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Agencies & People

Purplebricks is ‘not for sale’ says CEO

Vic Darvey insists the company is on the right course and could eventually take up to 30% of the UK property market.

Nigel Lewis

Purplebricks CEO Vic Darvey has revealed that the company is ‘not for sale’ in comments to a national newspaper over the weekend.

Darvey told The Telegraph website that despite persistent rumours that the company may be sold or face a takeover, he insisted this is not the case.

Over the past six months the rumours have begun to swirl after the company exited initially from Australia and then from the US, leading many to believe its weakened state may lead to a takeover or sale of some sort.

Many believe a bid is already under way from German media firm Axel Springer, which in June doubled its stock holding in the company. It now owns just over 26% of the struggling hybrid estate agency.

Over the weekend Darvey also revealed that he expects Purplebricks to eventually take between 20% and 30% of the overall UK sales market and that Axel Springer is ‘on board’ with this ambition.

Industry figures suggest that Purplebricks currently holds approximately 5% of the property market.

Purplebricks’ CEO confirmed that the company hopes to keep its stockmarket listing despite its share price nose diving over the past 12 months, and also defended its fixed-price fee model, despite recently revealing that the company is considering changing how much, and when, it charges customers to sell their home.

October 21, 2019

3 comments

  1. Their model clearly doesn’t work. You can either go for the premium service, or you can go cheap. You can’t do both. The reviews of PB on platforms that they can’t manipulate have been shocking virtually across the board. Even the ones they could (ie the paid ones) have recently come under scrutiny.

  2. The only great thing about Purplebricks for investors in its shares, was that on paper it seemed to be the mother of all cash cows. It appeared, and that was always the illusion, that with a positive cashflow from upfront fees, that it would once established make huge profits, without a costly bricks and mortar empire of offices, populated by expensive employed staff.

    The truth, now the smoke and mirrors are no more and the business model is clear for all to see, is that you can strip out the staff costs, the managers the negotiators etc who sell property and just have listers (even better if they are self-employed), but if your business campaign runs on a multi-million pound spend on television, web, radio and every media medium – it does not matter how much cash you are getting upfront, if the spend per unit listed far exceeds the cash you get in.

    Close scrutiny of the annual accounts of Purplebricks show a worrying conclusion that gross profit runs at about 45%, but when ‘marketing costs’ and ‘admin’ costs are added in that 45% gross profit becomes a negative figure.

    Purplebricks were closer to making profit when their turnover was 50M plus, they made a 5M loss. They then bragged that when turnover doubled, they would hit profit. Instead the 5M loss grew into a multi-million loss.

    The only thing keeping the Purplebricks empire afloat is the model of cash upfront, win or lose for the vendor. This pays the Local Property Experts and covers some of the costs of the business.

    If Vic feels that he is going to change the model, the cash input will dry up, and if the company has to wait 5 months for properties to sell and complete, from point of instruction, those multi-million monthly costs will eat the company and Vic alive.

    Perversely, I am not a luddite, I like new technology, and online agents (in concept) but I think that proptech should deal with the backroom stuff, as it does for many online and traditional agents. Allowing estate agents to have more time to be agents, to spend face to face time with clients, rather than be a replacement for them.

  3. The truth about PB’s actual fiscal results and market share are coming out on a daily basis so won’t be long before investors realise they’re backing the wrong horse. When funding dries up, so will their pipeline. In all likelihood, their staff, who are dropping like flies due to terrible work culture, lack of support and unrealistic targets will be the end of them long before investors realise what’s going on. 30% market share? Don’t make me laugh… I was, once upon a time worried about the likes of PB’s. These days, not so much…

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