Signs That Purplebricks Could Be Running Out Of Steam

Analysts are speculating that online estate agent, Purplebricks, may be struggling to sustain its rapid growth and that troubled times may be ahead.

That’s according to an article published on the Daily Mail website over the weekend. The article speculates that the company is aggressively pursuing expansion in overseas territories such as the US and Australia before the Purplebricks model has been proven here in the UK.

And that’s given as a potential reason why Purplebricks shares have fallen around 38 per cent from their high of 514.50p.

Make no mistake, Purplebricks are the largest online estate agent in the UK, and by an incredibly large margin. However, while their share of online agencies is large, their share when considering all types of estate agents is still relatively minor.

This means there are still question marks over whether it has found the perfect model to really compete against traditional high street agents.

Can Purplebricks ‘Sell’ Houses?

The Daily Mail article goes on to suggest that question marks over Purplebricks ability to sell properties could also be a sticking point for the company going forward.

According to the article “In a radio interview in October 2016, chief executive Michael Bruce claimed it sold 88 per cent of the homes it took to market within ten months. But investment bank Jefferies believes this is wrong, having carried out its own study. In a note to investors in February, Jefferies found that Purplebricks sold just 51.6 per cent of the homes on its site in November 2016 within ten months.”

Wherever the truth lies, there are certainly question marks over the way that Purplebricks do business. When we conducted our own Purplebricks review, we were particularly concerned about some of the issues raised during their appearance on BBC’s Watchdog.

They have also shown a reluctance to offer a ‘No Sale, No Fee’ package despite several of their competitors moving to offer true ‘pay on completion’ options. Some have speculated that this is further evidence of the lack of confidence Purplebricks has when it comes to actually been able to mark properties as sold.