Purplebricks is the story that keeps on giving. Having wiped the floor with all other online agents in the UK, the firm has launched successfully in Australia and – in a surprise move – raised a monster wedge of cash from investors to take their model and brand to the US.
Cue the detractors, jealous with their comments of disbelief.
But surely it makes perfect sense for Michael Bruce, CEO of Purplebricks, to chase the 3-6% commissions in the US.
Yes, lowly UK real estate agents: your counterparts in the US not only have protectionist regulations meaning you need to be a licensed ‘Realtor’ but they get paid well. It’s entirely normal for a single real estate agent to be taking home seven figures a year.
Note that PURP is earning to ‘list’ property and not to sell it.
Yes, they’ve persuaded the public that the internet works. And that you don’t need to ‘pay commission’ to sell a property.
If you think about it, it’s easier to persuade someone to spend £1,000 today listing a property for sale than it is to sell your own ability to achieve a sale. The first has a clear outcome. The mental picture is clear and complete.
Having to justify that your job selling property is complex, and here are all the myriad things you do to make sure a property sells – well, that just doesn’t sell. Hence there isn’t a dominant agent in any single area of the UK. The public are saying they find it hard to believe what agents say.
In the US, this hasn’t been the case for decades: you hire a listing agent. You pay them to list your property. And you cannot by-pass them because you won’t get on the MLS systems and Zillow (think Rightmove and Zoopla) without going through a licensed Realtor.
Even better, PURP now have a track record of going from zero to dominating mindshare in two countries. Their grasp of how to conduct TV advertising puts all others to shame. You almost feel the pain of the Agents’ Mutual board when they look at the money thrown away on their paltry efforts to win at TV advertising.
I didn’t ever think PURP would generate a profit in the UK. The numbers don’t stack up: too little revenue for too much money spent earning that revenue.
But £1,000 fee in the UK isn’t their prize. They are earning over A$5,000 per property just to list in Australia (vs the agent average of A$17,000 down under).
And in the US, consider the crisis they must be suffering when journalists write that average commissions are dropping to the low 5% range: https://therealdeal.com/2017/01/13/average-us-real-estate-commissions-dropping-to-low-5-range/
Not only is the US a much larger market, but the ‘lowest’ commissions are over three times the average 1.6% commission achieved by agents in the UK.
I’m not writing all this to toot Michael Bruce’s horn – he’s perfectly capable of doing that himself.
What I’d like to say is if you’re doing and saying the same thing, you can’t expect a different result.
NAEA and ARLA aren’t going to get US-style regulation and lobbying with a rebrand to Propertymark. There will need to be a change of attitude to achieve a quantum leap step forward in effectiveness when it comes to standards.
If you want a clear example: lettings admin fees is a battle that is about to be lost. And it didn’t need to be this way. There are plenty of ARLA members behaving badly. If ARLA disciplined them and was mentioned in the press for keeping agents in check, then the public at large – and their politicians – would know there is a check and balance that works.
Simple things.
It won’t end with the loss of admin fees. The world is increasingly of the view that the internet is all you need to sell property. Purplebricks is putting tens of millions of pounds into TV advertising to cement this view.
Nested.com – another start-up – takes the view that if they earn more than the ‘guaranteed’ price they promise you, they deserve a profit share. Seems fair. If they outperform, they get paid a portion of the winnings.
If I were still running an estate agency, I’d be ripping off what Nested are doing with a slight twist: £1,000 to list your property. If it sells for the ‘guaranteed’ price or less, you don’t pay another penny. If it sells for more, we get 30% of the uplifted value.
Imagine how that would shake up the competition on your local high street.
A reason for tenants to keep up with their rents
“If missing a rent payment affected your credit rating, fewer people would miss rent payments.”
Those were the words Sheraz Dar gave me when I asked why on earth he would join Creditladder as CEO.
Just mull them over. He’s selling a service to tenants who are desperate for their rent payments to go toward their credit rating. So much so that there’s yet another petition: https://petition.parliament.uk/petitions/186565
And yet the net beneficiaries will be landlords: tenants will have genuine fear from the credit score stick when it comes to missing rent payments.
But there’s a double benefit to landlords: if tenants are less likely to miss rent because their ‘official’ credit score would be at stake, then why would landlords need anything more than a standing order to collect rent?
The rise of the DIY landlord caused the rise in admin fees, because of the need of lettings agents to recover some of their lost revenue. And isn’t it funny that when these fees are about to be banned, that rents are finally going to be acceptable to Experian via intermediaries like Creditladder?
Even worse, if lettings agents don’t use a service like Creditladder, they’ll be worse off through having to chase more payments – or worse, lose business from landlords who in a few years find Creditladder is more recognisable as a standard than the likes of ARLA.
Openrent and why it doesn’t need a call centre
It’s quite a figure: 50,000 properties to let. That’s what Openrent said they achieved last year. And they’ve achieved that genuinely being the no-frills lettings agent: £29 to list, £49 to list and have all referencing and contract work automatically produced.
Their technology is so simple that – unlike every other online agent – customer landlords don’t call in very much for support and therefore the company doesn’t need a call centre.
Distant second Upad – the pioneer once-upon-a-time in this space – prides itself on having someone at the end of the phone to speak to. I think they miss the point of a low cost service.
Openrent has grown in the most low key, organic fashion. Most people still haven’t heard of the company. So it was quite the surprise that Openrent announced – on a Friday, which typifies how little Adam and Daz know about PR and attention – a £4.4m investment by Dan Jones on behalf of Oliver Samwer and his firm Global Founders Capital.
This isn’t Jones’s first proptech deal: Global Founders Capital are a significant investor in Goodlord (£2m), Nested (£1.2m) and HomeTouch (£700k). Disclosure: They have approached me multiple times to invest in Unmortgage.
For Openrent I have to say this is an odd deal. Their press release says this capital will help them expand the tech team and develop more products to save tenants and landlords money. At £29 to list and £20 for a reference check, how much more money can they save landlords or tenants?
Daz Bradbury, co-founder and CTO of Openrent, has always maintained that if Openrent succeeded, tenants wouldn’t have to go to Rightmove or have their time wasted by agents ever again: they’d just visit Openrent as a one-stop-shop for renting.
He first told me this a few years back when they had fewer than 1,000 lets a month. They’ve now – with no additional outside investment and until recently a team of no more than ten people – hit an average of 4,500 lets a month. So it is entirely plausible that this entrepreneur and his co-founder Adam Hyslop can absolutely achieve what they set out to. They’ve worked diligently and patiently, always growing the business in the most impressive manner. That they are now several times larger than Upad is no mean feat.
Someone once posed to me that if Openrent did viewings they would be huge. I countered saying that if Openrent looked and felt like every other agency, no one would use them.
You use Openrent because you want to spend the least and let with the least hassle, and that means conducting your own viewings. Letting through an agent is often a nightmare riddled with uncertainty. The biggest fear for a landlord is not that they won’t get paid – it’s that their property could be trashed by a rogue tenant. And that’s why landlords like to meet their tenants and Openrent serves an ever-increasing portion of the lettings market.
It’s interesting that Global Founders Capital have also invested in Goodlord as surely the number of letting agents will shrink thanks to companies like Openrent. With this new capital injection into Openrent, surely the prospects for Goodlord decline at the same time as Openrent’s shoot up?
There’s another reason Goodlord has to worry: ZPG.
What THAT acquisition really means
With the acquisition of Expert Agent, Zoopla now controls the data of more than 50% of letting and estate agents in the UK.
And just to be clear, these agents tend to be the ones that don’t look for a better way of servicing customers: they choose a software company and tend to stick with it and the monthly direct debit that helps to fund Zoopla’s profits.
So if you’re Goodlord and show off the lovely e-signature capability, I’m sure agents will say yes please. But when you turn around and say the agent has to change their whole way of working and their software supplier, the answer is probably going to be: “We’ll have a think and get back to you.”
This is why Fixflo has done so well: simple software, that integrates with everyone. And while this deal probably does impact Fixflo which doesn’t have a deal with Zoopla any more, it probably doesn’t impact Fixflo because the service still works for an agent regardless of their software provider.
I don’t have much of a view on Zoopla “controlling agents’ data” debate, because agents have never ever done anything useful with their data. So it won’t make much difference what Zoopla does or doesn’t do.
But I do have a view on agents using technology: they tend to not train their staff to use the technology they pay for. The evidence of this is that many agents use a paper diary to schedule viewings in their office.
It doesn’t matter how good your technology is – if there isn’t genuine buy-in from the end users then the usefulness of that technology won’t make it through to customers. Can landlords and tenants really say their experience has improved in the last ten years? Even my Pops now ‘gets an Uber’ instead of having to ask someone to call a taxi.
It won’t be long before he decides it’s easier to press the Openrent button on his phone instead of paying Rightmove a monthly fee. After all, he does the viewings himself.
Events in the property tech world
UKPA Cannes MIPIM Proptech Meetup – https://www.eventbrite.co.uk/e/cannes-mipim-proptech-meetup-16th-march-tickets-31538455369
– EG London Residential Summit – Wed 3 May – http://www.estatesgazette.com/eg-conferences/
– Future Proptech – Thu 4 May – http://propertytech.co
– Propteq Europe – Thu 11 May – https://propteq.com
– Inman Connect – 7-11 Aug – http://www.inman.com/icsf17/
It is surprising how regularly the half-truths about PurpleBricks are espoused by people who should know better. Since when was TV advertising a good thing? Fast forward the adverts. Watch on mobile devices. TV is ‘old hat’, even for someone as traditional as myself. The advertising creates brand recognition. No loyalty because there is no story, worth telling.
Regards to Nested business model. What’s new? It’s sliding scale without the downside. Something that I have recommended for a few years. Incidentally, we have a spreadsheet for sliding scale that we are happy to share with any estate agencies.
Whilst it might be easier to persuade someone to spend £1,000 listing than selling that person your own services, that doesn’t make it right. Especially if the former is the lazy way that appeals to naive vendors. Still, there are plenty of very successful estate agents that have taken advantage in this way and no doubt will continue to do so.
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So many things I would like to say on this buy do not want to start a new week in a bad mood and fed up have comments on stories removed.
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*BUT not buy! Ffs.
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“Cue the detractors, jealous with their comments of disbelief.”
Not sure if this is a cry for comment to part of EYE that has attracted, since inception, less posts than a reasonable garden fence – or a challenge to see who will risk the label of ‘jealous detractor’.
Either way – a serious read of “How to Make Friends and Influence People” wouldn’t go amiss.
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Vexatious = post count= cash.
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We’ve just topped the best post count ever for this section of EYE and it’s only 12.25!
Where’s our cash? ;o)
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PeeBee do you have a blog? Much better than twitter for passing on your message. Posts (if you add a bit of text) will be found on searches in Google.
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Now THERE would be a blog I would subscribe to (for as long as the lawyers allowed it published!) =D
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It would be a pity if the cutting wit was contained only to our industry though…..I would love to read some views in the blog on politicians and celebrities for instance.
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Don’t need a blog for that, AgentV – here’s my cutting wit on both sectors of media magentism:
Politicians – show me one who actually gives a fuppenny about the public they are paid darn well to serve and I’ll show you one extremely lonely person who is destined never to become PM.
Celebrities fall into two camps:
Those who remember where they came from
The 99.99% of others who should all be politicians.
There ya go! ;o)
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Well if you are just presenting a balanced view of data there’s not much they can do. I’m not sure the tweets currently offer that balanced view of the data but I think the same message could be presented if the focus is on data as a whole rather than one particular agent.
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Who wants to read a blog about anything as boring as the wrongs …of which there are many… and rights …of which there are many, MANY more… of our industry?
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By the way – that WASN’T an offer!
Maybe I should have started the post with “Who in their right mind would want to…?”
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>Who wants to read a blog about anything as boring as the wrongs
It’s very hard to follow what’s going on with tweets and with twitter you are preaching to about 100 of the converted. With a blog, new people will find the posts when they search on Google. With frequent postings the blog would over time become an authority and high up in the listings.
What happened with the port juggling detection system I have been reading about?
http://www.propertyindustryeye.com/can-this-property-really-have-been-and-come-and-gone-eight-times-in-the-last-two-and-a-half-years/
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The software is up and running and has eliminated about 90% of what had been going on until both the portals and some agents realised the extent of the problem.
Those who have continued to juggle have been monitored for 2 full months to track their activity in preparation for a meeting with the redress schemes and NTSEAT.
The practice has been proven, the persistent offenders identified and now it is down to the regulators to decide how to sanction those agents. That is a story for another day but considerable progress is being made.
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Robert, just reading your tweet from Jan 25th “Thanks to @rightmove #portaljuggling is simply a waste of time, it won’t enhance intel stats or help poor agents. The playing field is level”
Are you sure that what you are seeing now is not just down to technical issues with Zoopla & Rightmove? Or perhaps in the case of the online agents could this be down to the fact that the vendor actually control a lot of what happens with the Rightmove & Zoopla listings? For example, with the PurpleBricks platform the vendor can change price, remove the property from the market, accept offers and then (presumably) cancel their acceptance.
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Ahhh cyberduck46 – this is where the plot thickens… and reality becomes impossible to differentiate from the surreal world of cyberspin – isn’t it!
Firstly – there is little doubt that in some instances, technology IS the problem. Whether that be conflicts between Agent software ‘X’ and portal software ‘Z’ (oops!) or of the software within the cranium of the person making the changes TO Agent software ‘X’ is difficult to ascertain. I have little doubt that it is some of one and part of the other.
Secondly, how each portal handles changes to price/status/availability/other and displays it on its pages is entirely another thing.
Thirdly – and most importantly – the fact that certain portal listing facilitators allow homeowners indirect access to the information that the portals display via their own systems brings into question the fundamental matter of their suitability/eligibility to be listing properties on those portals in the first instance.
One thing for certain – regardless of the amount of lip-service the portals are paying to the industry that they are dealing with it and will hang, draw and quarter any wretch that steps a toe out of line – it’s still happening on a DAILY BASIS by the same suspects… and said portals are doing squat about it, despite mounting evidence and pressure.
If I told you any more… I’d have to kill you…
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>If I told you any more… I’d have to kill you…
You’re just a tease.
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I know – but only until we get to know each other better…
‘cyberduck’ is a loose anagram/synonym combo for ‘Can You Kill Dinosaurs, Brucey?’.
You could be ‘Mick the Hatchet’ or ‘Ken the Pistol’ for all I know – how can I be sure you’re not one of the Demonic Duo?
To you! ;o)
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PB shareholder but only small time. House up with them too. So can’t be far off being as bad as the Demonic Duo. As a shareholder I’d be concerned by any bad publicity and want to be able to trust the data.
Computer Scientist and Internet Marketer (retired thanks to moneysupermarket & co) and Landlord. I discussed marketing techniques with my LPE and can tell you that he told me Rightmove had stopped the trick of taking the property off the market and then putting it back on. You would probably be surprised to know that he was very strict about what he would allow in the advert. Actually putting me at a disadvantage compared to what other local Agents are putting in.
According to the PB platform data, Rightmove are providing 96% of the traffic to my advert.
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Thanks for that, cyberduck46. It’s genuinely interesting to get a view from a customer’s perspective.
I’d love to know more – not asking for you to tell tales out of school or anything as I’m sure you wouldn’t want your case being hoisted on a petard for all to see – but I reckon there’s a lot we could iron out between us… and all you want is your property sold!
Can we chat on Tw@tter via DM? You know where I am…
PeeBee
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“What happened with the port juggling detection system I have been reading about?
http://www.propertyindustryeye.com/can-this-property-really-have-been-and-come-and-gone-eight-times-in-the-last-two-and-a-half-years/“
Oh, mon ami…
…you have NO IDEA how big the can of worms you have just opened is going to get!
THANK YOU!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
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Good read However Nested many agents have offered performace fees for years as clients have demanded it Agreed basic and an overage payment based on a % over an agreed price especaily with developers on new developments
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I think the public would be happier if the ‘guaranteed value’ was actually guaranteed :). In reqality would this just not result in low valuations leaving even more business bith PB? I think the idea certainly has marketing potential but there’s the key as PB have proven – you need to spend big on advertising.
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I think PB along with the other internet listers have clearly had some success in convincing the public that listing online is all there is to it.
However, as we all know, there’s an awful lot more to selling property, and maximising the price, than merely listing it and I think that reality is starting to kick in.
Various websites such as Mumsnet and Moneysaving Expert are carrying threads about how poor the online experience has been (for both buyers and sellers) so I think the chickens are certainly heading home.
It’s also telling that PB have recently switched off the ability for the public to leave comments on their Facebook page. If their service was genuinely working surely they would welcome posts of praise from their adoring public?
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Apologies for repeating from another thread, but thought it was worth posting here as well:
I did 18 viewings at a property we have for sale on Saturday morning. Everyone of those people will have seen a PB board up for a similar property down the road, and most of the people I showed round might very well have been interested in viewing that one as well (why wouldn’t they be?).
The board has been up for a few days but I couldn’t find it online when I looked to see how it compared to ours. One of our viewers rang PB and was told by the call center that although the board was up, they didn’t yet know anything about it (including what price it was being sold for) because it wasn’t yet online!
If that is how most of their marketing of properties is conducted I am not in the least surprised by your comments. They must have ‘put off’ a shed load of enquirers, as boards are very powerful in the area concerned!
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Who could possibly have disliked this post I wonder?
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Unfortunately the public do not understand what good agents do and think they make pots of money. It is this lack of understanding and to a point, the lack of good agents that is allowing Purplebricks to thrive.
There is a simple explanation which hopefully the public will understand as to why they cannot provide the same service, and how this is another onslaught on Estate Agents using investment money like the buy-outs by Prudential et al in the 80s. We all know how that ended and transaction levels have not recovered since.
Read The Real Estate Agent and the Great Conspiracy Theory for further insights into the situation.
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PB are not ‘proper estate agents’. One of the two ‘reps’ in our area is a full time mortgage adviser masquerading as an estate agent. The other is someone that my company ‘got rid of’ because he was useless! There are 250 offices and therefore 1000 or so ‘proper’ estate agents working in the same patch. So, the claim that their reps are ‘local experts’ is also BS.
They do not have any depth to their service. This is an email I received from their Post Sales Support when I asked for a full chain check (after one of their vendors offered on one of my properties) –
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X-NONE
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MicrosoftInternetExplorer4
Dear xx
I refer to your email below.
Our buyers are Mr and Mrs xxxxxxxxx, they have nothing to sell and require a mortgage.
They have instructed xxxxx Solicitors to act in their purchase. Contact there is xxxxxxx
They have money on account but await the contract pack from our vendor’s solicitors currently.
Kind regards
E
Because as a proper estate agent I know what is going on in my area, I had their buyer on my system. I knew that there was in fact a sale below (and chain). The PB vendor was quite annoyed to find that he was in a chain…
I emailed PB back to see if they felt inclined to act as ‘proper estate agents’ and check their chain – this was the response –
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mso-tstyle-rowband-size:0;
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mso-style-noshow:yes;
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mso-style-qformat:yes;
mso-style-parent:””;
mso-padding-alt:0cm 5.4pt 0cm 5.4pt;
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font-family:”Calibri”,”sans-serif”;
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mso-bidi-font-family:”Times New Roman”;
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Thank you for your email, we will reply in due course. We will endeavour to reply the same day wherever possible. If your email has been received out of hours, please expect a reply the next working day.Please note the general office opening hours for Post Sales Support coincide with solicitors; 9am until 5:30pm Monday to Friday. If your enquiry is urgent, please call 0800 810 8008.
Kind regards, The Post Sales Support Team 01926 356624
So how can they advertise blatantly that they are available 24 hours per day? As I say, there is no depth to their service yet they are allowed to advertise that they do the same job as a proper estate agent.
I sold the property to a different buyer anyway, I don’t treat PB vendors seriously and if I have a choice of buyers I will obviously help my vendor to avoid them too.
My average fee is £1800 + VAT, so again, how can PB tell my potential clients that I will charge them £000s more in fees?
The whole thing is a joke, but it’s not funny. PB still only have 3% of the market so they have shown that they have reached a plateau – but the adverts still make me angry all the same.
I am not jealous though, what a stupid comment! I am happy that I make a great living from providing a proper service to my clients.
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