Purplebricks sells 76% of the houses it lists, “well above the national average”, a new note to investors said this morning.
Analysts at Investec Bank said that its independent market survey report “confirms that Purplebricks sells the majority of instructed properties, “contradicting some recent desktop analysis” – a reference to recent claims by Jefferies that Purplebricks sells just over half.
Investec said that its independent survey ties in with Purplebricks’ own figures, adding: “This is an important vindication of the model”. EYE asked whether ‘sales’ meant completions, and a spokesperson confirmed that this is the case.
Received wisdom is that most volume agencies would consider it very good if they were to sell over 60% of their stock.
The Investec report goes on to say: “While the incumbent estate agent industry does not like it, our survey suggests Purplebricks really does sell houses and converts instructions into sales at a high 76% rate; an attractive probability of selling for vendors.”
Investec also concludes that Local Property Experts “do a good job and are actively involved in a high proportion of house sales.
“Feedback is overwhelmingly positive on the role of the Purplebricks LPE and ability to service their customers.”
Investec is a house broker to Purplebricks – which is also advised by Peel Hunt and Zeus – but used an independent firm for its research.
The survey was done by VIGA, a digital research consultancy. It used its own “access hub” to identify 513 Purplebricks vendors across the UK, who were asked 25 questions in total. Of that 513 sample, 76% of the homes sold. The time taken to sell was under three months in 33% of cases; three to six months in 55% of cases’ and six to 12 months in 12% of cases.
This left 24% unsold. Of these, 42% were taken off the market – and of these, one half were taking a break. A further 34% were sold by another agent; and 10% of sales fell through.
Two-thirds of vendors said the LPE played an active role in the sale while 33% said it was the vendor themselves who took most of the responsibility. Nearly half, 48%, strongly agreed that Purplebricks was good value for money and a further 33% agreed: 84% said they would use Purplebricks again should they need to sell their homes.
The survey also looked at a broader sample of 1,591 respondents, not all Purplebricks customers, who had sold or tried to sell in the past three years.
They were asked what was important when choosing an agent to sell their homes.
The largest criteria was cost, at 78%; this was followed by the agent’s presence on Rightmove and Zoopla, at 59%. No sale, no fee was seen as important by 48%. Face to face contact, local knowledge and experience were all cited as rather less important.
Factors which were seen as far less important – by 28% or less – were referrals from friends and family; having a local office (important for 25%): and reviews on sites such as Trustpilot and allAgents.
Investec said the Axel Springer investment was a “positive endorsement of the Purplebricks disruptive hybrid model” and gave Purplebricks a buy rating.
Investec also said in this morning’s note that “online agents, and Purplebricks specifically, can take a meaningful and lucrative chunk of the traditional estate agency market in the UK and internationally”.
It also forecast Purplebricks earnings at £93.5m this year, but with an EBITDA loss of £10.2m. It forecast earnings of £257.3m in 2020, with EBITDA profit of £16.5m.