Purple phoenix?
The saga of the most controversial player in the residential property industry – Purplebricks – takes a new turn. David Callaghan charts its rise and fall – and rise again.
For a while it was a big success with impressive financial results and a brand that became a household name. It still is a household name, one of the few in residential property, and isn’t trashed in the eyes of the general public. News of its financial woes in recent years has not penetrated through to become part of the awareness of homeowners. It is a name recognised by most people, and TV ads have helped to reinforce the brand’s profile.
Industry disaster
Within the property industry of course the story is very different and the brand, which was always unpopular with agents, is now seen as a complete disaster. It is widely reported that Purplebricks’ financial performance has been woeful and profits have reduced. The recent deal with Strike, purchasing the agency for just £1, shows how low things had sunk. Purplebricks has departed from the AIM stock market becoming a private company, leaving later shareholders in particular with little return for their investment. At least the ignominy of a plummeting share price is now a thing of the past. A major restructuring, bringing its network of agents inhouse has backfired and ongoing employment dispute cases are testament to that.
Strike clearly believes Purplebricks can be a major force again.
Senior management appointments have been questioned, with Helena Marston as chief executive leading that particular charge. She came to the job with little or no experience of residential property selling and many onlookers wondered how it could work. There was a steady turnover in other senior positions, with for example, CFO Steve Long lasting less than a year. It is interesting that only his replacement Dominique Highfield has survived the buyout by Strike, with the departure of her management team colleagues being part of the conditions for the sale.
Strike takeover
Now, new owner Strike has moved quickly to change the pricing, with a single fee of £999 to apply anywhere in the country. Strike CEO Sam Mitchell (above) reflected his company’s excitement in the deal, despite the financial hangover it inherits, making it no secret that he was an admirer.
Mitchell said it is “highly likely” the two companies would eventually come together under the ‘Purplebricks’ name because its recognition was so high. Sam Mitchell CEO Strike.
He told The Neg he picked up the phone “incredibly quickly” once Purplebricks was put up for sale, wasting no time in making a move for the company he had watched closely. He said it was “highly likely” the two companies would eventually come together under the ‘Purplebricks’ name because its recognition was so high. The firms will operate separately initially, but will unite later this year into a single entity that Strike clearly believes can be a major force again.
Big backing
With the backing of Sir Charles Dunstone, who is well known for big brands like Talk Talk and Carphone Warehouse, Strike has the clout to make things happen. There is no doubt that it has plans to become a much bigger player in the residential property market, building on its USP for selling homes without a fee.
There are some uncertainties though which may prove to be more than a hindrance to its progress with Purplebricks under its wing. Can a set fee pricing approach work in a market that has become increasingly nervous in the last few months? Mortgage costs have risen sharply, and the Bank of England appears set on a course of even higher interest rates. Many buyers are either rushing to secure a deal before further increases, or holding back, waiting to see what happens in a housing market where prices may fall.
Others are seeing their existing mortgage payments spiral upwards as they come of fixed deals at a time when lenders are pushing their rates up.
Game on?
A phoenix rising from the ashes is the Strike vision for Purplebricks and perhaps it can work. The brand we know is a big advantage and gives the new combined company something solid to work with. “Time to unleash the potential of one of the UK’s best known brands. Game on,” Mitchell says in a LinkedIn post. And support has come from one of the founders, Kenny Bruce, who says the simplification of the pricing offer is a “great decision”.

But will Strike be able to steer the ship into a calmer more lucrative space, where it can pick up business from customers put off by the traditional high street agency?
We are about to find out.
In the current market, experience will count for everything. It will all depend on who the LPE’s are and getting the right bums on seats.