breed estate agency companies making some bold and questionable claims in the property market at present but how many of these claims stand close scrutiny and are they even trading within the law?

(This post has been updated on a number of occasions and these are all located at the bottom of the page – Last updated – major update 14/05/2017). Given the amount and length of some updates, this post may be split at some point to make for easier reading. CW

25/08/2017 – See latest related post – “Attempted intimidation by a PLC or fair comment?

03.08.17 BREAKING Purplebricks has now been subject to an in-depth investigation by BBC Radio4s’ ‘You and Yours‘ consumer program, as well as BBC Watchdog, forcing Michael Bruce, the CEO of Purplebricks, onto the defensive. Further complaints have been aired by consumers on Social Media and more is likely to break on this story over the coming weeks.

Over the years there have been many businesses who have seen what they believed to be an opportunity to change the property market in the UK (more specifically England and Wales) but, despite making bold claims to the press and investors, have failed spectacularly. Remember The Prudential?

In the late eighties it was the insurance companies wanting to sell endowment policies on the back of mortgages with cross selling opportunities (remember endowment policies?).

More latterly, a new raft of entrants have leapt onto the scene throwing the current corporate buzzwords of ‘disruption’ and ‘proptech’. These companies are the online* agents, promising allegedly huge savings for consumers with the same or even better service than the traditional full-service estate agents and big profits for investors.

In this post, I focus mainly on Purplebricks as the largest of these firms however, I also refer to other firms and the model in general too. In 2014, Purplebricks promised investors it would have made £25 Million profit by the end of 2016 (though these figures were subsequently challenged by PB . However, Hardman & Co predicted more modest profits of £8 Million EBITDA by this financial year-end).

Fast forward to December 2016 and PB issued a statement claiming that they had made just £300,000 profit using the EBIDTA method of calculation for the half-year results, some way short of the previous figure. Their full year-end figures are due out on the 29th of June for their financial year-end April the 30th but many industry experts believe PB will have to work hard to have grown their income in a property market where instruction volumes have fallen so significantly and the market share of the online sector as a whole has shrunk from a claimed (but unverified) 6% in mid 2016 to a verified 4% in March 2017. Readers may also wish to see the sector claims in light of other predictions from EasyProperty and eMoov of market dominance by 2017-18 with 20% or higher market share by sector.

Are Purplebricks and the call-centre agents heading for a tougher time in the press and with the authorities?

Those who have read my blog or Twitter feed will know I have called out a number of call-centre agents over their claims on many occasions resulting in a number of rulings made against them by the ASA. Whilst it is bad enough that this sector appears to have more than its fair share of complaints upheld about misleading the public and, by extension, investors, there are other, potentially more serious issues that may yet play out.

In the case of Purplebricks, there is an ongoing issue of whether their self-described LPEs (Local Property Experts) are classed in law as local or, indeed, as ‘experts’. Purplebricks have since removed this claim but were only recently advertising for new LPEs’ to join the firm with an immediate start but with “no experience required”

Certainly, pre-IPO, PB had publicly claimed that all of their LPEs’ were “qualified estate agents”. It would be reasonable that the public or investors may make a transactional decision on the assumption that such a statement would mean that the LPEs’ all held formal industry specific qualifications such as these NVQs‘.  However CEO Mr Bruce, himself a qualified solicitor, knew full well that this was not the case at all (extracts of the correspondence between the author and Mr Bruce at the time have been lodged with Purplebricks solicitors, Schillings).

Then there is the matter of whether Purplebricks and their LPEs’ have been trading legally. Purplebricks maintains that all of their LPEs’ are self-employed franchisees (PBs’ service agreement refers to utilising the British Franchise associations code of conduct in the determination of any disputes. See also HMRC update below) .

However prior to June 2016, none of these LPEs’ were individually registered with a property redress scheme, the Information Commissioner’s Office or HMRC for money laundering; all of which are legal requirements under the 1979 Estate agents Act. The author is currently awaiting a formal response on the LPEs’ legal employment status but believes that whether they are classed as formally employed or self-employed, it will leave Purplebricks looking at a possible investigation into their legal status surrounding trading, redress, money laundering, the sale of loans, VAT and associated employment and tax issues.

The claimed savings the public can make are also worthy of closer scrutiny, with PB seemingly very clear to muddy the waters and avoid using their own conveyancing partners firms data in its comparisons whose published estate agency commission figures** are considerably lower than the figures used by PB to estimate the alleged savings made by consumers.

Not only is the savings comparison flawed in its methodology (it is not a like for like comparison) PB claims savings on sold properties but steadfastly refuses to make figures available for how many consumers pay to sell but fail to do so – estimated to be circa £24 Million PA. Consumer and property journalists are now taking this seriously with many asking PB to shed light on their figures.

#PortalJuggling In a recent report on this activity, a number of well-known high street names including Purplebricks were mentioned as having very large numbers of property listings that were apparently anomalous. The author wishes to make it clear that he is not claiming or implying that any of those firms mentioned were deliberately undertaking such an activity merely that there were a large number of anomalous properties highlighted which bear closer inspection.

More disturbing is the use of heavyweight lawyers to silence critics or negative reviews. Purplebricks claims over 5,000 positive reviews yet a very high number of these are from unverified customers. Negative reports from un-verified customers however, are often removed within the hour.  Purplebricks recently removed their entire Facebook review page which certainly did NOT reflect five-star rating on Trustpilot and other review sites posters are not so complimentary about the PLC.

The author has been contacted by a number of customers who allege they were threatened with legal action for making negative posts on Social Media and on review sites and has screenshot evidence of these claims. There are also screenshots of reviews (since removed) by un-verified customers that allege they were not informed that by deferring payment of the Purplebricks fee, they would be signed up to a loan agreement with Close Brothers.

Furthermore, the author himself received a strongly worded email from heavyweight law firm Schillings threatening legal action for raising inconvenient facts and asking reasonable questions. All of the points raised by Schillings were rebutted with no further correspondence being received.

LPE numbers. LPEs’ were and continued to be recruited in large numbers however, what is not clear is how many of these are replacements for other LPEs’ who haven’t made the cut. Whilst the author does not have empirical evidence, there is strong circumstantial evidence echoed by other analysts that the turnover of LPEs’ is very high, suggesting that the promised rewards have not been forthcoming. Certainly, a cursory look at companies house suggests that there are not many who could be regarded as ‘long-term’ franchisees.

With Purplebricks year-end due within the next couple of weeks, there are many more questions unanswered than settled. Why, having made a categorical statement on BBCs’ money box that Purplebricks completes on 88% of all instructions, has Mr Bruce failed to provide any evidence for these figures?

A simple question Purplebricks. For every 100 customers who listed with you in the last financial year (your fee earning event) how many went on to sell (legally complete, not just sold stc) having had the buyer found via Purplebricks?  (There are a great many properties listed as under offer and sold by Purplebricks which are also listed as sold by other agents with a later listing date, suggesting that a significant number of sellers pay up front for Purplebricks, who fail to sell and then switch to high street agents who go on to successfully sell the property (legally complete).

This means 68 customers paid at least £57,732 at a minimum of £849 per listing (excluding  any additional services such as viewings/ deferred payment charges etc.) but did not sell. What was their average ‘saving’? Purplebricks do not seem to factor these customers losses into their heavily advertised ‘savings’.

With Purplebricks aiming for 3,000 property listings per month nationally, this means (if these figures were repeated across the UK evenly) that 75% of these customers would pay in the hope of selling but fail to actually sell within a 12 month period. That equates to those customers paying a whopping £24,165,000 without selling.

The difference in price between the original quoted average asking price on listing (£295,514) and the average final price quoted when the property was marked as exchanged (£228,145) is a whopping £ 67,368* – 23% below the listing figure.

And the news doesn’t appear to be much better for those that did go on to exchange. Of the 25% who did exchange contracts, the difference between the average prices from all of the original listings and of all of the exchanged properties is £67,368* per property. A total difference in price of £1,549,464. Repeated nationally (using the same average figures as in West Cornwall) this could equate to a £606,312,000 difference between asking and selling figures for the 25% of customers who were successful in selling.
*A misnomer as all agents are online. A more accurate description of these firms is ‘call-centre’ estate agents as they work from a centralised or regionalised office with no public access.

Update 17.4.17

Not the only example I’ve recently been sent/ seen but, this persons linkedin profile also suggests they went from zero estate agency experience to being a “local property expert” within a few hours.

UPDATE 21.4.17

Using publicly available data from Zoopla and Rightmove for the period Apr 21, 2016 – Apr 20, 2017 inclusive (the last 12 months) in the following postcode areas*** there were a total of 3,947 new instructions, of which, Purplebricks listed 91 (a 2.3% market share).

The average price quoted on listing by Purplebricks was £295,514

Purplebricks exchanged on just 23 properties during this time (giving a sale success rating of 25% or, a 75% failure rate. Take your pick)

UPDATE 24.4.17 For transparency and fairness, I have been asked to include the figures for all other agents success/ failure ratio during the same period. Between the same dates and exactly the same criteria, the complete dataset (including Purplebricks) exchanged on a total of 2,441 properties, a 62% instruction to sales ratio. Please note, the 38% of those customers who did not sell would, in the vast majority of cases, have not paid a penny to an estate agent.

So, using this data set, paying to list your home with Purplebricks suggests you have a 25% chance of selling. Whereas if you opt for the no-sale,no-fee model you have an average 62% chance of selling.

As has been pointed out elsewhere, when those who fail to sells’ costs are factored in to the lucky 25% who do, the cost to the average consumer who lists their home is almost identical between full-service agents and Purplebricks.

UPDATE: 28/04/2017 – I have now received a response from HMRC Money Laundering Team. At present, I can say no more until I have received further responses from other organisations.

In the meantime, if you wish to personally check whether an agent needs to be registered individually for money laundering as a franchisee (and by extension, individual redress scheme membership) HMRC Money Laundering Team can be contacted on 03000591009 mlrcit@hmrc.gsi.gov.uk

UPDATE 15/05/2017 – HMRC have now confirmed that all agents operating as a franchise who are sole traders or limited companies in their own rights ARE classed as separate businesses under HMRC classification and, as such, must be registered for Money Laundering with HMRC. I believe that this classification confirms previous assertions that such firms/ sole traders (‘LPEs”) who were not registered were doing so in contravention of a legal requirement.

I also believe that this clarification strongly suggests that all of these businesses were required to have had individual membership of an approved redress scheme such as The Property Ombudsman Scheme (TPOS). I have been informed by TPOS that many of these firms are now registered however, that they were not until recently. Again, this adds weight to the argument that these firms and their parent firm had been trading in contravention of the law.

At the recent #PROPTECH conference in London, property data company GetAgent.co.uk claimed that it had researched Purplebricks figures and found  that over 40% of all Purplebricks customers failed to sell with that company despite having paid over £1,000 up-front, on average, in that expectation (Source: estateagenttoday.co.uk – https://www.estateagenttoday.co.uk/breaking-news/2017/5/purplebricks-blasted-by-rivals-at-industry-technology-conference ) The author estimates that this figures represents over £12 Million is lost by consumers who paid in the expectation selling their homes but did not.

Data protection – Purplebricks franchisees (LPEs’) are predominantly individual companies registered at Companies House or sole traders. It follows (but I have no evidence to substantiate this assertion) that they take, hold, process and share information with sub-franchisees, other companies, the franchisor (Purplebricks PLC) and, separately, Close Brothers PLC and, MyHomeMoveConveyancing/ Premier Property Lawyers etc.

Of the fifteen LPEs’ and head territory owners (has sub-franchisees under them) I checked today (and have done so previously), not one is registered with the Information Commissioners Office (ICO).

The ICO process to see if you need to register is quite clear and simple https://ico.org.uk/for-organisations/register/ as is their warning: “Failure to register is a criminal offence”. Below are two screenshots of the process I followed prior to posting this update.

ICO ‘do you need to register’ process

ICO register of data controllers


*The difference in asking prices and selling prices may not be a true reflection of the price difference between asking and selling prices of the few properties that sold and could be explained by more highly priced homes simply not selling.


**Purplebricks conveyancing partner is the largest property conveyancer by volume in the UK. Accordingly, it has arguably the most accurate database of fees paid by agents in the UK. In 2015 Stephen Hayter Sales Director of My Home Move, published two articles which appear at odds with Purplebricks recently claimed average agents rates. The average percentage rates in 2015 were reported to be under downward pressure at that point and there is every reason to suppose that the average fee charged for a successful sale by a full-service agent in the England and Wales is now closer to 1% than the 1.8% or more claimed in many adverts.
***TR12 TR12 6 TR12 7 TR13 TR13 0 TR13 3 TR13 8 TR13 9 TR14 TR14 0 TR14 7 TR14 8 TR14 9 TR17 TR17 0 TR18 TR18 2 TR18 3 TR18 4 TR18 5 TR18 9 TR19 TR19 6 TR19 7 TR20 TR20 8 TR20 9 TR26 TR26 1 TR26 2 TR26 3 TR26 9 TR27 TR27 4 TR27 5 TR27 6 TR27 9


About Chris Wood: Chris is an estate agent with over 25 years of property experience. His business, PDQ Estates Ltd is based in Penzance and Helston, West Cornwall and was included in the Daily Telegraphs’ list of the UK’s top 20 best small estate agents “who go above and beyond to help their customers” in 2013. He is currently championing the fight against #PortalJuggling in the media along with a number of other agents, journalists and agency suppliers.

He has worked with all sizes and types of businesses from single office independents to the management team and board of RBS and Tesco.

A former President Elect of the NAEA and board member of NFoPP until he resigned in 2009, Chris has always championed the highest professional standards for estate agents in the UK.
No stranger to the media, he has appeared on various programs including BBC, News 24, ITV, independent and BBC radio and is a regular contributor to trade journals, local and national Newspapers. Chris is on KloutLinkedIn Ecademy Facebook and Twitter
Chris has previously competed in the National Laser sailing championships and, as a Sabreur with a top 300 UK ranking in fencing. A long-standing member of the Territorial Army; in 2010 he mobilised for a tour of duty in Afghanistan with 1 Rifles as part of 3 Commando Brigade but was medically evacuated back to the UK before deploying to his forward base with his unit and is now medically discharged from the army.


  • Please provide me the www link to this post Chris. I want to share far and wide (provided you are happy)?

    Andrew Overman | Manager

    Chilterns Estate Agents & Letting Agents T: 01842754161 | M: 07872693844 E: Andrew.Overman@chilterns.co W: http://www.chilterns.co

    [cid:td6d0c8] [cid:f72fedb]

    [cid:chilternstop719046] [cid:chilternsfreeinstanta73da4]

  • Hi Andy. By all means. Thank you. Purplebricks – What is really going on?
    Purplebricks is one of a raft of new-breed estate agency companies making some bold and questionable claims in the property market at present but how many of these claims stand close scrutiny and are they even trading within the law? Over the years there have been many businesses who have seen what they believed to […]

  • >there is strong circumstantial evidence echoed by other analysts that the turnover of LPEs’ is very high, suggesting that the promised rewards have not been forthcoming.

    Hi Chris,

    What is this evidence and what would be considered “very high” for an agent venturing out as self employed for the first time? Surely you would expect it not being right for a certain percentage of people? Not everybody is cut out for self employment.

  • Hi John.
    If I were setting out on a new venture with the support and backing of a PLC with associated multi-million pound TV, property portal, press and internet campaign I would expect my chances to be in a successful, profitable business after three years to be better than for almost any ‘hot-start’ franchisee, let alone after just a few months.

    The turnover appears to be well into double figures which suggests that either the model is fundamentally flawed or that PB are possibly failing in their duty of care in the recruitment of and to new franchisees. It doesn’t appear that Purplebricks are members of the British Franchise Association however, their code of ethics makes interesting reading http://www.thebfa.org/about-bfa/code-of-ethics

  • LPE’s are not franchises. Some are employees but most are self employed individuals and they all receive payment from PurpleBricks. “Well into double figures” doesn’t mean anything. That could be 20% or 90%. If it’s 20% then this would mean that the model has been a success for 80% which would endorse the viability of the model and might even suggest that the 20% it didn’t work out for were not up to the job.

    The article doesn’t really say anything concrete, just innuendo.

    Why do you compare an unverified market share to a verified one? This provides us with absolutely nothing.

    Why do you make such a big deal about estimates not being reached. If we look back to what you were saying 2 years ago you posted an article which claims “Cheap agents could cost UK consumers half a £Billion in wasted fees”. What is going on with that? You are claiming as low as a 30% completion rate costing homeowners £500,000,000. Well my own small sample of data shows that to be way off the mark for PurpleBricks.

    Also your figures for Hardman & Co estimates are out of date. probably from before the move into Australia last July. The consensus forecast of brokers estimate a loss of £8 million. Hardman & Co a loss of £5.5 million but remember this includes startup losses for Australia. I personally expect the UK operation to make about £2 million profit and Australia about £7 million loss. Just an estimate. We’ll see, there should be a trading statement shortly after the end of the month and results in June.

    As I say, I don’t really see what your article tells us apart from the fact that people aren’t very good at predicting the future. Of course there’s plenty of innuendo but nothing concrete.

    • It is very clear from Purplebricks’ own service agreement that LPEs’ are indeed franchisees John abd specifically mention resolving any disputes using the British Franchise Agreements code of conduct. There is little concrete information as Purplebricks are very good at ensuring there is very little concrete information to work on. Hence the article.

  • Chris, if a competitor came to me and asked me questions about my business I’d tell them to get lost. Why do you think PurpleBricks have to answer your questions?

    Purplebricks are very open about the actual LPE’s they have and also the properties they are listing are there for everybody to see. It doesn’t take much effort to keep a track of these things and seeing as you are so interested I’m surprised you haven’t been doing this.

    Still why bother collecting evidence when you can cast aspersions?

  • Jon, I think it unlikely that we will agree however, to answer your questions/ statements please consider the following.

    Purplebricks entered the property market rubishing a particular business model and many, many agents by making a number of claims and statements, some of which have already been shown to be misleading, not based on sound data or, either knowingly false or naive to the point of incredulity. It is not unreasonable to challenge those claims. There are also legitimate questions over the legality of the way it has operated and continues to operate in terms of redress, money laundering, data protection and employment law.

    I don’t expect a competitor to tell me it’s business however, when a competitor makes statements claims about how well it is doing or the savings it allegedly offers, I expect that competitor to justify them (incidentally, as do trading standards) with clear, reliable, transparent unbiased data. PB have not to date, in my opinion, done so.

    I do expect all of my competitors to work within the law in the same way they have every right to expect me to so do. I don’t believe that’s unreasonable.

    • Well in terms of legality, expecting is fine, but damaging somebodies reputation without proof is not in my opinion. Innocent until proven guilty.

      In terms of having to justify claims. Are we talking about adverts or any comments made? It just seems completely alien to me to claim somebody is making false claims (by innuendo or otherwise) unless you have evidence. The only way to stop somebody would be to use the courts which can be expensive even if you win the case. I’d be very surprised if Trading Standards ask every business to justify every claim made.

      You aren’t even asking PB to justify claims you’re asking them to make claims on their current conversion rates. Perhaps they should give you a weekly update? They have stated some time back in a radio show that their conversion rate was 88%. That doesn’t mean its currently 88% but if you doubt it then why not ask Trading Standards to investigate rather than repeatedly questioning it? I must admit I don’t really understand the amount of time being taken over a comment on the radio which 99.99% of people probably didn’t even hear and if they did they probably wouldn’t know if it was good or bad.

  • I have noted as many 1 to 3* reviews as I can, as they appear, since October. Many have been deleted.
    94% of reviews in that time are still 4 or 5*.

  • Hi Chris,

    Could you also clarify what you are alleging in regard to the advert from Ian Taylor? It doesn’t mention he is looking for a local property expert. Perhaps the position relates to a more junior role? The person who visits for measuring and photographs perhaps?

    Did you make enquiries before posting your comments and the advert?


    • That’s interesting John. In the version of this article that I have read the advert was placed by James Lavis who is the lpe for Bournemouth. Where abouts are based to be seeing a different advert? Also are you in any way shape or form employed, self employed a franchisee or related to the above of purple bricks? Your defence of them seems quite vercifarous.

      • James,

        My interest in PB is as an investor and after reading all of the “questions” elsewhere many times over the last few months I have research the true situation. LPE turnover, portaljuggling, estimated profits, growth of instructions & income and the number of listings that go on to sell with them as opposed to another agent. I am a long time investor, a Computer Scientist and also a customer of PurpleBricks which gives me a unique insight into how they and their software work.

        My conclusions are that a lot of people are being misled (the people in the Estate Agency Business being one group) that provide no actual facts and focus on out of date broker estimates, focus on the worst cases rather than the norm, talk of struggling to increase revenue, talk of illegality and general negative innuendo. At least Chris has toned down his attack on portal juggling “he is not claiming or implying that any of those firms mentioned were deliberately undertaking such an activity” but why even mention it if he’s not implying it?

        So what we’re seeing is spin, exactly what some are accusing Purple Bricks of. My point is that the truth is somewhere between the extremes and I wouldn’t hold shares if I thought PB were struggling to increase revenue and I’m looking at the data every day. The key is market share growth which according to my proxy, has increased by about 18% in the last 2 months.

        As for the advert, yes it’s the same one. No actual mention of recruiting for an LPE position is there? If the point being made is that the person sought is going to be working immediately as a LPE then it’s just lazy journalism based on supposition. Make some enquiries and you’ll find the truth rather than have to rely on innuendo.


      • Right that explains the defence. To be fair to all sides in this “debate” it’s all spin the latest advertising campaign focusing on “commisery” is mainly designed to in my opinion mislead and probably to annoy estate agents. The pricing structure can’t really be compared due to the very different nature and structure of the process. With pb you are paying them upfront for the work they due regardless of success whereas the run of the mill estate agent gets nothing until all the work is finished. As far as I am aware anyone taking all the risk in any business tends to receive a greater reward when successful. I believe that the company will fall short on its original targets but let’s face it who doesn’t ! There is also some merit in the argument over local property experts and the definition. I previously mentioned James Lavis, now no argument can be made against him being a local property expert in the Bournemouth area having worked in it for over 10 years that I know off, the storey is not the same however in the Salisbury area where I live. There have been 3 different local property experts covering Salisbury since the companies launch all 3 having never worked in Salisbury itself as estate agents. It’s all spin and as long as people are honest in their presentations then all is fair in love and war. There will be people on both sides of the battle lines that are unscrupulous but not all. Let’s face it estate agents have been tarred with the evil brush for as long as I can remember. The full accounts when published will undoubtedly make interesting reading, I wish you well with your investment.

  • Hi Chris, Great article. I would suggest it takes 10000 hours to become an ‘expert’ at anything (http://sethgodin.typepad.com/seths_blog/2008/12/10000-hours.html) I don’t think PB really thought about/cared what an ‘expert’ might be but used the word to give potential clients a misleading confidence in their offering. PB probably employ/use very few ‘experts’ in property and even less ‘local experts’ – shamefully misleading IMHO. I am not anti-online or anti-PB (they give consumers more choice) but let’s keep things factual and honest and not the current bullcrap that comes from their adverts. Tom @ Jungle Property

  • >I would suggest it takes 10000 hours to become an ‘expert’ at anything

    Hi Tom, perhaps this is why the person being sought wasn’t being labelled an expert? In typical estate agents how do you gain that experience? Perhaps this is the case with the person being recruited by PurpleBricks too? It said they will have the opportunity to progress.

  • Hi Tom. Thanks for your comments. The term expert will always be a subjective one except where definitions exist such as in case-law etc. However, as in the update photograph above (17.4.17) and from other recruitment tweets/ LinkedIn adverts, many of Purplebricks people have little to no experience of estate agency yet are called experts from day one. I do not believe that the definition used by Purplebricks PLC is one that a reasonable person would take it to mean and would be very interested to see how such a claim would fare in court if brought under Consumer Protection Regulations. I believe such a case would be in the public interest.

  • Hi Chris,

    >I believe such a case would be in the public interest.

    Perhaps Trading Standards can add it to their list?

    I was interested to see Mark Townend’s comment on your linkedin post where he says “I agree wholeheartedly that consumers need to be protected. However, I think there are bigger fish to fry at the moment; there are plenty of High Street agents actively over valuing to win instructions, duping clients into 5 month sole agency contracts. There are more who are clearly conditionally selling to purchasers who will agree to use their in house mortgage consultants. Others who will put their own avarice first by sidelining cash purchasers in favour of those who will be using in house services. Until this industry puts its own house in order bleating on about online / hybrid agents will simply fall on deaf ears with the general public. Quite simply the public wants choice, it is up to High Street agents to justify the genuine value of their charges”

    I was also interested to see that my own comment appears to have been removed.

  • Great article Chris. Brilliant research.

    • Chris,

      Does this answer your questions in relation to profit?


      From Peel Hunt who have apparently released the biggest research note to date.

      “The UK business is now profitable on a monthly run rate and will see a big drop through to profits from increased revenue/market share. From a breakeven operating profit in full-year 2017 we forecast margins to increase to 28 per cent in FY19 with operating profits of £24m.”

      • Hi John, haven’t peel hunt always been very bullish on their opinions regarding purple bricks? They’ve always had a strong buy report on them when others haven’t, or am I mistaken?

      • Hi James,

        Peel Hunt, Investec, Citigroup & Hardman & Co have all analyzed PurpleBricks at various points and rated them a ‘buy’. The only broker who seems to rate them as overvalued and values them at 97p is Jefferies. Jefferies have also suggested that listing to sales conversion is just 17% which my own analysis shows to be way off the mark.

        Peel Hunt are a very well respected City Analyst. I’m new to the sector but I’m told by an experienced investor , somebody who isn’t a big fan of PurpleBricks, that they are the most respected for the sector.

        I’ve been investing for over 30 years now and the end of year for PurpleBricks is in 5 days. There will soon-after be a trading update if the pattern of earlier years is adhered to. I’d eat my hat if the short term estimates of Peel Hunt turn out to be wrong 🙂

        I’ve done my own research. I have proxies for sales completion figures and turnover of LPE’s and I know what I think, however some people prefer to believe innuendo.

      • Fingers crossed for the results next week then. Competition in any market can only lead to improved service for the consumer.

    • Thank you Ian. Much appreciated.

  • Hi There,
    Excellent article ( and comments from both sides of the debate ) on a subject that everyone with a stake in the industry should be informed about.
    I believe that the advent of so called “online” agents has taught us all a lot about the business of selling property on behalf of clients – the importance of analysing our cost base, simplifying the listing and viewing process for customers and providing real value to those that use the services of estate agents. It has also highlighted the critical requirement for genuine and credible personal and individual service from ” experts ” – be they from Purplebricks or more traditional models.
    Personally I believe that ( nearly ) all effective modern estate agents are now ” Hybrids ” to a varying degree along a wide spectrum from purely online through to a more traditional model. Ultimately the customer will decide where they wish to place their custom along that spectrum.
    One thing that does perplex me is the apparent lack of credible and independent analysis as to the true percentage of market share ( for sale and sold ) for those that at least self-identify as “online” estate agents – which may or may not include Purplebricks.
    Is anyone aware of where such statistics are available?

    • Hi Simon,

      I’ve come across various comments during the short time I’ve been researching these things and the figures that are closest to my own proxies are those that are saying 4 to 5 percent. That is if we’re talking about new listings rather than stock levels. I haven’t really looked into stock levels.

      See http://www.propertyindustryeye.com/online-agents-go-from-2-5-of-market-share-to-over-5-in-two-years-rightmove/

      That’s an article from May last year and there’s a figure of 5% from Shipyard. I have no idea whether they are independent or not. I seem to remember Rightmove commenting at some point and and if my memory serves me correctly this was somewhere around those levels.

      I personally think it’s closer to 4% (again, I’m talking about new instructions).

  • Hi John,
    Thank you so much for that. It really is appreciated. That figure does appear to reflect the, admittedly anecdotal, information that I have for my own area In Cambridgeshire. Of course it does hugely depend on whatever definition is used in respect of an agency to be an “online” estate agent. I personally have not come across any meaningful definition which is why I would ask that agents self-identify as such for the purposes of this analysis. For me, that phrase is meaningless as nearly all estate agents are online to a lesser or greater degree as I alluded to in my post.
    Are you, or anyone, aware of a satisfactory definition?
    If 4 or 5% is accurate then it does strike me just how minimal the impact of the online agent has been to date on the overall market – despite the ( sometimes justifiable) hype and massive marketing spend.
    My own view is that the phrase “online” should be replaced with the word “budget” or “up-front payment” model as a more accurate description of this market sector. Isn’t that a description that most would accept as fair and reasonable?
    What would be your ( or anybody else’s) thoughts?

    • Hi Simon,

      The way I have always thought about it when I have hear the expression “online agent” is that they have no high street presence.

      I think the problem for online agents was always one of marketing and brand recognition. Whilst the estate agency industry has probably been aware of all the hype this has probably been totally missed by the general public.

      PurpleBricks started to expand nationally (in terms of their LPE’s) and started spending big on advertising 18 months ago and appear to have made huge progress and are said to have quickly risen to 70% of the online market. There will be a trading update from them next week.

      To me looking on it’s all about brand recognition, marketing and trust which develops over time.

    • Simon,

      I missed perhaps the most crucial factor in terms of Purplebricks’ rapid growth. This is the growth in LPEs. Up from 205 at this time last year and currently 474.

  • Hi Simon
    Thank you for your comments and observations. There is hard verifiable data available which I had access to in writing the original article, which showed that ‘call-centre’ agents* market share has peaked despite the massive spend you mentioned. The data I had access to is now in use by some highly respected names, organisations and businesses.

    As the most recent updates to this story allude to, there are some major announcements to be broken in the near future which are highly likely to create a major upset and embarrassment in the industry.

    *I believe this is the easiest and most accurate way to differentiate them

    • >There is hard verifiable data available which I had access to in writing the original article, which showed that ‘call-centre’ agents* market share has peaked despite the massive spend you mentioned.

      Hi Chris,

      When you talk about market share do you mean stock levels or new instructions?

      Don’t you mean that it is lower than its peak to date?

      It would have to be able to tell the future to determine that the market share has peaked.

      Where does this data come from and who has verified it?

  • Thanks Chris,
    I respect ( as ever) your well considered view and attempt to arrive at an acceptable definition of this market sector. I think that an acceptable definition is critical in this fascinating debate.
    However, I would respectfully suggest that this is a slightly disengenuous definition as ,like it or not (and I don’t!), most of these “call centre” agents do appear to offer slightly more than just that facility – even if it is at a higher cost to the consumer than they would first advocate.
    This is why I believe that ” budget ” or ” up-front payment ” is a far more accurate description.
    Thank you for your engagement and courteous interactions on this matter. I have learnt a lot!

  • Hi Chris,

    I’ve just seen that you have updated your blog with some data.

    As I suspected would be the case, this data is being spun in a way that favours traditional estate agents who, given the short time they are contracted with the vendor will be looking to achieve a quick sale and are more likely to encourage the vendor to list at a lower price and reduce quickly so that sale can be achieved during the period when they will receive commission.

    By looking at completions from properties listed in the last 12 months, 84% of them will have been on the market for less than 10 months. To use these figures to establish the number of completions is flawed & biased.

    I would also ask you to confirm that the data has come from an independent source and how it has been verified as accurate. For example, how can you establish whether a flat listed with just a street name and an incomplete postcode has gone on to completion?

    My own research, which is also on a small sample but a national one, looks back at listings from 10 months or more ago and determined the percentage that had completed in that time period. My figures are very different from yours and much closer to the 77% completion rate published by PurpleBricks in their last audited accounts than the 25% figure you have come up with.

    • My data source is clearly shown in my article.

      • Ah sorry. I think I now understand why your figures are flawed. The information in Zoopla & Rightmove is often incorrect as I believe you are aware.

        I assume you are aware that customers using PurpleBricks frequently remove their property from the market when they receive an offer.

        I am using PurpleBricks to sell and you should note that once somebody has made an offer to view your property, direct communication between you and the viewer can begin. Rightmove & Zoopla have no idea what is going on and a sale can complete without it even becoming ‘under offer’ or ‘Sold STC’ in the portals.

      • …but surely it would at some point appear on Land Registry data? Are you suggesting that a sale can be agreed by PB and not show as SSTC on a web Portal?

      • Simon Bradbury

        Hi John,
        I hope that you don’t mind if I join in this discussion.
        Sorry If I’ve misunderstood, but are you saying that a PB property can (sometimes) proceed to being under offer and then complete but in some circumstances they will still appear to be available for sale on Rightmove and Zoopla until it is picked up on the Land Registry and then removed some weeks or months after completion?
        Again apologies if I have misunderstood your explanation.

      • Hi Simon,

        Yes, I have been told about circumstantial evidence that suggests this is a possibility, not just with PurpleBricks but with all Estate Agents. I would imagine (and I have 35+ years experience in software development) that removal of the listing from Rightmove would require action by a human with the methods employed by traditional Estate Agents making it less likely to happen.

        Aside from human negligence, there’s also scope for system/software error.

        Here is a response I received about a property when enquiring with a traditional estate agent “When the sale of a proeprty (sic) completes it is removed from our own website but sometimes for whatever reason still appears on the Rightmove site.”

        I would even go so far as speculating that whilst Rightmove does provide information from the Land Registry, there is no guarantee that once finding this information the property would automatically be removed as a listing. In fact I wouldn’t be surprised if the listing process is completely separate from the process providing information from the Land Registry.

        I would imagine that the explanation as to why Chris Wood’s figures for sales completions by PurpleBricks is vastly different from my own is down to a combination of factors which results in PurpleBricks’ sales taking longer to be recorded in the Land Registry. Chris may want to explain in more detail how he carried out his analysis. Did he record listings on a daily basis during the period in question for example?

        Of course that won’t stop people with their own agenda from claiming that PurpleBricks complete on fewer properties than they actually do. I will personally trust audited accounts as a more reliable source of information than information from those with their own agenda. The key word being “audited”.

  • Yes, of course it will end up on the Land registry but you said your data was from Zoopla & Rightmove.

    >Are you suggesting that a sale can be agreed by PB and not show as SSTC on a web Portal?

    I’m saying that a sale can go ahead without PurpleBricks, Rightmove & Zoopla even knowing about it. Wouldn’t this be the case with any Estate Agent? From what I’ve seen I imagine this could happen more often with PurpleBricks because there is no need for a middleman in negotiations.

    Using the PurpleBricks platform, the offer on my property didn’t initially come as an offer but as a message. It was only at my request that we didn’t proceed independently of PurpleBricks. The person making the offer was quite happy to just tell the solicitors to get on with it.

    I suggest you do some research before publishing your findings. PurpleBricks’ online support chat facility is very useful in explaining how things work.

    I’m sure you will claim all sorts of illegal practices but remember law evolves and will put the interest of the public first. Of course PurpleBricks will have to keep Rightmove & Zoopla happy and their system can easily be changed to reflect theirs or trading standards’ or even the Courts’ wishes.

  • Sorry Andrew, I had presumed the reply had come from Chris.

    And i do appreciate that the land registry information does eventually appear in information provided by Rightmove & Zoopla so ignore that point.

  • Simon Bradbury

    Hi Again John,
    I do accept that there is always the possibility of human or systematic error.
    However, if a property was being advertised as “For Sale” when in fact it had completed, the estate agent would be in breach of Consumer Protection Regulations and The Property Ombudsman’s code of conduct.
    I am not necessarily suggesting that PB would be more or less likely to adapt this as an intentional policy than any other estate agent but from the apparent method ( as described by you) of monitoring and implementing these matters it does appear to me that the likelihood of such a misdescription is almost built into their modus operandi.

  • Hi Simon,

    I have the “Law of Estate Agency” by John Murdoch on order so will be able to look into these issues next week hopefully. I would be surprised if their systems haven’t been thoroughly vetted by lawyers though and the fact that no action has been forthcoming does suggest to me that trading standards aren’t confident of winning a case.

    To be honest I think there are plenty of issues of more significance for trading standards to be dealing with.

    I do have a fair amount of experience with Leasehold Law and have represented myself in Court & at Property Tribunals. Often law just comes down to interpretation and can be tested. The lower courts are notorious for making suspect decisions. Whilst a small Estate Agent may always choose to act in a way that is 100% sure to be within the law I would imagine a company like PurpleBricks would be prepared to test the law if it is fundamental to their business model.

    These type of issues could result in years of legal disputes going up through the hierarchy of the Courts with appeals.

    One other criticism I have of Chris’ article is his assumption in regard to the advert for an employee which he is suggesting is for a LPE. Whilst looking through the audited accounts yesterday I came across a case study from one of the LPE’s which states “have now recruited three Local Property Experts and two viewings assistants to help build upon our early success.”. It would appear to me that Chris is jumping to conclusions that the advert was for a LPE, the advert certainly doesn’t state this.

    • I suggest you review a number of similar adverts and linkin profiles of ‘LPEs’ which clearly show people are moving from totally unrelated jobs and being advertised as ‘property experts’within a matter of days.

      • I’ve already looked at a sample of PurpleBricks’ LPE’s and they all appeared to be highly experienced. I’ve also investigated what percentage of LPE’s leave. I’m not going to go checking every LPE but I think if you have concrete evidence then you should at least use that rather than jumping to conclusions about an advert posted by James Lavis.

        I think the general public would be more interested in their own LPE’s experience. An investor would be more interested in the overall picture. It’s purely an Estate Agent thing to be hung up on all the legalities and rare cases and most of them are probably too busy to even care.

  • Chris,

    Time goes on and your blog post is looking out of date already and your points are gradually being shown to have been biased and speculative with poor conclusions based on a tiny sample of properties in West Cornwall.

    PurpleBricks have now issued a trading statement with second half instruction growth 83% adding to the 108% instruction growth in the first half of the year. All at a time when Countrywide & other agents are showing a drop in transactions. My own data shows a market share growth of over 30% since the start of February.

    You persist in using an alleged 25% conversion rate from West Cornwall in your calculations when your sample size is less than 100 PurpleBricks properties in a low density area of the country, yet there is a more up to date data on a 500 property sample with 56% conversion which you mention but don’t use to update your calculations.

    As for the data you use to calculate average commission rates. Your data doesn’t include any properties from Central London and doesn’t include VAT. It is also from 2015. There has now been a study from Centre for Economics and Business Research and Post Office Money which shows the average Estate Agent fee in 2016 was £4310.

    Your article is out of date already, estimates and calculations seriously flawed, generally speculative in nature and severely biased.

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