Brutal industry reaction as Purplebricks looks for ‘new ownership structure’

When Purplebricks announced on Friday it was looking for a buyer it didn’t take long for the knives – and jokes – to come out. Industry reaction has been both funny and brutal.

Purplebricks boards

When Purplebricks announced on Friday it was looking for a buyer it didn’t take long for the knives – and jokes – to come out.

The online estate agency hung its own For Sale board up after it issued a profit warning and said a strategic review could result in the sale of the company after instructions had taken a nosedive.

With the company’s share price dropping by 15% to a record low of 8.2p, Lecram Holdings, which controls a 5.16% stake in Purplebricks, was more than blunt.


“It is regrettable that the lack of relevant experience at the helm of Purplebricks, which we highlighted last June, has led the Company to arrive at this unfortunate juncture.

“We are calling for a swift conclusion of the strategic review and, should it not lead to an acceptable offer for the company, that the chairman immediately stands down and the board, in consultation with us and other shareholders, brings in someone with the knowledge and capability to guide Purplebricks back to profitability.”

Only last December Purplebricks Chairman Paul Pindar saw off a challenge from Lecrum who wanted to bring in Rightmove co-founder and former Countrywide and Hunters senior Harry Hill as his replacement.

At the time Pindar was given a convincing vote of confidence by shareholders, winning more than 70% of votes at a special general meeting in London.


Reaction to Friday’s announcement from estate agents and financial experts was both funny and brutal.

“I’m astonished that it has taken so long to get to this point. Interesting that their commisery is coming back to haunt them!” commented Jeremy McGinn from Stratford upon Avon-based Jeremy McGinn & Co.

“Hope they will be paying their upfront no sale but pay the fee costs LOL,” said Murray Lee from Dreamview Estates in London.

Andrew Simmonds, director at Bristol-based Parker’s Estate Agents, highlighted Purplebricks ailing business model.

Andrew Simmonds, Parkers
Andrew Simmonds, Parker’s Estate Agents

“Twenty or so years ago there was a dotcom boom with every service being taken online. While Purplebricks had an initial element of success, playing on itself being far cheaper than a high street agent, it failed to recognise certain aspects of traditional agency such as sales progression and soon became regarded as faceless.

“There has been absolutely no impact on high street agency. If anything, Purplebricks has shown that the future of estate agency firmly rests with professionals who are engaged with buyers and sellers, not just companies that whack up a few photographs on a portal and wait for the phone to ring.”


Zaid Patel, director at agent Highcastle Estates in East London, says that the problem with Purplebricks is that they focussed on cheap price and quantity but poor customer service.

Zaid Patel, Highcastle Estates
Zaid Patel, Highcastle Estates

“The core of the estate agency sector is quality and personal customer service,” he says. “It doesn’t just need an alternative ownership structure, it needs an overhaul in the way they treat its stakeholders – from their local property experts to their vendors.”

But he adds: “Saying that, the brand definitely has value and if the marketing and concept from the new owners are spot on, they can easily be one of the big players in the market.”

Russ Mould, Investment Director at investment platform AJ Bell, made the same point to The Guardian.

“It’s hard to see who would rush into buying the business but someone might think the brand is worth more than the current £26m market valuation of the company.”

Anil Mistry, director at Leicester-based RNR Mortgage Solutions, says it was hardly surprising that Purplebricks’ share price had fallen from over £4 per share to less than 10p.

Their business model offers little incentive for proactive marketing of their clients’ properties.”

Anil Mistry, RNR Mortgage Solutions
Anil Mistry, RNR Mortgage Solutions

“Their business model offers little incentive for proactive marketing of their clients’ properties,” he says. “Although their low upfront fee may appear attractive, once the client has paid, there is little incentive for the company to actively promote the property.

“Unlike traditional estate agents who receive payment only upon completion of the sale, they are motivated to actively market the property and increase the chances of it being sold.

“This lack of motivation on the part of Purplebricks may be why homeowners still tend to use traditional estate agents, resulting in the company’s share price taking a hit and is now being sold.”

In totally unshocking news a business that lost a lot of money is no longer viable.”

Rhys Schofield, managing director at Belper-based Peak Mortgages and Protection, quips: “In totally unshocking news, a business that lost a lot of money in a booming market is no longer viable in a normal market.

Rhys Schofield, Peak Mortgages and Protection
Rhys Schofield, Peak Mortgages and Protection

“They used to be seen as the ‘cheapest’ but aren’t any more when the likes of Strike will sell your home for free.

“But then nor can they compete with a quality estate agent when it comes to working hard to sell your house for the most money, and thus become the actual cheapest agent, namely by leaving the vendor with the most money in their pocket.

“On top of that, they have seen a huge brain drain as their best formerly self-employed local property experts have seemingly left en masse to set up as their own independent estate agents as they feel they can earn more money and better serve their clients that way.”

Riz Malik, director at R3 Mortgages in South-End on Sea, was also downbeat.

Purplebricks have their place in the market but you get what you pay for in life.”

Riz Malik, R3 Mortgages
Riz Malik, R3 Mortgages

“Purplebricks have their place in the market but you get what you pay for in life. We are financing a purchase through Purplebricks, and my client, a millennial, has found the process to be smooth and efficient. Despite having diversified into other areas such as financial services, they will continue to suffer if the market remains sluggish through 2023.

“Their most valuable asset is their brand recognition, but I doubt that will bring them the bids they seek.”

This won’t be the last big name this year.”

Lewis Shaw, owner and mortgage broker at Riverside Mortgages in Yarm, reckons the future for other online agencies is also bleak too.

Lewis Shaw, Riverside Mortgages
Lewis Shaw, Riverside Mortgages

“Given that vast numbers of Purplebricks properties remain either unsold or don’t complete, it’s no wonder they’re looking to flog it,” he says.

“Making money from an online agency was tricky in the good times, so it’s unsurprising they’re raising the white flag now the market is turning.

“Personally, I’d like to see the end of all online agents, as they’re terrible to deal with.

“This won’t be the last big name this year.”


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