Purplebricks shares soar after trading update showing 83% growth in instructions

| Rosalind Renshaw

Purplebricks shares shot up some 6% in value yesterday after its trading update.

They ended the day at around 342p, the closest yet to their record price in March of 365p.

In yesterday’s trading update, Purplebricks reported a strong performance with an 83% growth in instructions.

However, it did not report how many properties it has actually sold.

Separately, the firm has also told EYE that two different adverts used online essentially say the same thing despite their different wording – and refer to properties Sold Subject to Contract. Purplebricks told us that the claims are a “very conservative estimate”.

One says “We sell a house every 30 minutes” while the other says “A sale agreed every 30 minutes”.

The agent who saw the adverts was Andrew Overman, who yesterday said: “I saw the pay-per-click sponsored advertising on the search term for the company I work for.

“The claim was that Purplebricks sell a property every 30 minutes. That would equate to 17,520 legal completions in a 12-month period, which seemed high.

“I was also concerned that the claim should be able to be substantiated as they, to my knowledge, have never disclosed the volume of successful completions.

“The following morning the claim seemed to have been amended to ‘sale agreed’ and then a few days later, no statistics were mentioned at all. I did raise the issue directly with them on Twitter but have yet to receive a reply. I have yet to receive a reply to my email either.”

Yesterday, Purplebricks’ market capitalisation was £914.45m, compared with Countrywide’s £386m.

 

 

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63 Comments

  1. Chris Wood
    May 5, 2017 at 06:50

    A sale or sale agreed is the legal exchange of contracts/ completion. In the spirit of transparency, it’s odd then that PB won’t/ haven’t released how many customers homes they actually sold in its year end trading statement.

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    1. AndrewOverman
      May 5, 2017 at 06:55

      Would the term “sell” not mean legally complete, whereas “sale agreed” mean SSTC?

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      1. Chris Wood
        May 5, 2017 at 06:58

        Technically, a sale agreed, without the subject to contract clarifier, implies that contracts have been exchanged. That is when, in law, the sale is agreed.

        (Nerdy voice)

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        1. AndrewOverman
          May 5, 2017 at 07:03

          Brilliant, that seems concrete clarification that the (conservative) exchange / completion figure is 17,520 per annum. One every 30 minutes. 

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        2. cyberduck46
          May 5, 2017 at 07:24

          Not saying you are wrong Chris but there seems to be some dispute over this. Could you cite the authority for your opinion.
           
          Michael Hardy Estate Agents say “Once the buyer has made a financial offer and the seller has accepted, a booking deposit will be paid. It is at this point that the sale is ‘agreed’ and both parties will receive a Memorandum of Sale to confirm. It’s important to note that ‘sale agreed’ does not mean the property is sold, though, as this isn’t the case until contracts have been formally exchanged.”
          https://www.michael-hardy.co.uk/blog/what-does-39sale-agreed39-mean.html

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          1. AgencyInsider
            May 5, 2017 at 07:36

            Well, this is what I have always understood as the meanings:
            Sold = Contracts exchanged
            Sold Subject to Contract = A sale has been agreed but contracts not exchanged yet
            Sale Agreed = A sale has been agreed but contracts not exchanged yet
            Under Offer = A sale has been agreed but contracts not exchanged yet

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            1. Chris Wood
              May 5, 2017 at 07:45

              As already stated, without the ‘STC’ addition, in law it implies that the sale has been ‘agreed’. I.e. Exchange of contracts.

              This was a key part of Reading Unis’ College of Estate Managements law paper on contracts and I remember revising it well all those years ago. To the best of my knowledge, this point of law has not changed.

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              1. cyberduck46
                May 8, 2017 at 06:13

                But apart from some recollection from a course you went on you can’t cite an authority? Something in statute or case law?

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    2. Trevor Mealham
      May 5, 2017 at 07:55

      A sale agreed has to happen to commence the legal side.

      Sale Agreed DOES NOT mean exchange of contracts has happened.

      All said there is a step away from being nearer to exchange with something like the GAZEAL ‘lock in/lock down agreement that ties seller and buyers into a legal agreement.
      http://www.gazeal.co.uk/

      But to a budget it wouldnt matter as they perform by taking money for sign ups regardless of a sale or not.

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      1. AgentPink92
        May 5, 2017 at 08:24

        AgencyInsider,
        This is the way we use the terms and mark properties:
        Under Offer: offer accepted but ID and proof of funds not yet received.
        Sold Subject To Contract: ID and proof received & MOS issued.
        Sold: Sale completed.

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      2. Chris Wood
        May 5, 2017 at 09:42

        Trevor, we rarely disagree but on this, we do. Please see my argument below.

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        1. PeeBee
          May 5, 2017 at 21:23

          “Trevor, we rarely disagree…”

          You have no idea what you have been missing… ;o)

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  2. AndrewOverman
    May 5, 2017 at 06:52

    There you go Robert, PeeBee, Chris et al – to my knowledge (and I’m happy to stand corrected if I’m proved wrong) I believe this could be the first time Purple Bricks have announced / suggested figures for actual sales. A (conservative) claim of 17,520 or a sale every 30 minutes!

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    1. Robert May
      May 5, 2017 at 08:51

      If it is  the numbers contradict themselves; 17520 completions at a listing to sales ratio claimed to be 88% mathematically  says that is 19909 fee paying instructions some way short of what is being precicted.
       if there has been an uplift in listing volumes and 36,000 have been listed but 17520 properties legally completed the sales to listing ratio has slipped back to the industry norm about 50% . The factual reality based on their own numbers without any marketing spin  18480 vendors don’t get anything for their £1060 average fee other than a listing on a portal, About £19.6million spent out to achieve nothing at all.
      Never mind though the share holders are happy, they have lots and lots of money for doing nothing at all.

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      1. Andrew Overman
        May 5, 2017 at 09:20

        Interesting Robert, to see figures and no spin.
        Did they announce in their trading figures actual listing figures?
         

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        1. Robert May
          May 5, 2017 at 12:05

          it’s too early for that; creating positive spin that holds water when it receives detailed examination take some doing.  If the numbers are straight, honest and positive  they appear quite quickly but if there is work to do it takes a little longer.

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        2. P-Daddy
          May 5, 2017 at 12:07

          The year end figures are yet to come, so you will have to be patient Andrew. However the investor bulletin boards are starting to wake up to a complaint to the ASA about claims made and some are picking up on how many of their actual listings are selling…it is the elephant in the room and is the area that will mark their real success or not. It is why they don’t answer as it could be toxic to their model for obvious reasons.
          Here’s a check and measure for you. In a previous interim statement to the stock exchange, they claimed the average client spend on services was £1,000 (including bolt ons like conveyancing and viewings) so if they have sold 17520, revenue will be in the order of £17.52m The balance will show how many aren’t selling and please remember that whether they sell or not, they are paid. Figures will be distorted by the revenue from Oz, but it will give a better idea. To explain this further and assuming their reporting is accurate, which it is supposed to be under stock exchange rules, if revenues come in at £35.04m, they sell 50% of their instructions, assuming all clients who use their service end up paying rather than being refunded after complaining! Ask the LPE’s how they feel when their pay is deducted without referring to them first . This is offered as a rough rule of thumb for when the figures are announced properly.
          For a new company, the directors don’t half sell a lot of shares both owned or acquired through options….speaks volumes to me! if you believe in your biz you hold. CF Woodford Fund are holding, but they aren’t estate agents and are holding in the hope of shares going beyond £4.

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          1. Robert May
            May 5, 2017 at 12:36

            They get to list not sell  so selling 17520  means they have, according to Mr Bruce’s 88% claim listed, 19909 properties which is  £21.1m turnover. If the turnover figure is higher the claimed conversion percentage wasn’t correct.

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  3. Shaun77
    May 5, 2017 at 07:48

    If they are completing on 17500 per annum whilst also claiming to list 3000 properties per week, their listing to completion rate is 11% – even worse than the rumoured 18%.

    In otherwords, 89% of their clients throw their money away. A definite case of #CONmisery

    If it’s 17500 “sales agreed” (stc) then the number will be much lower after fall throughs

     

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    1. Andrew Overman
      May 5, 2017 at 07:57

      This is why, in my view, this is a breakthrough. Shortly we should be able to see the full extent of #CONmisery

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    2. AgentV
      May 5, 2017 at 11:57

      Isn’t it 3,000 per month, rather than per week?

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  4. AgentV
    May 5, 2017 at 07:55

    Wonder what the figure would be for ‘sales completed’ for the independent sector of the industry. Probably over one every minute? What a pity we don’t have intelligent collective marketing. YET!

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  5. spin2009
    May 5, 2017 at 08:05

    I always remember a Judge musing over the words “subject to contract” and then grumpily adding “whatever that may mean”.

    Agreeing to marry someone does not mean you have left the Church.

     

     

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    1. Chris Wood
      May 6, 2017 at 07:00

      The judge was clearly a fool who had not studied the basics of estate agency law.

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      1. cyberduck46
        May 8, 2017 at 06:15

        Chris,
         
        If it’s basic law then why can’t you cite the law or case that creates binding precedent?

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  6. AgentV
    May 5, 2017 at 08:26

    Everyone needs to make sure they read the next story ‘Ah misery’ as well!

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  7. Simon Bradbury
    May 5, 2017 at 08:45

    It seems to me that the Purplebricks  (apparently amended) claim based on “Sale Agreed” can only, and will only be based on properties where a sale has been agreed – what most estate agents would term as “Sold Subject To Contract” and certainly not exchanged. Respectfully Chris, this is the generally accepted definition of “Sale Agreed” – even though it may not meet the definition you refer to. In 34 years of estate agency I have never witnessed a colleague punch the air at an exchange of contracts and shouting “brilliant – another sale agreed”.

    Assuming therefore that Purplebricks do indeed agree a sale every 30 minutes, and that this calculation is based on a 24 hour day (as opposed to normal business hours), this would mean an average of 48 sales a day or 17,250 sales agreed every year. Apply a ( very modest ) cancellation rate of 25% to that figure and you arrive at a forecast of 13,140 exchanges/completions per year. An irrelevant figure in respect of a business model that largely depends upon an upfront payment whether a property exchanges contracts or not – but noteworthy for two other reasons…

    Firstly, it provides an insight into the ability of this firm to achieve what is actually the clear objective of the vendor client – to sell the property.

    Secondly, remember that the considerable added income streams which benefit Purplebricks ( financial services and conveyancing ) will only generally produce income IF contracts exchange. To that extent, they are ironically incentivised to ensure an exchange of contracts actually occurs!

    In any event, we appear to be getting closer to being able to more accurately estimate the Instruction to exchanged sale ratio of Purplebricks.

     

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    1. Andrew Overman
      May 5, 2017 at 09:21

      As a point of fact Simon it’s 17,520 per annum, as i stated in the original article 😉

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      1. Paul
        May 5, 2017 at 10:47

        Not being picky, but the article states that they mean SSTC, so Simon would be correct in applying a modest 25% fall through rate.
        The other more interesting point is that if the 3000 per week claim is correct, that’s 156,000 a year, which means as Shaun stated, that’s a lot of people not getting what they paid for! 
         

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        1. Andrew Overman
          May 5, 2017 at 12:22

          Yes Paul, I would agree with that. If you check I was referring to 17520, as opposed to 17250!

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          1. Paul
            May 5, 2017 at 12:36

            Now you are being picky!  🙂 – Glad we cleared that up!

            Does anyone know how many instructions they are taking each week / month?  3000 a week seems too high and sounds like a month to me, which would, given the 17520 above, be more in line with conversion rates discussed.

            Thought that 156,000 number looked nonsense when I was writing it. My Diane Abbott moment right there possibly! 🙂 
             

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  8. Chris Wood
    May 5, 2017 at 09:40

    Whilst I accept (and made clear) that my point is a technical point it is, nonetheless, correct to state that a sales is only agreed when unconditional contracts have been exchanged. http://www.lawsociety.org.uk/for-the-public/common-legal-issues/buying-a-home/

    It used to be the case that all memorandum of sales had to be written including the words subject to contract to prevent an unscrupulous buyer or seller claiming a legal contract had been created (case law applies*) but this was changed in the latter half of the last century. It was from this change in the law that the common use by the majority of agents started to drop the STC when claiming a sale had been agreed. However, the legal fact remains that a sale is only agreed once unconditional contracts have been exchanged.

    I am aware that many will roll their eyes and say I am dancing on the head of a pin, however, what would a reasonable member of the public take from the description of x number of sales being agreed or “a sale”. To many, I would argue, this will mean that the firm in question has ‘sold’ that number and that, I would also contend, is what the advert in question wishes consumers to take from that statement.

     

    * http://www.bailii.org/

    An interesting piece of government of the days’ views on Gazumping too http://www.bailii.org/ew/other/EWLC/1975/65.pdf

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    1. AgentV
      May 5, 2017 at 11:54

      Wouldn’t it be interesting if the point in question was tested. Is the slightly different wording of ‘sell a house’ (as opposed to sale agreed) seen in law or by the general public as indicating an exchange of unconditional contracts….effectively completion. If this is the case then the claim needs to be verified and substantiated…once a complaint has been raised….for either the vindication or ‘informal agreement’ and withdrawel of claim to be be made.
      Just need the complaint raised. Hopefully a member of CIELA is reading this! 
       

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      1. Chris Wood
        May 5, 2017 at 12:58

        The pointy has already been raised with the ASA

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        1. AgentV
          May 5, 2017 at 14:25

          Good for you Chris

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    2. Trevor Mealham
      May 5, 2017 at 19:06

      I think the problem Chris is that if an offer is accepted, most agents move the status on to sstc OR sale agreed.However if a buyer pulls out the property goes back to Available. Whereas if it had exchanged, there would have been no going back. …………

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    3. cyberduck46
      May 8, 2017 at 06:21

      Chris the article you reference states “Exchange of contracts confirms your agreement to buy”. So exchange is the confirmation, the agreement comes earlier.
       
      You really need to cite legislation or an actual case to support your opinion.

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      1. PeeBee
        May 8, 2017 at 16:31

        “So exchange is the confirmation, the agreement comes earlier.”

        Exchange of Contracts is the Legal term for the (usually) binding stage of home sale/purchase that occurs prior to legal completion.  it is the point of no return for the vast majority of sales.

        I fail to understand what you mean by “the agreement comes earlier” – or why you felt you needed to point out that in order for a sale to take place you need to agree its’ terms and conditions between parties beforehand.

        Surely that’s not rocket science? Or secret mumbo-jumbo that is kept from public sight and sound?

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        1. cyberduck46
          May 9, 2017 at 06:22

          PeeBee  
           
          Chris is maintaining that ‘sale agreed’ is the same as sold and has provided a law society refeference which he believes supports his opinion. Also a link to the bailii database as though that somehow supports Chris’ opinion.
           
          What it in fact does is show that if the law society article can be relied on (which isn’t guarantee because it might just be the authors opinion) then ‘sale agreed’ must come before ‘sold’ because ‘sale agreed’ comes before exchange if exchange comes before ‘sold’.  
           
          You will now see that the Property Ombudsman has put their opinion forward and they also disagree with Chris and quite but still we have no citation of what could provide a legal definition, either from the Ombudsman or Chis.
           
          So it all just seeems to be a matter of opinion and until it is a Judges opinion in one of the Higher Courts it does not become binding precedent on a lower Court.
           
           

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  9. Whaley
    May 5, 2017 at 10:17

    On a complete aside Andy, very brave of you to expose your browsing history via your tabs,

    on another day this story could’ve been a thing of legend

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    1. Andrew Overman
      May 5, 2017 at 10:21

      Thank heavens for private browsing Whaley 😉
       

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  10. Property Paddy
    May 5, 2017 at 13:30

    I sell a house every 30 seconds !

    Just don’t ask me to prove it though !!!

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    1. AgentV
      May 5, 2017 at 14:32

      You can say it as many times as you like until someone complains and the ASA take a long….long….long time (as they are with the complaint about the PB commisery advert by CIELA) to assess if you can substantiate it, and then ask you to withdraw it in a frigin INFORMAL AGREEMENT.
      In the several months in between you can wallow in all your new found business from your marketing and advertising.

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      1. PeeBee
        May 5, 2017 at 18:45

        “You can say it as many times as you like until someone complains…”

        WHOA THERE! – NOT IF YOU’RE A PLC YOU CAN’T!

        Don’t ask me to quote the actual Legalities of it – but maybe as an avid and experienced Investor, ‘cyberduck46’ would care to sing from the relevant hymnbook as to what a PLC’s duties and responsibilities are with regard to the publishing of (potentially) false or misleading information.

        How’s about it, ducky?

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        1. PeeBee
          May 6, 2017 at 21:24

          Cat got the duck’s tongue?

          You’re normally like a rash over any comment – what’s brought on this sudden shyness?

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        2. cyberduck46
          May 8, 2017 at 06:32

          PeeBee,
           
          Sorry not something I could give a definitive answer on. Whilst I have a pretty good understanding you never know what you don’t know so typically refrain from commenting unless I’m 100% certain (unless I give the proviso that I’m not sure).
           
          Some people will speak with authority when they don’t really know what they are talking about.

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  11. Hillofwad71
    May 5, 2017 at 13:42

    http://www.zoopla.co.uk/for-sale/details/40711576#YC7luBlm18H37WFY.97

     

    Here is an interesting one first listed  July 2015 Coming up to its second birthday of unsoldness by the looks of the photo with snow  maybe on longer  Doesnt look like the LPE  keeps a watching brief

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    1. PeeBee
      May 5, 2017 at 18:31

      Nope – it actually WAS listed in July, Hillofwad71.

      I would say the REALLY interesting thing would be to find out when they last had snow in Callington, Cornwall in July.

      Maybe Chris Wood –  a REAL Local(ish) Property Expert in the Cornish market – can offer some insight?

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      1. Chris Wood
        May 5, 2017 at 19:23

        http://www.metoffice.gov.uk/climate/uk/summaries/2015/july 

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  12. PeeBee
    May 5, 2017 at 18:20

    From an article here on EYE 5 December 2016:

    ‘This morning, Purplebricks announced that it… is agreeing a sale every 16 minutes, 24 hours a day.’

    Did I hear cries from the back of “WHO THE **** SAID THAT???”  Allow me to enlighten:

    ‘CEO Michael Bruce said:  “…I am especially proud that currently we are agreeing a sale every 16 minutes, 24 hours a day”.’

    That would be 32850 “sales”.  As of 5/12/16.  As stated by the CEO.  As reported by the press (it was in The Sun – it MUST be true).

    SO… unless I’ve got my maths wrong, they are claiming a Gazillion percent increase in listings – but their sales have seemingly slowed to something like 53.33% of what they were achieving WITH LESS STOCK.

    Funny, that.

    Correction.  NOT for those who are now apparently paying to have LESS CHANCE OF SUCCESS than only a few months ago it isn’t…

    …not funny at all.

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    1. Chris Wood
      May 5, 2017 at 18:43

      Here’s the link if people struggle to find it drive.google.com/file/d/0B3oqJKVfbDXJcGRWZEphaXlfc1U/view?usp=sharing  
      I would imagine a 48% drop in listing to sales ratios in a matter of a few weeks (and a completely different figure to that given live on BBC MoneyBox by Purplebricks’ own CEO) might be rather difficult to explain to a few people.

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    2. cyberduck46
      May 8, 2017 at 07:19

      PeeBee,
       
      Unless there is actually some legal authority that “sale agreed” is actually contracts exchanged then it’s probably safer to assume the figures are for properties that have had an offer accepted.
       
      Also, with adverts, I believe the ASA accept that there will be a certain amount of exaggeration. Just had a quick look at an article on how the ASA dealt with a complaint http://marketinglaw.osborneclarke.com/advertising-regulation/the-fine-line-between-mere-puff-and-an-objective-claim-requiring-substantiation/ which supports that.
       
      >currently we are agreeing a sale every 16 minutes, 24 hours a day
       
      >That would be 32850 “sales”.
       
      I don’t think you can assume that this applied to a whole year. That would be 90 a day and with a stock of about 10000 (from memory) at the time it might well have been the case that 90 offers were being accepted per day.
       
      It’s just a matter of spin. You will spin the data one way 🙂 and PurpleBricks will spin it another way. 
       
      I’ll leave these things up to the ASA to decide, I don’t particularly think commentators on here have a very well informed or objective view as can be shown by some of the assumptions being made “32850 sales” 🙂
       

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      1. PeeBee
        May 8, 2017 at 15:49

        “I don’t think you can assume that this applied to a whole year.”

        SO… what period of time can you reasonably assume it to be applied to? 

        Six months, maybe?

        One month?

        A week?

        Or what about between 10.33am and 11.05 am on Julember the 42nd?

        #duckshoot

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      2. PeeBee
        May 8, 2017 at 15:52

        “Also, with adverts, I believe the ASA accept that there will be a certain amount of exaggeration.”

        Says it all, really.

        #duckshoot

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        1. cyberduck46
          May 9, 2017 at 06:29

          So we agree it’s all a matter of spin and the ASA determine whether it goes too far.
           
          Of course you would prefer it if it was your opinion that counted but I’m afraid it doesn’t.
           

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          1. PeeBee
            May 9, 2017 at 07:24

            No – we don’t agree at all.  Kindly stop speaking for me.

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  13. Chris Wood
    May 5, 2017 at 19:01

    Here’s the link if people struggle to find it https://drive.google.com/file/d/0B3oqJKVfbDXJcGRWZEphaXlfc1U/view?usp=sharing

     

    I would imagine a 48% drop in listing to sales ratios in a matter of a few weeks (and a completely different figure to that given live on BBC MoneyBox by Purplebricks’ own CEO) might be rather difficult to explain to a few people.

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  14. tremo9295
    May 6, 2017 at 11:31

    love how there are 45 comments from so called ‘estate agents’ fighting out terminology and statistics of another estate agent when the biggest complaint our customers have about estate agents, is the level of contact they receive.

    once a week a new article comes out about PB and you all ********* at the idea of trying to out smart a company in a comments war, that is leaving you all behind.

    you lot are a joke, I’m ashamed to be in the same profession as you lot

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    1. LocalAgent201625
      May 6, 2017 at 16:51

      To be honest i’m a high street agent and finding all these articles and comments about PB tiresome.
       
      I really couldn’t give a monkeys, much like any business there’s good and bad points about them but to argue into such detail about PB’s operation is pointless and boring.
       
       

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    2. PeeBee
      May 6, 2017 at 21:12

      “I’m ashamed to be in the same profession as you lot”
      You know where the door is – I’m sure a clever individual like you can find your own way out.

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      1. cyberduck46
        May 8, 2017 at 07:23

        Come on PeeBee, let people have their say without being insulting.

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        1. PeeBee
          May 8, 2017 at 15:34

          Sorry – where exactly in my post is the alleged insult?

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  15. LocalAgent201625
    May 6, 2017 at 16:45

    Am I the only one a bit bored of all this talk about what PB are doing or not doing?

     

    Let them get on with it.

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