Five years ago, Michael Bruce and his brother Kenny, had a vision – to create an online property agency that slashes selling fees for homeowners and provides advice from local property experts. Enter Purplebricks, hailed as the “world’s first 24/7 Estate Agency.”
Where Purplebricks primarily differs from traditional Estate Agents is that instead of charging an average 1.3% in commission, it charges a fixed fee of £1199 in London and the surrounding areas, and £849 elsewhere in the country.
The lack of commission vendors pay, is the essence behind the Purplebricks’ television adverts, which depict disheartened home sellers, showing their dismay by banging their heads against the wall and other self-destructing acts, for not selling their home with Purplebricks and thereby having to pay commission!
So far, this year alone, Purplebricks’ shares have virtually trebled, leaving its visionary owner Michael Bruce worth a £160 million fortune on paper. Many of the City’s highest profile investors are investing in shares in Purplebricks, including funds guru Neil Woodford and former Capita chief executive Paul Pindar.
Despite the interest in Purplebricks by pundit investors, not everyone has fallen in love with the “no commission, no commissary” online Estate Agent.
Talking to The Standard, Anthony Codling, a Jeffries analyst, notes how Purplebricks is reluctant to reveal how many properties it has sold. Instead, Codling says, the company shares how many instructions it receives.
According to codling, Bruce refers to the number of instructions as the amount of sales, which “inevitably lag behind.”
Another jibe was made at Purplebricks by Nested’s founder Matt Robinson. Robinson accused Purplebricks as being the “Ryanair for Estate Agency”, criticising the company for generating a competitive market to create low selling fees.
Love it or loathe it, what Purplebricks has proved is there is a demand for fixed-price house selling, where vendors put their home on the market for one fixed price instead of paying commission on a percentage of the property’s selling price.
That said, upfront fees are not for everyone and the prospect of paying over £1,000 to put a property on the market whether it sells or it doesn’t, isn’t for everyone.
There is still undoubtedly still a market for vendors to happily pay 1.3% to an Estate Agent who successfully sells their home and provides them with a face-to-face, high street service.
As one vendor in the north west of Britain told Agent Wow:
“When you successfully sell a home, you don’t notice so much the 1% or so you pay the Estate Agent. You notice more the £849 you have fork out though just to put your house on the market.”
What’s your thoughts on fixed-rate property selling versus traditional, commission based methods? We’d love to hear our readers’ opinions.