Purplebricks: the rise and fall and rise again of the great disrupter

2012-2014

P urplebricks was originally conceived back in 2012 by estate agent brothers Michael and Kenny Bruce. It was then launched to the public in 2014, when it was immediately hailed as one of the greatest-ever disruptions to the property industry.

Its revolutionary move was to set up a pared-back online estate agent that charged a fixed fee for selling a home rather than a commission and was fronted by Local Property Experts (LPEs). There was a whole range of add-ons, but the basic package, which included a valuation report, photos and a listing on Rightmove, cost just £599. The average agent’s commission at the time was £5,214.

Armed with £8m of investment money, the brothers proceeded to tear into the housing market, initially in the south of England.

2015

By the following year, Purplebricks had expanded their reach to the whole of England and Wales and, understandably, traditional brick-and-mortar agents were becoming alarmed at their meteoric rise. It even generated some serious discussion about whether it would mark the end of traditional estate agencies altogether. At the time, The Negotiator (then PROPERTYdrum) provided some much-needed words of comfort, saying all was not yet lost, that online agents had yet to reach a 10% share of the market and, despite it all, traditional agencies had still managed to push up their fees.

The rise of the virtual agent – March 2015

By December, Purplebricks’ standard package had risen to £665 and they were on the point of listing on AIM, with an expected valuation of £240m.

Purplebricks float expected to value firm at £240m – December 2015

2016

Purplebricks’ shares began the New Year at 96p and kept on rising. In May’s edition of The Negotiator, it was reported that there had been a 445% uplift in Purplebricks’ income, that they had overtaken Foxtons for sales volumes and their share price had risen by 62%.

Purplebricks quadruples annual revenues to £18.5m – May 2016

By the summer of 2016, the firm had recruited 300 Local Property Experts, their revenue had reached £18.6million and they had their sights set on Australia.

Strewth! Purplebricks launches in Australia – August 2016

It was also in 2016 that Purplebricks launched their now infamous Commisery adverts.

2017

It was in 2017 that Purplebricks were at their zenith. While shares in traditional agents were struggling, by January, Purplebricks’ shares had reached £1.81 – nearly double their 96p launch price.

By January, Purplebricks’ shares had reached £1.81 – nearly double their 96p launch price.”

Purplebricks shares hit all-time high – January 2017

It was also the year that the first cracks started to appear. There is no doubt that its success had made them a target and when their claim that they took just 14 days to find a buyer and six days to find a tenant was reported to the Advertising Standards Authority (ASA), it was not a big surprise. Both claims were deemed misleading and Purplebricks were forced to remove them from their website.

Purplebricks takes down website claims after ASA probe – March 2017

It didn’t do too much harm as, not long after, Purplebricks revealed they had sold £5.8 billion worth of property and boasted they would be doubling their turnover to £80m the following year. Their advertising budget was also growing rapidly, with a planned spend of £3.5m for 2017-2018. However, the top-performing bricks-and-mortar agents were still managing to hold their own, outperforming their online rivals in almost all the key areas. According to research by HomeOwnersAlliance.com, they not only achieved higher prices, they also had a far better sales success rate (82.42% compared to 51.98%) and took less time to sell properties, too.

Top high street firms outperform online agents, research shows – June 2017

There was more trouble brewing, though. In August, Purplebricks featured on the BBC show, You and Yours, where CEO Michael Bruce was forced to not only defend the kinds of exaggerated claims that had been highlighted by the ASA but also accusations that there was a lack of clarity over some of the financial aspects of their packages. In addition, there were grumblings about inadequate support, with one interviewee complaining that Purplebricks’ Local Property Experts didn’t care about her sale because they knew they would get paid anyway. It was an accusation that Purplebricks found hard to shake off. By now, the basic fee had gone up to between £849 and £1,199 and, after a post-BBC dip, their shares hit their highest ever level at £5.13.

Purplebricks shares drop by 6% following BBC investigation – August 2017

And it wasn’t just the ASA and the BBC having a go – yet another spat was brewing, this time with allAgents. For some time, there had been accusations that Purplebricks were screening their reviews on Trustpilot, which many felt were unnaturally positive. On allAgents, it was a different story, where around half the reviews were just one star. After rumoured legal action, Purplebricks were banned from allAgents’ site.

Escalating Purplebricks vs allAgents spat goes global – September 2017

In the meantime, their international expansion continued unabated. After raising £50m in the City, Purplebricks launched in the US. They began with California but had ambitions to roll it out to all the key cities and states.

Purplebricks kicks off in US with 3D viewings – September 2017

Back in the UK, the company continued to go from strength to strength. By October, Purplebricks had a total of 16,498 properties listed on Rightmove, which Robin Savage of Zeus Capital claimed made them the largest estate agent in the UK. They were far more evasive, though, when it came to the number of properties they had actually sold.

Purplebricks is now “the largest estate agent in the UK by listings” – October 2017

2018

By Purplebricks standards, 2018 was a relatively quiet year, although it didn’t get off to a good start. Amidst continuing questions over the number of sales they were achieving, their shares fell by 10% in just one day to £3.74.

Purplebricks shares continue freefall despite robust radio defence of sales by new UK CEO – February 2018

The firm’s hunger for expansion next took them to Canada, where they acquired hybrid agent DuProprio for £29.3m. Their aggressive expansion plan was to be funded from their own reserves.

Purplebricks lands in Canada after buying local counterpart DuProprio for £29.3 million – July 2018

In the UK, with Purplebricks chasing that elusive 10% market share, the advertising budget was hiked by a whopping 50% to £21m. They could afford it, though, as although the US posted a £16m loss and £11.8m in Australia, the UK’s turnover grew by 81%, from £43.2m to £78.1m, with a gross profit of £45m.

Purplebricks increases UK ad spend by 50% to £21 million as it aims at 10% market share – July 2018

Despite the positive figures, Purplebricks’ share bubble was slowly deflating and by October it had sunk to £2.09.

Purplebricks stocks sinks to all-time low of £2.09p a share – October 2018

2019

2019 proved a challenging year as their seemingly inexorable rise showed signs of coming to an end. Research by consultancy TwentyCI revealed that online and hybrid agents’ share of the market had fallen from 7.6% to 7.2% amid suggestions that demand for them had plateaued.

Has online and hybrid estate agents’ market share grab run out of steam? – January 2019

Just a few weeks later, Purplebricks announced that revenue was significantly lower than expected, that both their UK and US CEOs were leaving and their share price sank by 26%.

Purplebricks announced that revenue was significantly lower than expected.”

Purplebricks share price tanks after shock exit of CEOs and revenue warning – February 2019

The bad news kept on coming. According to data from The Advisory (an independent consumer advice group), traditional agents were gaining ground on their online rivals.

High street agents regaining ground from Purplebricks, report claims – February 2019

Then came the announcement that Purplebricks were withdrawing from Australia and that Vic Darvey was taking over as CEO.

Shock announcement as Purplebricks CEO steps down and agency withdraws from Oz – May 2019

And then they also withdrew from the US.

Breaking: Purplebricks withdraws from US as group losses double – July 2019

New CEO Vic Darvey outlines his plans for incentivising Local Property Experts (LPEs) to concentrate on achieving sales rather than instructions, at the same time admitting the company had bitten off more than it could chew in the US and Australia.

Purplebricks to move away from rewarding LPEs for listings – October 2019

2020

Purplebricks begin 2020 by finally taking a 10% share of the market, but only in certain areas of the Midlands and the North and only for houses under £200,000. The question was whether they could do the same at the more expensive end of the market.

Online estate agents take 10% of market for first time within sub-£200k sector – January 2020

Finances were still reeling from their failed ventures in Australia and the US, which not only halved their reserves, they also resulted in a groupwide loss of £19.2m. In an attempt to turn the tide, Vic Darvey revealed they were considering yet more changes to their operating model. He claimed that by splitting the by now £1,000 fee between listing and completion there would be less of a barrier to entry.

Purplebricks prepares to radically change its fixed fee model – August 2020

Purplebricks ended the year having listed 58,884 properties, of which, 39,227 were sold. It meant they were once again the country’s No.1 estate agency. It was notable, though, that despite paying an upfront fee of £999, 17,035 of their customers had withdrawn their properties from the market without a sale.

Revealed: How far Purplebricks has REALLY eaten up high street market share – January 2021

2021

Number one or not, 2021 was the year the business hit the buffers. Shares that had once been as high as £5.13 had, by August, fallen to 61p. And that’s despite being in the middle of a Stamp Duty-fuelled boom and having a new moneyback guarantee.

Shares that had once been as high as £5.13 had, by August, fallen to 61p.”

And just when they thought it couldn’t get any worse, Purplebricks were forced to bring their LPEs in-house as employees and their shares dropped to 33p. Industry watcher and Twindig founder Anthony Codling famously said: “Purplebricks is a bit like Goldilocks, it doesn’t work if the market is too hot and it doesn’t work if the market is too cold and the perfect temperature range appears quite narrow.”

Purplebricks’ week goes from bad to worse as class action prepares launch – November 2021

Purplebricks ends the year with yet another low, facing fines of up to £9m for failing to properly complete tenants’ deposit paperwork.

LATEST: Purplebricks admits ‘deposits glitch’ fines could total £9m – December 2021

2022

The beginning of the end. Chief Executive Vic Darvey steps down for ‘personal reasons’ and COO Helena Marston takes over.

BREAKING: Purplebricks’ Chief Executive steps down ‘for personal reasons’ – March 2022

Whilst traditional agents were flying in a bull market, Purplebricks’ instructions had slumped by 31%.

Purplebricks reveals 31% instructions slump despite recent boom market – May 2022

Research by Property Road suggested there were limits to the model, with only 17% of potential vendors willing to consider paying upfront fees and most valuing getting the best possible price above a lower fee.

Online sector is running out of vendors keen on their estate agency model – May 2022

In July, the agent dropped their money-back guarantee, claiming it was not ‘highly valued’ and basic fees climbed to £1,199. New CEO, Helena Marston, blames marketing failures for the 23% drop in revenues and shares hit a new low of 14.1p.

LATEST: Purplebricks revenues and profits slump by a quarter – August 2022

2023

The end in sight? Purplebricks announces EBITDA losses of between £15-£20m and puts up its own for sale board. They also release a statement.

The Board recognise that the potential of the Group may be better realised under an alternative ownership structure.”

Purplebricks considers sale as instructions plummet and £20m losses loom – February 2023

And it’s not long before a bid comes in from hybrid rival, Strike.

Strike in talks with Purplebricks about takeover bid – March 2023

With liabilities of around £10m, including a class action over the PAYE status of LPEs, the once billion-pound company sells to Strike for £1. It is announced both companies will be rebranded as Bricks Newco plc.

£1 Purplebricks sale to Strike agreed by shareholders – June 2023

2024

The Purplebricks brand survives, and is relaunched on Boxing Day 2023, offering ‘everything you need to sell your home for free’. New boss Sam Mitchell promises they will do it better this time.

New Purplebricks boss promises to ‘do it better this time’ – February 2024

And so the story goes on.