Purplebricks faces calls to provide more data, as shares slip 15% in two days

Purplebricks is continuing to face calls to release more information about how many houses it sells, following a bruising end to last week which saw its share price slide 15% in just two days.

The company’s share price starts trading at 418.6p this morning after dropping from 489.8p on Wednesday — a fall of 14.5%.

The slide came after the publication of a bombshell report which claimed that the agent sells just over half of the properties it lists, rather than the 78% it has previously laid claim to.

The news made national headlines and at one point was the third most-read story on the BBC News website.

Purplebricks came out fighting, with UK CEO Lee Wainwright declaring the analysis “wrong”.

The controversy sparked a slew of comment on Purplebricks and its business model in the mainstream media.

The Financial Times Lex column said it was time for Purplebricks to start sharing its data about its sales completions.

It said: “House sale figures are recorded in UK government data.

“So why is Purplebricks so coy about its own? In the face of repeated questions over the number of completions the digital estate agent has enabled, it remains tight lipped. It should heed calls to publish the data.

“This is not to satisfy nosy rivals jealous of its ballooning market value, but to protect that value from erosion.

“Purplebricks is in the midst of a £50m expansion into the US. It will struggle to transpose its model if it is debunked.”

The FT article went on to say that there was much to like about Purplebricks but that it was too well established to lean on its Trustpilot reviews (the company announced last year that it would also add Feefo to its site).

It added: “There are two questions the agency should answer. One is the volume and speed of sale completions.

“Next is what it regards as ‘completed obligations’. If it suffices to post a house online without ensuring it sells, customers might think twice about paying a £1,100 fixed fee.”

Investment website the Motley Fool saw a possibility that the recent falls in Purplebricks’ share price was “overly defensive”.

But Paul Summers warned readers: “With so much uncertainty over whose figures are more accurate, I’d be tempted to look for other, less risky, holdings for a growth-focused portfolio at the current time.”

Meanwhile, Sky News presenter Ian King said in his analysis of the row between Codling and the hybrid agent: “Purplebricks will argue that none of those established players publish a figure for the number of homes that they sell, as a proportion of the properties they market, either. But those businesses do not charge customers an upfront fee and so it is not as relevant for them.

“The row is doubly damaging for Purplebricks because it is the latest in a string of rows over the way it does business.”

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27 Comments

  1. Chris Wood

    No Dom and ducky posts yet?

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    1. AgencyInsider

      Their brains are probably still plugged in to the great purple computer which is downloading their instructions for the day…

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    2. PeeBee

      ducky’s been in a lock-in down the other pub wiv his #fanboy riival.

      He started wildly gobbing off around 3.45 this morning about the world being a cruel place; ran to the lav and chucked up his dinner and fourteen babychams – and the last we saw of him he was waddling down the road punching bezzie dom-boy in the shoulder and shouting “I love you… ya b*****d!

      A fitting end.

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      1. AgencyInsider

        Assuming it is the same cyberduck I see they have written on the London South East shares website:

        ‘As for your point about the win/lose at the flip of a coin argument . We’ll have to see whether those selling that fiction can overcome the mighty marketing machine of PB. When it comes to spin, PB are no mugs :)’

        You said it cyberduck, you said it.

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  2. AgentV

    I am sure they will turn up at some point claiming that no other agents reveal their true completion rates….so to get the ball rolling;

    ’The percentage of properties we charge a fee to for selling that complete their sale with us is over 95%’. (Would be 100% but we had one vendor who wanted to pay up front, and then changed their minds about selling a few weeks later, due to family circumstances).

    Why can’t their heroe company declare the same?

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  3. proagent54

    Share price down to 395 (nearly 6%} already, it’s going to be a tough day in purple towers

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    1. proagent54

      Make that nearly 8%…..I cant keep up!!

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      1. AgentV

        Perhaps it’s time for the dynamic duo to leap in with their lifetime savings, just to support the share price. 

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    2. AgentV

      Looks like the share price drop is taking the FTSE AIM100 with it!

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  4. cyberduck46

    I’m not sure it would be wise for PB to provide data that no other agent provides (that is conversion). They should wait until Jefferies publishes the rest of their data and then the High Street will be opened up. If Jefferies refuse to provide the data they promised then PB perhaps should produce some of their own or ask a third party to do it.

     

    The most shocking thing about Jefferies report to me is that the High Street have only been selling 50% of their properties. Once this sinks in with the public and the homeowners selling realise they’re paying the marketing costs for so many non-sellers as well as their own they will perhaps look more to the fixed fee model. Some agents may not survive.

     

    This is just another step in the learning curve of the public. How it all works out is hard to guess but for me there’s a clear advantage for sellers to use online agents if their property is above average price outside of London and all those properties in London at average price £450K and above must surely be better off with a fixed low cost agent. If you look at what Foxtons charge at 3%, that’s more than £14500. Compare that with PB’s £1200 fee then surely you list with PB?

     

    Personally I see this as all good for the consumer but the future for traditional Estate Agents looks more uncertain to me now that I realise they have such poor conversion rates. I was led to believe by this forum that PB’s conversion rate was vastly inferior.

     

    Sorry I won’t be replying today. Lots to do.

     

    Enjoy the SP decline if that’s what floats your boat 🙂

     

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    1. AgencyInsider

      Regardless of all the twaddle that you usually peddle ducky the one fact you cannot wriggle away from is that even if the onliners and the high street both ‘only’ sell 50%, the likes of purplebricks take money from the consumer regardless of outcome. Whereas no-sale, no-fee agents don’t.

      That fact came across loud and clear in the programme and I would bet that mainstream media now start to talk in those terms. As the message sinks in the public will be far less inclined to go for the pay up front model – and the likes of PB will lose their market share.

      Tell me I’m wrong.

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    2. Chris Wood

      If an agent of whatever business model makes a claim, it must be able to substantiate it. End of story. If you are a PLC and make claims to consumers and the stock market it is even more imperative that you can substantiate those claims. If you can’t, the FCA and SFO may come knocking; just ask Tesco.

      If you don’t want to publish your conversion ratios etc, don’t make the claims. Simple.

      https://www.asa.org.uk/resource/guidance-for-estate-agents.html

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    3. Woodentop

      What a lame duck answer that was!

       

      PB are not the same and has been misrepresented  for far too long. We all know this and at last the city is starting to realise they have been duped? They are asking the same questions we have been raising for so looooong.

       

      They charge for success or failure. There is no incentive for them to achieve a completion or just as important to get the best price. Something they are required to do under the EA Act and what customers expect. They have limited marketing exposure and limited service level which cost more to buy into and is still inferior to the high street agent.

       

      The high street agent puts everything on the line and only get paid for success, risking all.

       

      Customers want their property sold, not to be misled that there is possibly only for example a 50/50 chance of selling for £1,000 or whatever the fee is. At least with the high street, it didn’t cost them anything. That is the stark difference that customers are presented with and they are misled into not understanding the deliberate act of marketing by PB between sales agreed and completion. They are not the slightest bit interested in a sale agreed, it hasn’t been sold!!!!

       

      Investors want to trade with a business that will give them a return either with dividend or future growth in share price. Both can only happen if the consumer continues to buy into the business. Once the consumer abandons ship, it will start to sink. PB have yet to provide a dividend, its accounts are arguably legally rigged with marginal profits over several years, while the directors cash in.

       

      The writing is on the wall for PB. Misinformation or lack of is about to come back and bite you hard. You should have come clean years ago with “completions”, but then that would possibly have shown up how unsuccessful a service you provide? You have that data, everyone knows you have it AND TO HIDE IT, you may have created your own down fall. Here today, gone tomorrow?  Trust is key with the public and you were always, certainly are now damaged goods on that subject.

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      1. AgencyInsider

        Looks like the ducky posted this on the London South East shares website:
        ‘As for your point about the win/lose at the flip of a coin argument . We’ll have to see whether those selling that fiction can overcome the mighty marketing machine of PB. When it comes to spin, PB are no mugs :)’
        That last sentence is gem. He has basted himself in orange sauce and jumped into the sizzling hot oven I’d say.

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        1. AgentV

          When it comes to spin, PB are no mugs :)’

          No, I think we all agree, they are absolute unbeatable experts at it!

          He has basted himself in orange sauce and jumped into the sizzling hot oven I’d say.

          Love it!

          BSOS23PC

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  5. David M

    Hey everyone, my mates got a load of BMW’s worth £50k and he’s only selling them for £30k !!!!!!    (that’s a £20k saving)

    Bargain Me thinks!!  Who wants one???

     

    He has told me that he cant guarantee you’ll get one but will let you know a month or so after you have transferred the money to his off-shore bank account….  but hey i’m pretty confident you’ll be one of the lucky ones, and anyway you wouldn’t be that bothered about losing the money would you??

     

    PS: For the avoidance of any doubt, there are NO BMW’s  – this is satire.

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  6. Propertyboy

    Meanwhile in Australia, PB have increased their fees by between 10% and 33%, depending on which state you live in….

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  7. hodge

    Firstly, the whole ftse has dropped from a high of 7724 to a low of 7300 as a result of 2 things. Pension deficit and brokers taking gains to make up the shortfall  and the 2nd is automated selling as a result of broker taking gains.

    God knows i have been to enough investment seminars to spot that.

    Every agent who charges no sale no fee will be talking an offer up because they want to get paid and if its not getting viewings they will be asking for price reductions because they overvalued to get the instruction in the face of competition, Remember that saying to the viewer “they will take an offer”

    PB have a new model it may or may not work but they won’t be urging you to accept a lower offer to make a deal and they will have used exactly the same methods to value it as you did.

    If it doesn’t sell then any agent will discount their own fee if the client presses hard enough so the grand or so that was paid out is offset.

    Agency is defending a poor record and trying to justify the over inflated salaries for nothing more than a service agent. 100k + for a Director????

    30k for a neg (average salary in the south is 21k)   50K plus for a manager with zero qualifications other than familiarity of the area and the ability to remember basic info and the sense to use right move.

    PB will come through this and you had better start changing or you will come under the cosh from rising rents’dverising, salaries.

     

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    1. Woodentop

      Wrong in so many ways. PB do not sell a property at a fixed price. It is negotiated, there is no incentive to get the best price or to put pressure on the seller to accept a reduced figure. There will be more pressure by PB to increase its completions figures? Over valuing is an old argument, not all agents do it, not all agents directiors get paid £100K. You are being selective just like PB on salaries but omit the so called groosly over paid figure an LPE is supposed to get for doing nothing more than a listing, at whatever the price they can get it on their books for.
       
      Agency isn’t defending a poor record. Poor agents are, but you like others make it sound like we all do it. Nothing could be further from the truth.
       
      If the city turn on PB, they will fall and there will be nothing they can do about it. Trust is the key in all things. 

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      1. htsnom79

        Agreed, in our world everything has to be paid for, if a director is worth 35 – 50 completed sales or a manager 18 – 25 then the throughput to get there is proper graft. What PB could and should of done is take that fat market cap and use it to fund a large swat team of kick @ss professionals on sales control suitably incentivised to make the client feel like they have somebody onside, most I come into contact with just feel abandoned and a little embarrassed at the help they ask me for when I’m not their agent.

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    2. AgencyInsider

      ‘Every agent who charges no sale no fee will be talking an offer up because they want to get paid’
      Congrats hodge. That wins you the ‘ B*ll*cks of the Week’ award.

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      1. hodge

        So they won’t be saying this is a good offer i think you should look at it?

        And none of your guys have ever said to your staff when they go out on a viewing. Remember they will go for a lower offer as they have found somewhere? And of course that supremely talented agent with now 2 whole weeks of experience is not going to blab it out.

        My friend you only support my view of agents. Having said that i  have worked with a few great ones but they like me are now retired

        Don’t be in a rush to go back to brain surgery i think you have found your vocation.

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  8. Beano200062

    As a keen novice share investor I subscribe to one of the share information sites and love the fact that Purplebricks are now listed as a momentum trap, described as;

    The read across for investors could hardly be more stark. Stories in the stock market are like a magnet. With herds of followers, these popular shares typically boast eye-catching price momentum. Yet a good proportion of them hide deteriorating fundamentals and stretched valuations that can be harder to spot (and, for some, easy to ignore). These are the market’s glamour stocks which may well be Momentum Traps – stocks where a sudden change in sentiment could see their momentum crash.

     
    Of all the dangers that investors face, perhaps none is more seductive than the siren song of stories. Stories essentially govern the way we think. We will abandon evidence in favour of a good story –

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    1. AgentV

      Beano200062,

      You need to get in at the very start of something, before it has been hyped to an incredible level. If you want to see something like this contact me on in@agentv.co.uk

       

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  9. J1

    This is all very straight forward.

    In summary PB’s only job, and I stress, their ONLY job is to get the house on sale.

    At that point the job of the Lexpert is over.

    If it sells it sells, if it doesn’t, who cares?  I am sure they don’t.

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  10. Sunbeam175

    We now offer a ‘give me £849 up front and we will do nothing’ option. Alternatively we charge a proper fee and do a proper job. No one has taken us up on the Mickey Mouse option. Can’t say I blame them!

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  11. Chris Wood

    Congratulations, you have won the Nigerian lottery. All you need to do is to forward me £1,100 to claim your winnings…

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