An investment site has described Purplebricks’ valuation as “wacky” and “totally bonkers” – and tipped The Property Franchise Company instead.
The Property Franchise Company includes Martin & Co and online firm EweMove.
Investor’s Champion did, however, praise Purplebricks – whose shares yesterday hit an all-time high after announcing plans to launch in America – for its “can do” attitude
It also noted that it previously described Purplebricks’ valuation as crazy – “and the shares have more than doubled since!”
Separately, it appears that Purplebricks has already appointed a CEO in America. He is Eric Eckardt, 42, a licensed New York real estate broker, whose impressive CV includes online agents. He launched DwellOwner, a ‘full service’ hybrid agent, in only the third quarter of last year, and before that ran Hubzu, an online agent based in Luxembourg. His Linked In profile is here: https://www.linkedin.com/in/ericeckardt/
He may want to read the Investor’s Champion blog, which said: “Broker forecasts are practically worthless as nobody really knows where this business [Purplebricks] could go to. However, let’s be really optimistic and assume revenue for the year ending April 2019 could hit £160m (estimates were for £123m).
“A gross profit margin of 60% would see gross profit of £96m and pre-tax profit of approximately £50m and net approximately £42m – this is wildly optimistic!
“The multiple of approximately 17x doesn’t look too rich on those sums but we have ignored start-up costs for the US and accelerated marketing costs to build a presence there, not to mention increasing competition in the UK – after all, the competition isn’t going to lie down.
“This is a transactional based business that will rely on ongoing marketing to keep it in the spotlight. It’s not like those other star unicorns Uber and Airbnb where the same consumer returns multiple times to use their service.
“The market opportunity is big and the estate agency market evidently needs shaking up but we struggle to understand the barriers to entry with what appears to encompass relatively simple technology.”
Wondering how US realtors will react to Purplebricks, Investor’s Champion says that those wanting cheaper exposure to an online estate agency offering should look at The Property Franchise Group.
EweMove, which was acquired last September, comes top on Trustpilot and, says Investor’s Champion, “a web search for our area revealed that EweMove carried several more listings” than Purplebricks.
The Property Franchise Group is “a nice profitable business at a modest valuation with the excitement of a Purplebricks type of offering in their EweMove Business,” is the conclusion.
Yesterday, shares in Martinco (as it is known on the stock market) rose 1.9p (1.36%) to 141.40, giving it a market capitalisation of £35.29m.
Shares in Purplebricks finished the day at 267p, up 41p (18%), giving it a market capitalisation of £661m. At one stage yesterday, the shares hit 270p.
No pushing to the front of the que today!
AgentV and Trevor, behave yourselves!
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Ohno12359… was that fast enough off the mark?
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the whole story of PB appears to prove that money can buy you almost anything. Why else would Eric go to them, when he had launched his own offering several months ago?
The problem is that whilst we all thought PB would run out of money at some point, the rising share price encourages more investors, deepening their pockets. This means the unfair and misleading propaganda against full service agents will get louder and last far longer than I, for one, had hoped
Someone made the comment yesterday that I totally agree with. Who now isn’t being asked far more regularly by potential customers about the threat of the ‘onliners’. Whilst I feel I can provide and justify answers to these questions, they are defensive…typically telling what they don’t do or achieve. What I really would like is to be able to stand up and say ‘but look at what is said, and written ….and proved about ‘property sale best walk away results’ achieved by independent full service agents?’
I want to be able to show…not tell.
However no current ‘professional body’ or organisation seems to have the will (often because of conflicting interests), the belief or the desire to achieve this. So it is up to us, before it is too late. Who else out there wants to make the truth matter more than the money?
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I enjoy giving people the option of payment upfront like an online agency if they wish. I then liken it to employing builders.
Would you like to pay your builders everything up front before they start the loft conversion, trusting they will do the very best job that they can, in the best timescale, not making any mess, and you still have to pay them if they don’t finish the job ?
Or do you pay them a little bit up front, a little bit as they progress, with a final payment when you are completely satisfied ?
Would it be wonderful if you didn’t have to pay the builders a penny until you were completely satisfied with the job, you might even be prepared to pay that company a little more as you didn’t have to take the money out of the bank or just trust them, on what they say ?
Well that’s how a trustworthy high st agent charges ………….
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Do what the onliners do – make up some statistics and wait for someone to complain! (and get resolved on the quiet)
Eg
High street agents get 15% more for you property than online agents
High street agents can sell your property 4 months faster than online agents
High street agents cost you nothing if you don’t sell.
Maybe a prize for the best Russell Quirk ‘statistic’
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Another brick in the wall. But cracks showing in areas like after sales when chains dont get progressed in the UK.
US Realtors have to do more pre work to market. Running costs could be high in a very large established market place.
Good licenced Realtors wont be cheap and thus need to charge enough to bring the right negs and managers in to compete.
£50m in the US market isnt a big war chest when some States are bigger than the UK
£50m for 50+ States. How far would £1m go in a new launch model in England.
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Trevor
Found little comment in the US on the Bricks announcementt No doubt you have liased with your strong contact there
What is the US response to the forthcoming arrival of Bricks or has it gone largely unnoticed?
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@Hillofwad71
Contacts tell me they are not worried. People like Warren Buffet with brands like Berkshire Hathaway have very deep pockets with interests in Kraft Heinz, property, Coca Cola, Mastercard, Duracel, American Express, Bank of New York, Delta Airlines to mention a few. Berkshire Hatahaway in 2015 showed revenue of $210.8 billion
PB are known here as a budget model. The US is typically a 6% listing fee that on completion gets split 50/50 between the listing brokerage and the sub brokerage.
So at 6% PB has no USP. At $1,000 to $1,500 there’s not enough meat on the bone, especially to share listings back into the MLS where a introducer agent will want 3%.
No agent can survive in the USA without access to add or take listings into or from the MLS (multi-list service).
@Hillofwad71: **** One close contact feels the route forward would be to take listings on at $2,500 upfront or finance pay in 6 months. And then the seller pays 3% on completion which PB would pay to the introducer sub agent ****
The MLS’s have been quite funny about listings that get held back from their MLS’s.
The local agents may also turn against PB, if low fees are seen as a threat. But for sure if an agent is not on the MLS, they’re dead in the water out there
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Nice to see M&Co mentioned here as an actual business and not a money-chucking game. EweMove purchase expensive but clearly worth it at a plc level?
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Mr Harvey; isnt the description above of the Ewe-move offering at odds with the actual. I thought Ewe-move charged the same as high street agents and on completion, this being the case they are far closer to traditional agency than they are to Purplebricks.
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EW has a no sale, no fee proposition, but an ‘online’ set-up (no premises overheads etc). That’s why it’s labelled as hybrid, cos it is effectively both and neither at the same time.
EweMove model is part of the realistic future of estate agency while PB is the optimistic/hypothetical future. hence the big-up in the story.
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PB shows how you can persuade sane people to part with money, however effective they are or will be at selling houses is not relevant, what is relevant is what the public percieve as being a good bet whether or not that is listing their property or investing in the shares. Hoping they will run out of cash and crash quickly is a naive position to take, they probably have far more resources than most of us at the moment and whatever we think they have done a fantastic job of getting people to part with money, can they sell property? they probably do not care. Wish I had thought of it!
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Seriously impressive numbers and that share price is still rising in spite of issuing 25 million more shares to raise the fighting fund for the launch. Impressive! It has diluted the existing share holders and yet they still managed to hit a market value for now of £640m without a proper profit! Investors are backing a hunch that this will be a ‘sky is the limit’ and changing how the markets work in the big property owning democracies, I’m even hearing some hyping to £5 per share!
I went to a presentation given by a city analyst a few weeks back and the purple subject came up as he had used them to let his house. He is a fan, even though they were not very good, they were no worse than the High Street agents he also used and much cheaper! He doesn’t agree with the value of the company, but said that the City likes the concept of estate agents being shaken up and they believe this is the future even without a profit. There is a lot of hype and the USA move has mixed it right up, and I bet there were unofficial discussions about the Stateside move, hence the stellar price before the announcement and the confidence of placing at £2.20 a share or thereabouts. There is a 2 tier hybrid agent I see in the future, where there is still a High Street presence for certain parts of the market, but as an investor as well as agent, I kick myself for not reaping the rewards of the share price rises, but as a long term investor, I take all AIM companies with a pinch of salt as there are big risks in the long term without profit…and of course when the inevitable exit strategies kick in.
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I think you may well be right about a 2 tier hybrid. I fear that for all the flak that Countrywide have taken they could come out the other end as being visionary. One thing is certain, Estate Agency as Estate Agents would like it to be is in the hands of the public not the Agent and how it evolves will be determined by the public and not the Estate Agent.
Darwins Theory of Evolution – Develop through the natural selection of small, inherited variations that increase the ability to compete, survive and reproduce.
Do not stand still, you will become extinct. Of course if you try and make too many changes you could well end up with a freak, tricky decisions for a Friday afternoon.
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PB shows how you can encourage sane people to part with money, however actual they are or will be at selling houses is not relevant, what is relevant is what the public observe as being a good bet whether or not that is listing their property or capitalizing in the shares.
http://www.loftconversionsinkent.co.uk/
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