Purplebricks: Penwortham estate agent offers advice to worried Lancashire homeowners after sale announcement

Michael Bailey Estate Agent says people selling their homes through Purplebricks need not worry, despite the company effectively putting itself on the market recently after revealing it expects to lose up to £20 million this year.

What is happening to Purplebricks?

Founded by brothers Michael and Kenny Bruce in 2012, Purplebricks is a lower-cost estate agency model that is 100% online and charges a flat rate to market a property.

Purplebrick’s share price has fallen more than 98 per cent from a high of 514.5p in August 2017 to just 7.70p currently.

It says it has appointed Zeus Capital to assist with a strategic review that may lead to a sale of the business, but that it is not in talks with any potential buyer "and is not in receipt of any approach with regard to a possible offer"

In its statement to the Stock Exchange, Purplebricks said: "The board recognise that the potential of the group may be better realised under an alternative ownership structure, and has, therefore, decided to conduct a strategic review of the group’s business with the aim of delivering maximum value for shareholders."

What advice does a local estate agent give?

Michael Bailey has been a property professional working in estate agency for 15 years, and runs his own independent estate agency covering Preston, South Ribble and parts of Fylde.

He said he has been contacted by homeowners that have already listed properties for sale with Purplebricks and paid their upfront fee that are concerned about what it could mean for them.

Michael said: "Some sellers are understandably jittery about the news that Purplebricks have basically hoisted a for-sale sign over their business, worried that they may not honour their commitments.

"At this stage, I think that looks unlikely. Anyone that's already got their property up for sale with Purplebricks should be fine, the review they’re having carried out, and any potential sale of the business that might lead to, isn't going to happen overnight.

"My advice is to contact Purplebricks and just seek a written assurance that they will continue to use their best endeavours to market all homes they currently have listed for sale."

What does the local estate agent think about Purplebrick’s demise?

Michael, was asked for his expert opinion by the tech business news site BusinessCloud.

He explained how the Purplebricks model, with its heavy reliance on technology and arms-length operations, meant problems arose soon after signing customers up, telling BusinessCloud: "The majority of the relationship is then conducted via the app and tech they have got.

“There’s little or no interaction with customers from a person, which is very disconcerting and for people that don’t sell or negotiate house sales every day, extremely stressful, and this is what consumers remember.

“Purplebricks are completely transactional. A firm like mine and many others are relationship-based and as such get huge numbers of recommendations from previous clients, 85 per cent of our listings last year came this way.

“Like any market, when things are buoyant the consumer is happy with low touch for cheap cost. However when a market tightens up consumers look for the experts to help navigate.”