Purplebricks ‘sells 77% of the houses it lists’ claims chief executive

Purplebricks sells 77% of the houses it lists, it was said yesterday.

CEO Vic Darvey made the claim in a webcast yesterday after Purplebricks’ interim results were announced for the six months to the end of October.

He told attendees, including journalists and City analysts: “We sell 77% of the houses we list.”

Darvey did not define what he meant by “sell” and numbers were not given as to sales.

However, Darvey said that Purplebricks’ success rate was far better than the industry average of sell-throughs, and that he did not want to change it.

Much of the webcast was in the context of changes to Purplebricks, including its pricing, placing emphasis on sales rather than listings.

Purplebricks yesterday reported that it now has a 5.3% market share in completions.

Chief financial officer James Davies said that this increase was “further proof” that Purplebricks was aligned with customers’ objectives, to sell their homes rather than simply list them.

Purplebricks is to trial a new pricing model in the UK which could mean that sellers pay a higher overall fee – but this would be split into a lower upfront fee and an amount payable on completion. One possible example given was that one-third of the fee could be charged  up-front, and two-thirds on completion.

Answering a question from an attendee about Local Property Experts and the financial impact that this might have on them, Davies said: “We are not going to starve our LPEs for six months like Yopa did.”

He said that the whole concept was to weight payment towards completion.

However, Darvey was adamant that Purplebricks would not move to a No Sale, No Fee commission model.

Darvey said that splitting the overall fee but reducing the upfront charge would open the business to a wider customer base.

He also emphasised that Purplebricks’ LPEs would be remunerated better than their high street counterparts, and he spoke of recruiting the best talent in the industry. He said that improved automation would give LPEs one day back a week.

He also spoke of improving Purplebricks’ technology and systems, with “dedicated squads” enhancing the customer experience.

He said that Purplebricks now contacts buyers and sellers at different points in the transaction process, with the result that the time has been reduced from SSTC to “completion” by seven days.

Darvey described Purplebricks as the biggest and most successful estate agency in Britain: “We now sell 5.3% of all houses – we sell more houses than any other estate agent in the UK”.

Davies also said in the webcast that while Purplebricks’ lettings business was slightly down year on year, when adjusted for the tenancy fee ban, there was underlying growth of 10%.

Previously, then group CEO Michael Bruce claimed in October 2016 that Purplebricks sold 88% of houses within ten months. The last UK CEO for Purplebricks, Lee Wainwright, has put the figure at over 80%.

Purplebricks reported 32,850 UK instructions in the six months to the end of October. At a 77% success rate, it will have sold 25,294.

Yesterday, its shares closed at 105p, up 1% over the day, but having been as low as 100p and as high as nearly 109p.

Yesterday Purplebricks also announced that senior independent non-executive director Mike Wroe has left the board and been replaced by Simon Downing. Paul Pindar, Purplebricks chairman, assumes the role of chairman of the audit committee.

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36 Comments

  1. Hillofwad71

     

    “We sell 77% of the houses we list.”

     

    So that means nearly a quarter of all vendors pay a fee to Purplebricks not  to sell  their  house and he thinks that is positive

     

    Despite another huge marketing spend (25%of total revenue  in UK) this has resulted   in a 15 % fall in instructions

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    1. PeeBee

      “So that means nearly a quarter of all vendors pay a fee to Purplebricks not  to sell  their  house and he thinks that is positive”
       
      Highly debatable, Hillofwad71.
       
      Purplebricks’ definition of “sell” has always been “subject to Contract” – never actual sales completions.  They have never stated their fall-through rate – but the supposed industry average is somewhere near 33%, and whilst I personally disbelieve the validity of that statistic, if it were to be correct for the PurpleOnes, that would produce a figure way, waaaayyyy below the 77% claimed – and it’s not even as easy as taking a third off.
       
      Look at it this way.  You sell 100 homes. 33 of those sales fall through. You re-sell the 33 – and 11 fall through again.  They then re-sell – you lose 4.  Stopping the clock at that point, you have 144 “sales” – but only 96 completions…
       
      …or a conversion rate of 66.7%.  Apply that to the Purplebricks’ claimed “77% of houses they list” – 66.7% of 77% – you get 51.59%…
       
      …which is, miraculously, a mere one hundredth of one percent percent south of the ‘toss of a coin’ report figure produced by Jefferies almost two years ago – to which Purplebricks responded in an RNS, including this snippet:
       
      “Purplebricks reiterates its most recently published conversion rate from instruction to sale agreed of 78%…”
       
      I’ll just leave that thought parked here, shall I?

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      1. LogicR

        I do like this post PB, people don’t do the math quick enough.

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        1. PeeBee

          You might appreciate the maths in my post yesterday also, LogicR – which I will cut’n’paste here to save you looking for it:
          From the presentation:
          “The overall fee can be increased further than the £999 and £1,499 if split between publication and completion”
          But in order to simply earn the same money per listing overall, based upon a completions rate of 51.6% as indicated in the “coin toss” report by Jefferies, the UPFRONT part of the fee charged to every listing – “regardless of sale” as the old, less-transparent-than-lead, saying goes – will need to increase from £499.50  to £741.26. – or £749.50 to £1112.26 for those in the ever-expanding “London area”.
          Therefore those successfully selling will be paying a minimum of £1240.76 (£1861.76) – which equates to an increase of 24.2% on the current offering.
          Which could be interesting.
          VEEERRRYYYYY eenteresteeng…
           

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  2. GPL

    Prove it Vic.

     

    Prove that your Online Only Property Listing Company actually SELLS 77% of its properties.

     

    …….and just to clarify what “SELLS” means, with the benefit of my 30 plus years as an Estate Agent….

     

    ”SELLS” means “SOLD” – “SOLD” means a property which has had a Legal Offer, legally Exchanged or Concluded whereby the Purchase Price has been Paid and the Vendors moved out of their Home.

     

    Any other interpretation is merely smoke n’ mirrors!

     

     

     

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    1. aSalesAgent

      From PB’s Annual Report 2019:
      “Number one at selling houses: 77% of listings sold (completed, exchanged or SSTC) within 12 months to April 2019; 56% of listings are sold within two months [emphasis added]”
       
      According to them, an acceptable offer means they’ve ‘sold’.

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  3. EAMD172

    In this area (BH post code area) PB agree 49% as many sales as instructions YTD and it was 54% last year.
    Why don’t all you other agents go into Rightmoveplus for your core area look at those two figures year to date and see how many sales PB have agreed and how many instructions they’ve listed and post them on here. Let’s see if ANY area has a 77% rate of instructions to sales agreed. Let alone actually SOLD! (IE completed)

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    1. BenNorthEast62

      52% in my area, which is actually better than a lot of my competition.

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      1. PeeBee

        An unfortunate byproduct of the ‘Numbers Game’ mentality of many Agents, BNE62 – and one which is a factor in the demise of true Agency (pre-corporate interferance).
         
        Pour sausage meat into the machine – get sausages out the other end.  
         
        The thing is, to Purplebricks the only thing that matters is the meat being poured in.  They don’t have to produce sausages – or anything else for that matter – with it. 

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    2. fluter

      In my area PB have had 21 new instructions in 2019 and a total of 16 sales agreed so on that basis = 76%, very good you may think? HOWEVER, if you look a little further RM+ reveals PB have 46 available properties in my area which means that 25 have been on the market since before 2019! Furthermore, they have 14 price reductions with an average reduction of 6.6%. So If you look at the overall picture, PB have 46 available properties of which they have agreed 16 offers which comes down to 34.7% and that doesn’t take into account fall throughs! Is Vic there?

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    3. surrey1

      41% for PB in my patch. The lowest conversion of a “high street” agent locally is 55%. The average is about 80%.

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  4. TwitterSalisPropNews

    Houses sell houses.

    It’s whether the estate agent has secured top price for the property compared to what other agents would have achieved.

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    1. APE

      Absolutely!

      And, Vendors who’ve already parted with £1,500 and have been worn down by months of waiting for a buyer will accept a low offer.

      However, I don’t believe the 77% stat.  Victor means 77% agree an offer.  Or re-agree a different offer.  Or hope the offer they agree after that one actually has a completed chain.

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  5. JustPlainSavage04

    A property can be sale agreed by a LPE/ Vendor via the website without doing chain checks or solicitor/ ID checks.

    I think the real question is what percentage of the 77% are proceed-able  buyers when the property is marked as sold SSTC?

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    1. APE

      Great minds!

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  6. Woodentop

    How many of the claimed 32,850 instructions were correctly valued?  
     
    How much of the claimed saved more than £150m in commission reflects on the amount vendors lost for incorrect valuations and no incentive to achieve the best price?
     
    A vendor may have saved a a couple of hundred pounds (very little saving to some agents properties) or a grand or two for their so called average agents fees, but little consolation for the £k’s lost on the sale price? 
     
    23% (if true sold) still equates to charge of over £10m while the high street charged NIL.

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  7. HonestJohn

    I can tell you with ABSOLUTE certainty that “sold” means “sale agreed” in this instance. So if a property happens to fall through and a re-sale is agreed, that’s two sales according to these monkeys. That’s how they bolster their sales numbers and help to disguise the true amount of customers who pay for a service that doesn’t result in a sale. Smoke and mirrors my friends, smoke and mirrors.

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    1. PeeBee

      See my post above, HonestJohn.

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  8. padymagic

    Mr Darvey has clearly missed his calling

    Should be a politician

     

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  9. Sdaltaf101

    Good morning my plump little Turkeys,
     
    Here we go again whining about the epic success of a brilliant business model. In reality, PB offers exactly the same service as the high street agent, their due diligence is the same with regards to the valuation, photos, descriptions and floorplans. They list on all the major portals including their own and communicate between potential buyer and homeowner. Any assumptions made with regards to the high street agent generating a higher price for the property is unsubstantiated and would imply fraudulent actions to deceive potential buyers within an open market.
    The other assumption is PB charge even if the property is not sold, this is also incorrect although the payment will be received either on instruction or within the agreed 10 months but regardless the property will remain on the portals and active until sold. If the property is withdrawn from the market by the homeowner this would represent a change of circumstances and would be the same if listed via the high street agent, however with the high street agent, the homeowner will be contractually obligated to pay the agent commission if the property is sold in the future (up-to 5 years in some cases) even if the property is sold without the original agent which is totally unjustified, immoral and demonstrated a distinct lack of morality which is why PB’s will continue to succeed based on their ethical value alone.
     
    In reality, the fixed costs associated with the high street model is no longer feasible and demanding a percentage of the client’s asset is rood to say the least when PB offers the same like-for-like service for a fixed fee regardless of the value of the asset.
     
    However, if the portals refused to accept the online agents taking the view of supporting the high street agent then the online model would be unsustainable but unfortunately for the high street agent they didn’t and as a result have substantially contributed to the demise of the high street agent, a decision based on greed and as a consequence will frustrate the future growth and ultimately the demised of the portals. But you already know this as you continue to whine whilst paying extortionate fees each month to a business who is and will continue to contribute to the demise of the high street agent – madness!
     
    Collectively you have the power to control your destiny but choose to follow like Turkeys to the slaughter.
     
    Anyway, I need to prepare for my next sermon.
     
    Have a great Christmas with your families and I hope 2020 brings you fulfilment and prosperity.   
     
    Love, joy and happiness to you all, including the muppets!

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    1. PeeBee

      Prophet’n’Loss
       
      I stopped reading at “Good morning…”.  
       
      I like to think I see the best in everyone I encounter – however difficult that task might appear on the face of it…  
       
      …so thought it wise not to increase the challenge exponentially by going one word further.  
       
      Enjoy your day.

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      1. Sdaltaf101

        The last line is for you.
         
        You too PeeBee, have a great Christmas and i hope your employer is happy with the time you spend contributing to this forum when you should be working hard selling houses.

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        1. PeeBee

          Shows how little you know.

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          1. M Barnard

            Great irony PeeBee. Those that know know…

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    2. padymagic

      fake news!

      Traditional agents don’t wait for the phone to ring from a rightmove advert

      We have a database of buyers and many rely on the agent’s understanding of their requirements.

      Most successful agents spend hours (if not days) getting to know the buyer to then identify the right property and the best possible price for the client.

      PB do none of this, they list based on low upfront fee, a price that they hope the owner wants to hear and then wait for the call.

      Yes it is a model that will sell houses but as we can see by their shrinking market it’s clearly not working nearly as well as the more labour intensive (and therefore more expensive) method adopted by the “sheep” or is it Turkeys you’re calling us?

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    3. Woodentop

      Not sure what it is that you are snorting, but you need to stop.

       

      The future is bright, the future is the High Street, 95% public trust the High Street.

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      1. padymagic

        Just saying stuff

        agreed traditional high street is best

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        1. Woodentop

          Sorry padymagic, not for you but the stuffed prophet.

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  10. Property Pundit

    More chance of a second EU Referendum than getting a true audited figure from the smoke & mirrors outfit.

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  11. Simonr6608

    Taken directly from the PB website as of today   Total listings – 32996 For Sale – 17011   I’ll leave the working out to someone else but at a glance that’s not 77%  

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    1. PeeBee

      You are right in that it does not equate, but if only it were that simple to work out listings to completions ratio, Simonr6608…

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  12. PeeBee

    OKAAYYY…

    Tried to post this earlier but it never materialised – a problem with urls I think so I won’t make the same mistake again.

    Thought I’d do a snapshot analysis of today’s “last 24 hours” listings on Zoopla to see what pops out of the woodwork.

    Here are the scores on the doors at 0900 for the preceding 24 hours:

    107 “Just added” properties

    16 #RElistings in the above – 14.95% of the total. Put another way however, Purplebricks’ actual listings total – 91 – was inflated by 17.4%.

    Of the 16 #RElistings, six of them were recently SSTC according to their Rightmove caches; two have duplicated listings (with different RRNs to the current in the archives, and six have no cache or history whatsoever, apparently – despite having been listed weeks or even months previously, and therefore impossible to verify.

    Working on the minimum provable statistic, 6 out of 16 – 37.5% – of the properties which have been remarketed in the last 24 hours on Zoopla after being removed for various reasons have actually been #RElisted due to fall-through of an agreed sale.

    According to my records, in the six months of Purplebricks H1 2020 (April – October) there were some 6976 properties #RElisted on Zoopla.

    Using the above 37.5% statistic as what I would suggest be a rather generous yardstick, that would therefore indicate that a minimum of 2616 Purplebricks “sales” did not proceed to exchange of Contract in that period.

    Thoughts, anyone?

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    1. Woodentop

      Yeah where is the ASA and NTSEA. Are PB in breach of providing false and misleading information? Not just on a property that is sold or not, but issues of not disclosing they are not new listings but re-listings, use of such information that may deceive the consumer to belive they are better than they are and can make a difference in instructing them. After all, isn’t Vics PR release just that, to impress readers. This also brings into manipulation of figures/disclosures that would influence stock value on stock exchange?
       
      https://www.propertymark.co.uk/media/1043356/ntseat-guidance-on-property-sales.pdf  
       
      Bedtime reading but for agents who don’t know the contents of this document, you should and need to read or you will be in the brown stuff. 
       
      One snippet but there are many breaches ….
       
      Your advertising to attract new clients is covered as well as your advertising of
      property for sale. The BPRs also set out the conditions under which you are allowed to make
      comparisons with your competitors.
       
      An unfair commercial practice may mislead consumers through the false information it
      contains, or through the practice itself, or because its overall presentation is deceptive or is
      likely to be deceptive – even where the information it contains, taken literally, is factually
      correct.
       
       
      Too late in the evening for many to see this!!!!!
       
       

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    2. PeeBee

      Today’s figures as follows:

      100 listings “Just added” to Zoopla by Purplebricks in last 24 hours (as at 0900)

      TWENTY SIX of those have been listed previously by the company.  That means that the actual total of 74 ‘clean’ listings was boosted by 35.1% to show the above total.

      Of those, eleven can clearly be identified by cache listings as having been SSTC before #RElisting – that’s a minimum of 42.3% (which I would suggest to be still waaay south of the true statistic) being ‘sales’ that fall through.  The others had no cache history for the current/previous listing – which in itself is mighty unusual – or did not show as SSTC, but this is no guarantee that they weren’t fall-throughs by any stretch of the imagination.

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  13. J1

    Oh no they don’t

    He’s behind you !!!!!!

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  14. andrew.stanton@estate-agency-insights-strategies.co.uk

    Not a good picture for Purplebricks, despite hiking the fee by £100 a unit, they did 47M of revenue in 6 months in the UK – bearing in mind they charge an upfront fee at around £1,300 sale or no sale, and only turned in a paper profit of 3.5M in the UK, down almost 40% in terms of profit for the same period last year, but, really there was a 17M loss.
    ith further monies still required to pay for their global exploits that will fall in the next accounting period, I think the full trading year will show inroads into the cash war chest that once stood not so long ago at 150M, then dropped in a year to 60M and now must be dwindling fast.
    Also, if they change their fee model, to a more fees payable on completion, this will skew their cash flow by five months, typical cycle of a completed property, so rather than easing the cash situation it may well compound it. No point in being the biggest lister of property in the UK if you have no cash to run the operation.
    Going into its 5th year this should be a maturing model, for me it is well past its sell by date, as its offering is in no way spectacular, its just a cheap fee – reflected in service levels, which appeals to a small segment of vendors, selling at the lower end of the property scale.
    Annually, Purplebricks charge 47% of their clients, collectively over 40M as an upfront, sale or no sale – fee. And keeps this sum, as these clients do not get a completed sale through them. I know of no other business who could get away with keeping 40M for a service they fail to provide. 
    Vic Darvey can state that 77% of the properties his company lists, go on to complete, this is probably true, but Purplebricks only completes on 52% out of that 77%, the remainder get sold through the next agent who lists them (or the subsequent agent if the second fails).  That is why if you look at Rightmove todauy – properties listed in total by Purplebricks vs those under offer is nowhere close to 77%.
    A year last April Purplebricks had over 150M, cash at bank, in the next 12 months it burnt through 90M, leaving it with 60M last April, since then it has made a 17M loss in 6 months, so, it is down to 43M cash, and although it is generating a huge cashflow front end, it is spending every penny and some. 
    Now it was burning through 7.5M a month of savings, even if that slows to a cash burn of 3M a month, in a year, it will have less than 10M in the bank maybe less if it has to keep paying out for its failed global ventures, and with the share price at the level it started, and looking to dip sub 100p a share, I think no-one will want to invest in the company. Axel Springer may take the company private – but the big question is – why – a company that has never made profit is a costly vanity project. 
    Other hazards on the horizon are the HMRC looking at the LPE’s status as self employed and the tightening of regulation – ROPA, is this a good fit with a business model built upon stripping out costs?   

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