For sale: a spent model for sales and letting?
By Punchline reporter | 21st February 2023
Despite that cheeky ad campaign to save yourself from "commisery", property sales and lettings giant Purplebricks has felt its own pain with a shares dive from a peak of £5 to just... 10p.
Add a failed international expansion, expensive restructuring and issues surrounding its letting operation and the newbie property disruptor faces an expected loss of £15m-£20m this year. Little wonder the misery has triggered a bid to sell the business.
But with revenue expectations for 2023 now slashed (by £7.5m) to between £60m and £65m, what of the local property market reaction? As you might guess, there is a lack of empathy for Purplebricks. Yet many positives remain.
Angharad Trueman, managing director of CGT Lettings , says there were certainly "ruffled feathers" from the newcomer's low upfront fees and big marketing campaigns.
"They annoyed agents, but it did cause many traditional agents to take a look at their business to see what processes could be streamlined and how they could use online methods more to sell property.
"Purplebricks had strong initial growth as people sought a low cost alternative to sell their homes and they had some great tech, but they didn't invest enough in customer service and their leadership's lack of understanding about what's important in agency let them down."
Because estate agency is fundamentally a "people business", she says building local rapport has always been king.
"Dogged by complaints and costly errors, especially on lettings, they've been taking on water for a while. Local agents who can build rapport with their vendors and buyers from the first enquiry through to completion will always prevail. Overall though, Purplebricks may have brought about some positive change: they gave everyone a shake-up and forced us to review things, but traditional estate agency will be the lasting model."
If negativity lingers in Gloucester and the county among stakeholders in the property sector, Trueman says the issue centres upon a sense of expertise and service being devalued by charging "ridiculously low fees while not delivering on their promises".
"I don't think many agents will be sad if they do eventually go, although I think positives should be taken about the way this episode has inspired many to change how they operate."
Looking ahead for 2023, Gloucestershire remains a hugely desirable location on the UK map and CGT reports new tenant enquiries across the area as robustly higher than pre-pandemic activity.
Trueman adds: "Home working has meant that people need bigger homes and can live in more countryside locations while commuting to cities a few times a week. Although good sale prices have made some landlords think about selling up, it's also great to see bigger investors buying in the area and re-developing properties to provide vital accommodation to all these many people who want to live here.
"And with rental reform on the horizon for the UK, there could be some big changes afoot for local landlords, so it's important they invest in a great local agent to help navigate difficult times that could be coming, while maximising their property investment."
Copyright 2023 Moose Partnership Ltd. All rights reserved. Reproduction of any content is strictly forbidden without prior permission.