Opinion: Will Purplebricks and the corporate agents join forces to launch a property portal?

Purplebricks’ share price plunge now appears to be emulating that of Countrywide’s, prompting the suggestion that it’s time for Purplebricks’ founders to do the honourable thing – and quit.

But perhaps they are looking at another option entirely: ‘Rightmove 2’?

When Countrywide’s shares slid from an all-time high of 686.4p to just 100p, its CEO Alison Platt was forced out on the back of her disastrous ‘retail’ strategy, albeit that her tenure began when shares were at 408p.

As I write, Countrywide’s shares have tumbled even further and are now just 11p (and even sunk as low as 8.5p in December), with the company clinging on by its fingernails and hoping its new ‘back to basics’ approach will do the trick.

Surely Purplebricks’ shareholders must be concerned they are heading in the same direction with shares tumbling from an all-time high of 525p in the summer of 2017 to about 140p at the weekend, and 99.8p at their lowest on the day of their profits warning.

As we’ve seen from Countrywide’s example, could they plunge even further? Can this model ever be profitable?

What must the group’s biggest shareholder, Neil Woodford, be thinking as he watched £36m wiped off his 27% stake overnight when Purplebricks announced its recent profit warning, along with the exit of its US and UK CEOs?

It’s even worse for German media giant Axel Springer, which has seen its investment cut in half in just one year.

It has lost a massive £68m by my calculations, having invested £125m in Purplebricks, buying 27.7m shares at £3.60 each totalling £100m last March and a further 3m shares at a cost of £3.07 totalling £9.2m in July, taking its stake to 12.5%.

To cut its losses it might be time for Axel to forge ahead with opening its proposed joint venture portal in the UK on the back of its German Immowelt.de portal, which is the German equivalent to Rightmove.

It would need Countrywide and LSL to make the numbers up, plus probably the under-invested-in Connells/Sequence group.

It’s allegedly being billed as Rightmove 2.

Any independent agent being pulled into that party surely needs to see the true benefits of OnTheMarket – the agents’ portal.

Purplebricks and Axel already have a joint venture in Germany – Homeday.de – the Purplebricks equivalent: have a look at the website, it looks remarkably similar!

Of course the share price is only one indicator of how things are going at Purplebricks.

I’m pretty sure from the number of job applications we are getting from their ‘Local Property Experts’ and the Purplebricks senior team that there’s real disquiet on the ground.

It will be interesting to see if the return of Kenny Bruce from his travels in California and Australia will quell the unrest. Is his California, dream over?

It must have been exciting for the staff at first, to be part of a pioneering, disruptive outfit that was doing something different.

But now their team appear to be feeling unloved, with their noses put out of joint by the joiners from Countrywide – and fearing for their futures.

There’s only one way forward for the Bruce Brothers – and that’s to pour their remaining millions into an all-out advertising offensive, to try and build their market share and get as many leads as they can in a very sluggish market – and one that might get even worsen post-Brexit, depending on what happens.

You can keep investors happy with lots of TV and marketing spend, but in the end losses catch up with any failing business.

For a business which had its official launch in 2014, it has now had five years to make its mark.

How much longer does it need before it realises that charging a low fee while burning millions in advertising spend to buy market share won’t make it profitable?

Watch the portals take our fee income

Portals worldwide are under growing pressure to increase their income – and it seems they are turning to estate agents’ other sources of fees to fill their coffers.

In Australia, REA Group bought a mortgage broker, Smartline, which immediately led to healthy profits, along with selling larger photos to customers!

However, Domain in Australia launched mortgage, insurance and utility switching services in joint ventures, which are still at the start-up phase and making a loss, despite a massive increase in revenue, according to analyst Mike DelPrete.

Zillow in the US also bought a mortgage broker, Mortgage Lenders of America LLC, suggesting it too is moving closer to the transaction, along with making an instant offer.

At the same time, in the UK Zoopla has uSwitch.

These portals are moving further away from being organisations that just connect buyers and sellers to ones making larger pools of revenue.

DelPrete describes these portals as moving from search engine to service engine, pointing out the rich pickings to be had from mortgages, insurance, conveyancing, moving and utilities, home services and repairs, offering the one-stop shop.

But watch out. As these portals move closer to the customer, don’t forget that they displace agents in the process.

Keep on top of the tech

We’ve just come back from the Inman Connect real estate tech event in New York with some golden nuggets when it comes to future thinking.

Three areas that really stood out were: how Artificial Intelligence will be impacting our interaction with data, whether that be from an agent’s perspective or from a consumer view.

How text messaging is being used to make the customer journey easier and positioning potential calls before they get made, increasing answer rates and reducing call times.

And lastly, how agents are using tech to improve data capture and influence behaviours when managing leads and customer journeys.

The US market has some parallels to the UK with online agents such as Purplebricks trying to enter the space and the introduction of iBuyers.

In both cases, the US looks to customer service as the differentiator and reason to engage with a traditional Realtor. The challenge in the UK is whether we can adopt the same principles and application of emotional intelligence to gain buyers’ and sellers’ confidence.

There are some incredible tech companies doing outstanding things in the US that will invariably be of interest to the UK market.

Among them are Jane.ai – an Artificial Intelligence platform that makes company’s information accessible through slack or chat type services; and NextDoor – a post completion value-added service that agents could provide to purchasers to establish themselves in their new community.

* Paul Smith is chief executive of Spicerhaart

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  1. Chatty Cathy

    Some interesting points Mr Smith but PB setting up with the corps, we’ve been having a dig at them for years and now you’re suggesting they could be the saviour to our portal woes?

  2. The Blame Game

    You are absolutely on target Paul in every respect, maybe we should have a chat.

    You would find it interesting, especally in relation to Rightmove2.

    Cheers…The pivot

  3. GPL

    Purplebricks remain a “hit n’ run” operation whereby they simply wish to light touch the client/extract a “volume” fee then move on. That might be fine in a property market which is flying however when the market gets challenging, which is now, a real “Estate Agent” delivers at a local level which is unmatched by Purplebricks “hit n’ run” approach.
    Tech is the biggest “apparent” influencer is many respects however the value of real “Agent to Client/Buyer” contact remains a core part of the successful Local/HighStreet Agent ……in my humble opinion.
    As Agents “value” prospective properties for sale they also need to “value” their service. The right “Tech” can help however it’s the Human Estate Agent that “closes the deal”.

    1. The Blame Game

      Well said, but don’t see the need for “humble opinion”
      No need to when you are offering a sinsere and well informed comment.
      The Pivot

      1. GPL


        ….you’re right Blame Game …..replace “humble” with “modest” ……at least I can refer back to that at a later date “that I was actually modest with my opinion on one occasion”.



  4. Property Poke In The Eye

    It’s Monday people.  Show PB the love.

    Go and hit one of their paid adverts  😉

  5. Thomas Flowers

    Good article Paul.

    May explain why Countrywide recently stated that ‘Purplebricks are here to stay’?

    Will full transparency of referral fees force PB  to merge/buy a large conveyancing company so as to disclose their ‘self-employed’ LPE’s much smaller referral fees and as one company would they have to disclose the total value of referral income?

    They must surely come up with a plan to mask their eye-watering conveyancing income?

    Is data ownership the future to increased profit for all portals?

    Why would you not consider joining an alleged  Rightmove 2 if the offer was suitably compelling?

    I would be very interested to know your thoughts on the above?


  6. Hillofwad71

    More likely that Axel will move in on the minnow OTM.Relatively cheap entry point with a portfolio of existing agents to farm.If previous form is  anything to go by the flash of silver would be sufficent to tempt Springett into taking an early bath.
    The  migration  of 20 k instructions to OTM by Bricks would certainly liven things up   Disgruntled agents faced with the prospect of sharing a bed with Bricks should be molilified by a rise in share price and the departure of Springett
      Axel with their deep seated pockets and expertsie certainly would be able to add some bells and whistles to the portal

  7. GPL


    Short term gain, long term pain for OTM Subscribers that agreed with that strategy.


    Taxis lining up to take OTM Agents away from OTM.


    Finally, one last Hurraaaah for a Genuine Estate/Letting Agents Portal. Could agents trust another “Let’s Go Round Again” Portal Launch? ……a very big ask however if the right people were involved then Agents might just stomach a final “Trust Us, WE ARE actually Your Portal!”


    That’s the real problem …..how do Agents Trust any Portal, given the Track Record of them all?


    Thing is, we The Agents fund them All?


    Interesting times…..



  8. watchdog13

    OTM of is an obvious target. Properly funded, it could take the fight to RM .  
    Starting from scratch would be too expensive and I think be a portal too many for agents. 
    Also no sure how many agents would be happy to get into bed with PB in any way

  9. Local Independent

    More likely PB rolled out in C’wide branches. The Bruce Brothers were “well in” with Hill and his cronies so there’s already form in that department.

  10. Anthonyw

    It wouldn’t make sense AT All for agents to sign up to a portal that is owned by a corporate/purplebricks. It would be like sleeping with the enemy. They would have the competitive edge over all of us and we would be manipulated/abused more than ever. No, it needs to be totally independent in my view.

  11. The Future Is Tech

    Why is there so much focus on a business with 5% market share? The Future is Tech – it’s about time the high street upped their game and lowered fees to stop conning sellers out of their money. If you offer the same service for every seller, why do you charge different rates? “you look like you have money, let’s take 2%”  Wow, how is that fair? How can the high street get away with it for so long is incredible – show us your fees?


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