If you’ve been following the UK property market, you may have heard of Purplebricks, the once-high-flying online estate agent.
Founded in 2012 by Michael Bruce, Kenny Bruce, and David Shepherd, Purplebricks quickly became a household name. Investors backed it, including venture capital firm DN Capital and Neil Woodford, Paul Pindar, and Errol Damelin.
The company’s innovative online platform and fixed-fee pricing model disrupted the traditional estate agency industry and increased, reaching a peak valuation of more than £1.3bn.
However, in recent years, Purplebricks has fallen on hard times. In May 2023, the company was sold to Charles Dunstone-backed rival Strike for just £1, putting more than 750 jobs at risk. The sale came after Purplebricks revealed it expected to lose between £15-£20m that year.
The company’s management said the group’s potential might be better realised under an “alternative ownership structure.”
So, what went wrong for Purplebricks? Why did a company that was once worth over £1bn end up being sold for just £1? In this article, we’ll take a closer look at the rise and fall of Purplebricks and explore some of the critical factors that contributed to its decline.
The Rise of Purplebricks
If you were looking to buy or sell a property in the UK a few years ago, you would have needed more time to notice Purplebricks. The online estate agent was founded in 2014 and quickly became one of the most recognizable brands in the sector.
One of the reasons for Purplebricks’ rise was its flat fee model. Unlike traditional estate agents who charge a percentage of the sale price, Purplebricks charged a fixed fee much lower than the industry average.
This made it an attractive option for sellers who wanted to save money on commission fees.
Another factor in Purplebricks’ success was its investment in marketing. The company spent millions on advertising campaigns, which featured prominently on TV, billboards, and social media. This helped to raise brand awareness and establish Purplebricks as a credible alternative to high street estate agents.
As a result of these efforts, Purplebricks quickly became the most significant estate agent brand in the UK, with almost a 4% share of the total market. The company went public in 2015, debuting at 100p per share on the London Stock Exchange’s Alternative Investment Market (AIM). At its peak, Purplebricks was valued at over £1.3bn.
In summary, Purplebricks’ rise was due to its flat fee model, investment in marketing, and its position as a credible alternative to traditional estate agents.
How PurpleBricks Operates
When you use PurpleBricks to sell your property, you will be assigned a local property expert to provide a valuation, take professional photos, and create a listing on the PurpleBricks website.
You will also receive a ‘For Sale’ board and access to an online dashboard to manage your listing, receive feedback from potential buyers, and schedule viewings.
PurpleBricks used to offer packages from £999 that included additional services such as accompanied viewings, premium listings on property portals, and conveyancing.
However, the company has since changed its pricing structure. It now offers a basic package for £899 that includes the essentials to sell your property, with additional services available at an extra cost.
If you want to buy a property through PurpleBricks, you can browse their website for available properties and book viewings online. You will be assigned a local property expert who can answer any questions about the property and guide you through the buying process.
PurpleBricks is a cost-effective alternative to traditional high-street estate agents, offering various services to help you sell or buy a property. With a fixed fee structure and a team of local property experts, PurpleBricks aims to make buying or selling a property as simple and stress-free as possible.
Does PurpleBricks still operate today?
Yes – PurpleBricks still offers you the ability to sell your home through them today. You will need to book a valuation, and one of their local experts will visit your home to value your house and provide you with a pricing package.
Typically, the packages start from £999, depending on whether you want to advertise on portals such as Rightmove and Zoopla or have a full service where staff working for Purplebricks manage your viewings and offers.
Once you instruct Purplebricks, they’ll begin writing your advert, arrange professional photography, and get your listing ready to be published for the world to see and to begin finding a new buyer for your home.
Purplebricks Share Price Decline
Purplebricks has experienced a significant decline in share price in recent years. In August 2022, the company reported an annual loss and lower instruction volumes, causing shares to tumble. The share price decline is likely due to the company’s ongoing financial struggles and profit warnings.
Purplebricks has issued several profit warnings recently, indicating ongoing financial struggles. In February 2023, the company issued another profit warning and put itself up for sale.
The company expects to bring in revenue of between £60m and £65m for the financial year to the end of April, with a loss of around £20m. This follows a previous profit warning in August 2022, where the company reported a loss of £28.9m in the previous financial year.
How Much Revenue Did Purplebricks Make?
Purplebricks’ revenue has also been impacted by its financial struggles. The company reported revenue of £70m in the financial year to the end of April 2022, down from £90.9m the previous year. The company expects revenue from £67.5m to £72.5m in the 2023 financial year.
Purplebricks has struggled financially in recent years, with a decline in share price, profit warnings, and lower revenue. The company’s ongoing financial struggles had put itself up for sale in hopes of finding a buyer, which was bought by Strike, their main competitor, who bought it for £1.
What's The Legal Action Against Purplebricks?
Purplebricks has been facing a significant amount of legal action in recent years. The company has been accused of misclassifying its Local Property Experts (LPEs) and Territory Owners (TOs) as self-employed instead of employed, denying them various employment rights and benefits.
In November 2021, a pressure group called Contractors for Justice (C4J) announced it plans to take legal action against Purplebricks. C4J seeks to set up a Group Litigation Order (GLO) against the company, allowing hundreds of former Purplebricks workers hired as self-employed agents to claim unpaid earnings.
According to C4J, nearly 200 self-employed agents are owed unpaid earnings by Purplebricks. The group claims the company owes these agents thousands of pounds each in unpaid holiday pay, pension contributions, and other employment benefits.
Purplebricks has been fighting back against the legal action. In March 2022, The Negotiator reported that the company had quietly reversed a judge’s decision that LPEs were employees.
The company convinced the agent involved in the case to withdraw his claim and then worked hard to overturn the decision.
The legal action against Purplebricks is still ongoing, and it remains to be seen how it will be resolved. However, the pressure group C4J has been very vocal in criticising the company, and the legal action will likely continue for some time.
Sale of Purplebricks to Strike for £1
Purplebricks, the once high-flying online estate agent, has been sold to Strike for £1 with more than 750 jobs at risk.
The struggling company had put itself up for sale after revealing it expects to lose between £15-£20m this year. The group’s potential may be better realised under an “alternative ownership structure,” according to the company’s statement.
The sale to Strike was backed by shareholders, who voted overwhelmingly to sell the online estate agent for only £1.
The sale of the company to Strike has been a controversial move. While some have hailed it as a necessary step to save the struggling online estate agent, others have criticised it as a fire sale that undervalues the company. The sale has also raised concerns about the company’s workforce’s future, with its more than 750 jobs at risk.
The sale of the company to Strike comes after a difficult period for Purplebricks. The online estate agent was once seen as a disruptor in the traditional estate agency market, but it struggled to turn a profit and has faced criticism over its business model.
The company has also faced regulatory scrutiny, with the UK’s advertising watchdog ruling in 2022 that it had misled customers over its fees.
The sale of the company to Strike marks the end of an era for Purplebricks. While the company was once seen as a potential game-changer in the estate agency market, it ultimately failed to live up to its early promise.
The sale to Strike for £1 represents a significant discount on the company’s peak valuation of more than £1.3bn. What the future holds for Purplebricks remains to be seen under its new ownership structure.
Is PurpleBricks worth using?
If you’re considering selling your property, you might wonder whether PurpleBricks is worth using. As one of the largest online estate agents, PurpleBricks offers various services to help you sell your home. However, whether or not it’s the right choice for you will depend on several factors.
One of the main advantages of using PurpleBricks is that it can be more cost-effective than traditional estate agents. With PurpleBricks, you’ll typically pay a fixed fee upfront rather than a percentage of the sale price. This can save you significant money, mainly if you’re selling a high-value property.
Another advantage of using PurpleBricks is that it offers various services to help you sell your property. These include professional photography, floor plans, and listings on major property portals such as Rightmove and Zoopla. PurpleBricks also provides an online platform to manage your property listing, book viewings, and receive feedback from potential buyers.
However, it’s worth noting that PurpleBricks doesn’t offer a “no sale, no fee” option. This means you’ll need to pay the full cost upfront, regardless of whether or not your property sells.
Additionally, some customers have reported issues with the quality of service provided by PurpleBricks, including delays in responding to inquiries and poor communication.
Ultimately, whether or not PurpleBricks is worth using will depend on your circumstances. If you’re comfortable paying a fixed fee upfront and are happy to manage the sale process yourself, then it could be a good option.
However, if you’re looking for a more hands-on service or want the security of a “no sale, no fee” option, then you may want to consider using a traditional estate agent instead.