Is it time to admit I got it wrong- in an epic way?
I wrote a blog post about 2 years ago now entitled “sink like a brick; a Purple Brick!”. It followed the floatation of purple bricks on the stock market and the subsequent fall of their stock by over 25%.
Over the last 2 years that stock has of course gone on from strength to strength and is now trading at significant gains on launch price, going to show that my disclaimers of I know nothing about stocks, and that Neil Woodford doesn’t make that many bad decisions turned out correct.
I thought therefore following my scathing review of Purple Bricks back then it is only fair to look at why I feel they have had the growth and success within the market place; their strengths, and still very obvious weaknesses within the UK estate agency market.
Property is a people game. Estate agency more so than any other part of the sector. The transaction of selling your house doesn’t depend on the name above the door, or the fancy window displays, but on the people involved in the transaction. It is very clear to the most successful agents that you cannot sell a house without first listing it, and therefore most successful agents have invested heavily in the individuals who put the properties on the market for them. Purple bricks are no different in this aspect, however their approach it seems has raided their strongest competition for some of their best performers. A key to the success they have had in my eyes.
A look on the LinkedIn profiles of most Purple Bricks agents will reveal they are seasoned [somewhat, and of varying degree] professionals in the property world. Most, come from a corporate estate agency background. So why have they abandoned their secure jobs, with large companies, and basic salaries to go self employed with an online agent, who in the industry does not have the best reputation with its peers? [Of course, this could be led somewhat by the fact Purple Bricks are taking enormous amounts of instructions off of the high street agents]
Corporate estate agents are notoriously demanding on their employees. The best employees amongst them will earn well, others not so much, but the demands placed on each will be the same. If you burn out; it’s time to get out. Most corporate agents have significant staff turnover rates. There will be varying reasons for this. One might be the lack of overall employee benefits provided by them. An employee attitude and perception of “they ask too much for what we get in return”. They are not alone; and nor is this sector in trying to get as much out of their employees for as little in return as possible. Some might say that it is in fact how great businesses succeed.
The corporates almost seem to accept this turnover of staff as a result of their success, and that you can either cut it here or not. The problem is over the last couple of years- many that could cut it, and were successful, have been tempted away by the lure of flexible working, self employed [Director Ltd] tax regimes on their personal income which resulted in a higher net pay even if the gross was the same, and less micromanagement of their time and efforts. No door knocking. No leaflet dropping. No area manager asking you why your average fee has slipped, and the subsequent feeling of inadequacy within the role which inevitably follows. You could argue that they feel like they are treated like the adults, and professionals they wish to be.
This is where Purple Bricks have excelled. They have had success based on their proposition to the estate agent employee, and not in my eyes to the client. I am still a firm believer their proposition to the client is still currently poor. You pay whether it is sold or not. You pay before you exchange, and therefore the agents are solely focused on what pays them- listing properties, and not what is most important to the vendor- getting them moved. Anyone who has been involved in a chain with Purple bricks knows first hand the pain this brings.
Purple Bricks have offered an opportunity to the estate agent, which has always been afforded to the Mortgage Advisor. Purple Bricks have become an “Appointed Representative network” for an estate agent. Providing the tools, and the marketing for them to succeed and subsequently a split on income, which you can run through your own company for tax efficiency. It has given the power and flexibility back to the talented employee, and it has attracted talented individuals away from successful traditional high street agents in their droves.
Purple Bricks are not the innovators of estate agency because they decided to set a structure where the vendor pays anyway- regardless of the result. They are the innovators of estate agency because they have changed the way in which an individual employee in estate agency choses to work; and they have backed it up with a stock market listed company.
Added to this all of the marketing- and by god do they spend a lot on it, is done for you. Your appointments are booked for you online. By the client, and not some grumpy office based negotiator who is getting the hump because you wont work late on Saturday.
Here’s the thing. You manage your own diary. So, if you do work late Saturday, you just make unavailable another time to create your own balance. No need to be working late, but still at your desk for 8:15am the next day ready for the motivational morning meeting.
The Purple Bricks agent knows the fees, and so does the client before the appointment. The negotiating has been taken away. Some may argue therefore the fun of the listing job has also been removed. So, the only requirement is to sell themselves as the person to get the property sold. All of this it would appear from the conversations with ex-colleagues who have joined Purple Bricks results in better conversions.
For me they have set the foundation for others to follow. Some physical agents have started to take on territory owners as listing agents, and then providing the back up support of sales progressing, rental management and an available, local and knowledgeable point of contact for their vendors. A fee split agreement is put in place.
Allowing the agent to come on board self employed as a territory franchise owner, under their own business structure, allows them to create something of value, which they can sell on in the future if they wish. A replacement for the poor pension most in the industry will receive after slaving away for 40+ years building someone else’s business for them- even if they did get a few nice foreign conferences out of it over their time, and their company car improved because they hit a psychologically created promotion threshold, which was only put in force to make you work harder. [You weren’t promoted unless your job changed, just an FYI]
The reality is the world has changed. Employees no longer need to be in an office at 8:30AM every day for the same laborious meeting, and still there at 7:30PM at night to prove they “want it”. Technology means people can do this job from a home office with a decent internet connection. Something most who work in estate agency will probably attest to is a home internet connection is a lot quicker, and less frustrating than the network in the office. Flexibility brings balance, and ownership brings commitment. Combined they will bring longevity of employment. They also make it much easier to bring people together under one common goal.
The future now lies somewhere between the high street agent, and the online hybrid when we look at how estate agency will be staffed moving forward. I may take a few more years for the high street to let go of their morning meetings, and their late night phone outs. Their 60 hour work weeks to prove you’re committed and want it. But it will come. It might also take a couple more years for Purple bricks to realise people actually want to move, and put in place proper infrastructure which provides the post sale support that vendors desire.
All opinions in this article are my own and taken from my direct experiences. Other opinions and experiences may vary.