Geoffrey, George, Zippy and Bungle. A disparate bunch (was anyone else intensely irritated by that bloody bear? With his hand-wringing wetness, one just knew that he would be a sandal-wearing, bearded, lib dem voting drip). The gang greeted us five times a week with the cheery, “All above the streets and houses”. Very apposite this week as many in the business of selling streets and houses got very excited about one of their industry competitors and the said competitor’s seemingly imminent demise. Or not. The arch villain of the piece was purplebricks (PB) who featured on both Watchdog and Radio 4’s consumer affairs programme You and Yours. Firstly, let us acknowledge the power of the t’interweb; I would guarantee that there wouldn’t be many estate agents who would have the radio tuned in to such cerebral listening, but through the medium of bashing away at a smartphone every agent suddenly was able to comment on what had gone down. What exactly had occurred? Well, there was something of a hue and cry about PB’s shady practices involving getting a customer to part with their money. Much was made of the non-payment of the up-front fee charged by PB. This was described as a “loan” facilitated by Close Brothers Finance (same synagogue maybe?) Not true said PB. The customer not paying the money but having the debt met by a third party is not a loan, but a “deferred arrangement” and thus does not come under FCA regulation. Still with me? Why such delight in the supposed discomfort of PB in having to explain their business practices on a national radio programme? Ah well said the sages, PB’s share price will have fallen and they are doomed. Mmm. Yup, the share price did fall by 7% and millions were wiped off the company’s value. Cue high fives and big-ups by estate agents across the land. And what happened? Nature abhors a vacuum and the same premise can be transposed to the stock market. Shares in PB suddenly became much cheaper to buy. So guess who bought them? Those very same uber wealthy gentlemen who already own PB. And the result? PB’ share price rockets again and actually sits higher than it was before. Market forces. Not dissimilar to professional gamblers backing a horse in from 25-1 to 14-1. The price shortens; an ideal opportunity to lay it on the exchanges. The market reacts, the price lengthens and those same wealthy (and ballsy) boys and girls get a second bite of the cherry, backing it to win again at 25-1. Back to PB; who were the losers? Not the Bruce Brothers indeed Kenny and his sister in law Isabel sold £23.8m worth of shares in March if I had just pocketed that type of money I doubt whether watchdog or radio four would bother me that much. One other point that many missed entirely was that the vendors who part with their cash upfront are paying for a service, not a product and more fool them. How many restaurants do you go into and pay before the meal? Much was made of PB launching in the USA where agents or ‘realtors’ fees can be up to 10%. I will be intrigued to see how they propose to sell up-front fees to the land of the free and the service capital of the world. If they succeed in this, Kim and Donald should put their handbags away and let Team Bruce run the world.
May I suggest that a lot of people missed the point? PB are not a threat to good, traditional, independent estate agents. This is not said with bravado and false hope. Cheshire & Co and many of our fellow independent agents in the NP postcode have a very different business model and are appealing to a very different demographic than that of PB. Our business is based on recommendation and referrals and there are certain clients and families who we have represented and looked after who would never go to anther agent, let alone one based online. We all have such clients and we are all in the business of trying to get more of them. Our (and by this I mean all independent agents in the vicinity) biggest threat is that posed by our immediate geographical competitors.
I would further suggest that many agents in the NP postcode have been struck by colour blindness and I am not referring to the rather dubious decor in some offices. Forget purple, it is the colour pink that has caused the biggest ripple in the pond. Have I ever been to a valuation in competition with PB and lost it? Never. Have I been in competition with Pinkmove (PM) and come close, but no cigar? I have, as has every one of my fellow agents, independent or corporate. I must state that I was using WAL photos and videos before PM launched, but why now does nearly everyone of my fellow agents offer wide angle lens photos, floor plans and videos? Of course, the quality varies immensely, but the key point is that PM (or a similar outfit in another area) has changed the game. Back to market forces. This does not mean that all of my fellow agents have upped their game. Some are in a race to the bottom, to offer to do it as cheaply as possible with the primary focus being on doing it for less than any other agent and sod the service provided is moving into PB territory . Again, this will appeal to a certain demographic-but isn’t financially sustainable-as we have discussed in previous blogs and oblivion is just over the hill. Back to the service industry: as independents it is the service that we provide that grows and sustains our business. Falling short in this area means that we have no business.