Should I use Purplebricks?
What is Purplebricks?
Purplebricks is an estate agent, but not a traditional one like you will find on the high street. It is an online or hybrid estate agent. This means that they do not have any high street branches.
Instead of high street branches, Purplebricks has a network of Local Property Experts (LPEs), most of whom are self-employed agents freelancing their services to Purplebricks rather than direct employees of Purplebricks.
The LPEs work from their home, your home (when valuing your property and conducting viewings if you have opted to pay the extra fee required for the viewings package) and their cars, they will be on the road and contactable on their hands-free mobile for much of the day as they travel between their clients.
How is Purplebricks different from the High Street Estate Agents?
There are two main differences.
They do not have any high street branches; and
You pay their fee whether or not they sell your home
What is Purplebricks success rate in selling homes?
This is the key question. If you have to pay Purplebricks whether or not they sell your home, it is important to know how likely they are to sell your home.
The big problem is that they do not disclose or publicise their success rates. So we do not know how likely they are to sell your home and neither do you.
In our view, if they were very successful at selling homes they would tell us, but they don’t. Surely that is Marketing and Advertising 1.01?
Remember you have to pay Purplebricks whether or not you sell your home, there is no money-back guarantee.
When using a traditional high street agent you only have to pay if they find a buyer you agree a sale price AND the sale completes meaning that you have actually and legally sold your home. This is not the case with Purplebricks.
Why don’t Purplebricks say how many homes they have sold?
This is a good question, they say good news travels fast so if they sold lots of homes surely they would tell us?
We also have to consider what is an acceptable success rate. Would you be happy to use Purplebricks if they sold:
5 out of 10 homes so you have a 50% chance of paying Purplebricks not to sell you home
4 out of 5 homes so you have a 20% chance of paying Purplebricks not to sell you home
2 out of 5 homes so you are more likely not to sell your home than to sell it.
Purplebricks used to disclose what percentage of homes they had Sold Subject To Contract (SSTC). This is not to be confused with the number of homes actually and legally sold. If the homes were legally completed sales we are sure they would have told us. Purplebricks must track the number of legal completions because for those customers using the 'pay later' rather than 'pay upfront' option, the legal completion acts as one of the triggers for the deferred payment to be made.
SSTC can mean many things, but it doesn’t mean is that a sale has legally completed. Normally SSTC means that an offer has been accepted.
SSTC also doesn’t mean that contracts have been exchanged. Exchange of contracts is important because at this point the buyer and seller are legally obliged to complete the sale. If the sale falls through at this point penalties are payable.
What market share does Purplebricks have?
However, it is not clear what ‘sold’ here actually means. Purplebricks used to define and disclose the number or percentage of homes sold as those which had been ‘Sold Subject to Contract’ but now it doesn’t disclose that figure.
Purplebricks accounts also do not define what they mean by ‘sold’ in their accounts, but they previously defined sold as SSTC rather than a legally completed sale.
Should I use Purplebricks?
You have to bear in mind that salespeople always play to our pride. If I am sitting in your living room telling you that you have a lovely house that will attract a high asking price and will be easy to sell you are likely to agree with me.
Everyone thinks their house is lovely and worth top dollar.
The difference between Purplebricks and a traditional estate agent is that the Purplebricks will get paid if you decide to instruct them whereas the traditional agent not only has to win the instruction, but they also have to sell your house before getting paid.
Traditional high street estate agents have to put their money where their mouth is and sell your home to get paid.
Purplebricks agents just have to put your money where their mouth is. They don’t have to sell your home for Purplebricks to get paid.
Should I use Purplebricks if I am just looking for a listing on Rightmove and Zoopla?
If you are happy to do most of the selling work yourself and managing the sale process and just want your house listing on the main property portals then Purplebricks could be for you, especially if you are not relying on them to sell your home.
The basic fee is £1,499 in London and £999 outside of London. But if all you want is the Rightmove and Zoopla listing you should consider Doorsteps who claim to be the ‘UK’s fastest-growing estate agent’ and offer the portal listing service for a £99 – ten times cheaper than Purplebricks.
Is Purplebricks any good?
To know if Purplebricks is any good it is important to know why you have chosen to use them:
Purplebricks is good if:
You want your home listed on the main property portals with a recognised brand
You are happy to take the risk that you have to pay the Purplebricks fee even if they don’t sell your home
You have a buyer already lined up and want to see if there is more demand out there
You are happy to manage much of the sales process yourself. At the time of writing, Purplebricks had experienced 20% growth in instructions, this means more work for each LPE and therefore each LPE will have less time to help you sell your home
You are happy that once you have accepted an offer you will no longer be working with your Local Property Expert, but handed over to the call centre Post-Sales support team.
Purplebricks is not good for you if:
You only want to pay a fee if your home sells
You don’t want the risk of spending a base fee of either £999 or £1,499 and not selling your home
What happens if Purplebricks don’t sell?
If Purplebricks don’t sell your home, you still have to pay their fees. In this sense, they offer a marketing service rather than a house selling service like a traditional estate agent.
This model isn’t for everyone, imagine going to a restaurant and having to pay for the food even if it didn’t turn up?
Purplebricks has a menu of fee options
Base fee outside of London £999
Base fee inside London £1,499
If you decide to pay later, you have to use Purplebricks conveyancing services – payment will be due 10 months after instruction, or earlier if:
The property sells and the legal process is complete
If the homeowner asks Purplebricks to withdraw their property from being marketed by them
If the homeowner decides not to use Purplebricks conveyancing services at which point the Base fee and an additional admin fee of £360 is payable.
Purplebricks viewings service
If you wish Purplebricks to accompany potential buyers when they come to view your property an additional £300 is payable if your property is outside of London rising to £399 inside London or in Scotland. Purplebricks says that around 40% of their customers choose the viewing option.
Purplebricks Enhanced marketing services
If you would like more than the standard adverts on Rightmove or Zoopla you can pay additional fees for an enhanced marketing package. At the time of writing, we could not find details of these additional fees on the Purplebricks website.
Purplebricks share prices rising isn’t that good news?
Purplebricks shares did go up a lot as they announced their half-year results on 15 December 2020, you could say Christmas came early as at one point the shares had increased by more than 20%.
The share price increased because the results were better than expected. They had won more instructions and increased their prices. Their profits had increased and they had raised their expectations for future profits.
Interestingly they had reduced their marketing spend by 27%. They spent £3.3m less on marketing, that is less money spent advertising their client’s homes for sale, which in our view is one of the main things that their customers are paying for.
In the half-year, Purplebricks had 35,387 instructions and spent £3.3m less on marketing, this works out as £93 less spent marketing each home. Meanwhile, the Average Revenue Per Instruction (ARPI) increased by £39. You can see how this may have helped the share price: Purplebricks was charging more for less.
How much is my house worth?
We advise that you get a full valuation from a full-service high street estate agent, but to see how the value of your home has changed since you purchased it you can visit Twindig and for a free monthly home valuation report. Sign up to twindig, enter your postcode, select your home, and we will give you your very own home valuation report and update it monthly or you.
Want to become a house price expert
If you would like to become a house price expert you can hone your skills by playing the Twindig House Price Game Simply choose which of two houses is more expensive. Sounds easy, doesn't it. Why not give it a try?