Purplebricks hit market ‘saturation point’ years ago claims expert
US-based global proptech expert Mike DelPrete says there are only so many vendors out there prepared to sell their home the hybrid way.
Purplebricks watchers within the industry who wonder why the hybrid estate agency has hit an obvious ceiling in market share now have an answer.
Global proptech consultant Mike DelPrete has published a critical analysis of the estate agency’s performance which claims that it has hit what he calls an ‘adoption ceiling’.
This is the phenomenon where a ‘disruptor’ within a market like Purplebricks within the housing market grows very quickly but then plateaus as it reaches market saturation.
This is because there are only so many people prepared to try their ‘new way’ of doing things.”
In Purplebricks’ case, for customers that was paying up-front for their estate agency services in return for a lower fee and doing viewings themselves.
“This is common across many new models, but especially prevalent in real estate due to its highly fragmented, non-differentiated nature,” says DelPrete.
Ceiling
He claims that estate agency hit its adoption ceiling in 2019 and since has been impacted by the rising cost of acquiring new customers via advertising, which have risen from £400 to £600 over the past three years.
In response, DelPrete argues, Purplebricks has tried more and more to look and charge like a traditional agent including a ‘pay later’ option, charging higher fees and taking its self-employed staff in-house.
“Like so many real estate tech disruptors, Purplebricks is a “cautionary tale” about overreach and setting unrealistic expectations.
The whole business viability of any business is based on the acquisition cost of each new client – it’s no surprise to anyone who really understands the industry that purple bricks would eventually fail in its original form but would continue whilst it had enough cash to burn. I’d imagine Strike will follow the same path, probably in less time. In the meantime, they do create some disruption along the way and successful, established agents, will continue to adapt and provide local expertise to clients and they will win business through trust, recommendation and local presence.
Finally, we all know the house/buying process doesn’t lend itself to a “transactional relationship” because of its inherent problems with legal transfer, mortgage lending and surveys, stress and more – these things are all navigated skilfully by experienced agents who sit in the middle of the process and ensure sales complete. We become estate agents, friends, counsellors and life coaches along the way – to clients going through key moments of their lives, which are often very traumatic like death, divorce and debt prompted sales. Being a good estate agent is more about people than property.