Purplebricks has "been circling the drain for years" - reaction to sale

Purplebricks' £1 sale to Strike has exposed key challenges faced by online estate agencies: profitability struggles, competition from traditional firms, consumer perception issues and financial setbacks. Traditional agencies have also done well to adopt digital services in the past few years, increasing competition for online-only players. Meanwhile, consumers have shown a preference towards personalised service when selling their most valuable asset. Yet, online agencies claim to offer convenience at a cut price, while traditional agencies provide expertise and face-to-face interactions. That said, hybrid models, blending online and offline elements, do hold promise. Adapting to evolving consumer preferences and market dynamics is crucial in the present market. Striking a balance between convenience, technology and personalised service remains key. Purplebricks' fall serves as a reminder to industry players to embrace innovation and cater to the ever-changing needs of the market.

Purple bricks model was flawed once sellers realized that putting a property online was the easy part. Property market conditions are ever changing due to many factors, so listing a house for sale on the property portals does not always guarantee a sale, or indeed guarantee a sale at the best price. Purple Bricks were one-trick ponies. There are many estate agents in our industry that can list houses for sale but simply cannot do the rest of the job. I watched many of them move to purple bricks as they could list houses, however, many were poor at doing the second part of the job. All they had to do to get paid was a list house! Purple bricks had no real interest in selling the house, as they were paid regardless. A total recipe for disaster, especially when market conditions change. Sellers across London realized this sooner than the rest of the country, Purple Bricks have been pretty nonexistent in London for the last few years. Sellers wised up!

Buying or selling homes online has proved to be very difficult for people. What we are seeing today is one debt-ridden online company taking on the debts of another one. The online model simply doesn’t work because it does not put the customer first. People need someone with knowledge of their locality to help them buy or sell a home and take them through a process that they thankfully only go through occasionally. We have staff at Country Property in South Gloucestershire who know the difference in the market in each and every town and village and the same at Parker’s Estate Agents where our team live and work in North Somerset. That local model and knowledge is lost with the online agencies. The demise of Purplebricks shows that people are returning to the traditional estate agent and valuing the service they receive.

In completely unsurprising news, Purplebricks is to all intents and purposes no more. When they launched and were the new kid on the block they genuinely caused huge disruption with their low fee model, unburdened of the costs of an expensive high street office. Gradually however, the novelty wore off, new players came in and estate agents no longer feared going up against them as they got better at explaining that the cheapest agent isn't really the one charging the lowest fee if they're going to sell your house for thousands less. To compound the issue, the business has seen a huge talent drain as their best staff have seemingly left en masse to go and work under other self-employed models as it's much more lucrative and rewarding. This has been a business that's been circling the drain for years. It's only taken as long as it has courtesy of a booming housing market.

Purplebricks failed in its mission for a number of reasons, specifically mismanagement. Their agents were initially on self-employed contracts but found themselves working long hours trying to manage multiple sales, not earning a great deal more than if they worked for traditional agents. The technology that promised so much didn't bring the expected cost savings and perhaps most importantly ignored the fact that buying property is an emotional decision that needs human input. Purplebricks also expanded internationally in the US and Australia with disastrous results. This result would seem to leave the market for online estate agents as one that favours a hybrid approach, in which consumers can pick and choose the level of service they want and pay accordingly. Strike have done well out of the purchase, as they'll be able to take advantage of PB's technology, customer base and data whilst retaining the most productive staff. No doubt there will be redundancies across both groups.

Low-cost models work in a buoyant house marketing, but when the tables turn and conditions get challenging this is when traditional agents are in their element. With fewer properties selling, consumers are less likely to want to pay an upfront cost with no guarantee their house will sell and more are opting for a percentage paid upon completion. Ultimately, reducing the homeowner's risk of losing money. Strike buying them for £1 is an odd move, with them already haemorrhaging money each year, so how long this becomes a viable business is to be seen. It could be seen as a desperate move to save face in the cheap online agent model.

I am afraid that quality generally costs more. Spending money on slick systems and massive marketing campaigns at the expense of appropriately remunerated staff leads to what we have seen today. A good, professional "traditional" estate agent charging 1% provides a great service at a great price.