We are in profit for first time, triumphant Purplebricks tells shareholders

This morning, Purplebricks announced that it has achieved maiden profit in the UK and now plans to accelerate market share growth. It said it is agreeing a sale every 16 minutes, 24 hours a day.

The profit is an adjusted EBITDA figure – ie, before tax and after costs, depreciation, amortisation, net finance costs and share based payment charges – of £0.3m on revenue of £18.3m. In the previous six months it made losses of £6m.

Announcing its interim results for the six months to October 31, Purplebricks says it made a gross profit of £10.2m – equating to a gross profit margin of 55.6%.

Its revenue for the period grew 159% year-on-year, exceeding last year’s full figure sales of £18.6m.

It also announced that it now has 329 local property experts, having recruited 124 in the six month period. Since the period ended, further recruitment has boosted the figure to 340.

The firm also announced that instructions rose by 108%, and that average revenue per customer was up 20.6%, to stand at £1,000, excluding VAT.

It claimed that it sold and completed on £2.589bn worth of property, compared with a figure of £2.766bn for the whole of the previous year. Sales agreed subject to contract are worth a further £2.521bn.

Purplebricks said it is in a strong financial position, with net cash of £29.1m, and pointed to over 10,580 Trustpilot reviews, scoring it 9.4 out of ten, with over 10,000 rating it as excellent.

CEO Michael Bruce said:  Our strong results are testament to the seismic shift that is underway in the estate agency market. We continue to win over an increasing number of customers by offering them a complete and seamless high quality estate agency experience at an attractive fixed fee. I am especially proud that currently we are agreeing a sale every 16 minutes, 24 hours a day, and the number of properties sold in the first half is similar to the total number of properties sold during the whole of the previous year.

“These results demonstrate that the business model is working, with the UK generating a maiden half-year adjusted EBITDA profit whilst growing market share.

“We have also demonstrated that our team can internationalise our model with the successful launch of Australia which has performed better than any of the initial regional launches in the UK.

“Although we recognise that the UK market backdrop is tough, we continue to have a confident outlook for the future. We have momentum, a superior, low fixed cost flexible business model and a strong balance sheet, which we will leverage further in the early part of the busier spring market so as to build on our success to date.”

In Australia, there are now 50 local property experts, said the firm, with plans “well advanced” to extend its regional coverage into new territories. In the six months, instruction fees generated £0.57m in the first seven weeks.

Purplebricks – which does not say in its results exactly how many UK properties it has transacted – says that the recent Uber ruling on the employment status of workers  has no implications for its own business. It says its local property experts “run their own independent business, engage and employ their own people and are successful independent entrepreneurial business people”.

It says 90% of its local property experts are self-employed, with 90% of fees paid up-front,

The firm adds that it is now working on a Purplebricks app for buyers, while a new TV advert is to start airing on Boxing Day.

Purplebricks also reports:  “At the start of June 2016 we commenced an intensive test marketing campaign with Rightmove, which we hoped would raise further awareness and engagement and drive valuation opportunities. We are pleased with the outcome of the campaign and will further increase our engagement with Rightmove throughout 2017.”

 

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57 Comments

  1. AgentV

    10,9,8

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    1. PeeBee

      Is that what they are going to claim to their Investors as being their latest Trustpilot score?

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    2. Bless You

      Its time On the market let the corporates join.

      You  have to have an office paying business rates to join or something.

      Watching Purplebricks lies is like watching the eu ref and trump, every time they release a statement.

      Rightmove has created purplebricks and we need to kick rightmove where it hurts.

      Other similar things that happened sue to inaction:

      Supermarkets wiped out local business, isis grew in Iraq , tenant fees were scrapped

      tbf the list goes on.

       

       

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      1. PeeBee

        Bless You

        You say “Its time On the market let the corporates join.”

        With respect – and please note… I’m not disagreeing with you – that action would stop NOTHING.

        The monsters that are RM & Z are simply the vessels that seemingly are happy to carry the inaccuracies to the eyes of the public (and the City).

        OTM would benefit hugely from the increase in stock and Agent/Branch numbers – but as has been proved so far with existing Members who have in the main ‘dropped’ one of the other two to satisfy Membership Rules, very few Agents have the ‘nads (self included) to go solo on the OTM portal only.  They (corporates) would continue to populate the other two portals and therefore NOTHING would be accomplished other than more revenue (whatever that would be…).

        From what I have been able to establish, many ‘Corporates’ & Corporatesque multibranch ‘Independents’ contribute on a large scale to the issues we are trying to bring a stop to.  They, too, work on the ‘Numbers Game’ principle (let’s face it – they actually invented it…) and a #relisting to them is one up on the competition… a stat that they can use when they visit the next unsuspecting vendor who think we’re all the same at the end of the day.

        It is entirely feasible that RM & Z could be actually revelling in the numbers that #portaljuggling can potentially bring them.

        One source previously said that up to 10,000 properties per annum are being ‘juggled’.  I would suggest the figure will be way, way greater that that.

        Say it’s double – twenty thousand. Say that each of those properties attract 100 ‘views’ – which isn’t by any means a high number – but many suspicious #relistings are removed within 24 hours of going live so let’s keep it on the low side.

        That’s TWENTY THOUSAND listings and TWO MILLION page impressions a year that they wouldn’t have otherwise.

        Some would say that isn’t something to be sniffed at…

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  2. sb007ck

    I’m sorry i find it incredibly hard to believe that they are in profit, so presume that the numbers have been spun somewhere or other, or that the large amount of LPEs who are self empoyed. their wages are not included in this figure.

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  3. Quickbrit

    “First of all they dismiss you as having no relevance, no importance – that’s the first cycle, denial. After that they ridicule, and after that, and it took a while, but then they seek to address the scenario.”

     

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  4. PeeBee

    “…average revenue per customer was up 20.6%, to stand at £1,000.”

    But… but… but… didn’t the Interim Financial Statement for the 6 months to 31/10/15 state

    “the average Purplebricks fee is £1,080 (inc. VAT).”?

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    1. PeeBee

      Funny, innit – two ‘people’ find hard, in-yer-face fact ‘Dislikeable’.

      Tell yer mates not to shoot themselves in their own feet.  Then you wouldn’t need to look like complete Planks.

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  5. AgentV

    The numbers they claim with a sale agreed every 16 minutes adds up to over 30,000 properties a year…..or is that many fewer properties having their second, third or fourth sale agreed?

    How many sales have they completed in the last 12 months. That is what I would like them to confirm!

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  6. Eamonn

    I love it.  Increase our engagement on Rightmove.  In other words Rightmove have said.  “You pay more now”. You will buy this valuation product

     

    ha ha ha ha ha

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  7. sb007ck

    Also instructions rising by 108%, does this include the excessive portal juggling. If you list a property twice, that doesn’t count as 2 instructions Mr Bruce.

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    1. PeeBee

      …or three times?  Or four?

      What about NINE times?

      SOME might say that’s a bit excessive.

      But not Rightmove – they seem to LOVE it.

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  8. Hillofwad71

    They fail to mention the number of instructions which has stalled in recent months . No mention of the miserable display of the lettings side of the business  A  paltry  400  instructions  One bright note isthat they still have over £25m in the Tommy Tank so conceivably could make a play  for Belvoir ,Martinco if they are looking to beef up the lettings buiness  .Probably a more sensible route than dissipating it on on a fresh advertising campaign The main problem is that the service they can offer landlords with accompanied viewings is no  cheaper than a High Street agent so why use them?

    Its difficult to see how they  can ramp up instruction levels which have fallen  since August  in a flattening market to  reach a profit which justifies their current market value of £265m  .Put it this way the shareholders are going to be waiting a long time for any sort of dividend

     

    As for the Trustpilot rating .Over 10,000 reviews mostly single reviewers  Incredibly high response rate and  they watch it like hawks swooping on any favourable ones with a vengeance .Take all that with a huge pinch of salt

     

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    1. Keyser Söze

      Are you Sain@vision?

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  9. AgentV

    The last paragraph is key here. Guess who is significantly helping promote the PB brand awareness to the detriment of all the other members who have supported it for many years.

    If PB achieve their ultimate aim they will eliminate the independent arena, and get to the point where they are bigger than the portals in their own right……so won’t need them either. Or is this just futuristic sci-if!

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    1. sb007ck

      Interesting point that, is he claiming that Rightmove prioritise Purplebricks over traditional agents. If so, wouldnt be s surprise as in general Rightmove couldnt give 2 you know whats about traditional agents.

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  10. AndrewOverman

    For “sale every 16 minutes” read, point of sale. i.e. List a property to the market with no consideration for whether it actually completes.

    For “instructions are up 108%” read, our dedicated portal juggling department are doing a sterling job!

    honestly, how they can keep spouting this **** is beyond me!

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  11. PeeBee

    “…we are agreeing a sale every 16 minutes, 24 hours a day”

    That’s 32850 per annum.  More than they seem to be listing – Zoopla figures have come down from around 2600 per ‘Last 30 days’ to 1854 today.

    But I’m sure there will be a perfectly logical answer…

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    1. Woodentop

      I was just thinking that too. PB would make a song and dance about anything that would portray them in  good light, not matter how deceptive it may be, but then we have all come to expect it from them. £I profit is a milestone for them, however if one looks at their actual track record …. shocking performance on the gains they say they have made before tax … err, that means no profit, still.

       

      £0.3m always looks better than

       

      £330,000 but still to pay tax

       

      from an investment over £18.6 million.

       

      Absolute failure to date and it hasn’t taken off in Oz. The mention of RM is yet another wake up call for high street agents who continue to feed the animal that will continue to milk you to your end.

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  12. Eamonn

    In summary then

    they have made £300,000

     

     

     

     

     

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    1. Woodentop

      still to pay tax on it.

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    2. PeeBee

      “…they have made £300,000”

      I don’t think they have, Eamonn.

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  13. Property Paddy

    I bet all those investors at a £1 per share must be licking their lips at their huge, no doubt soon to arrive, dividend !

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  14. Hillofwad71

    Well the old stock market  adage  is that if news isnt as bad as expected thats when the SP  soars  has happened  for Bricks 20% up and now valued at £300m The problem is that the revenue for H2 is unlikely  to increase beyond the £18.1m for UK  .9121 instructions and dropping

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  15. Paul H

    I think that there is money to be made by dabbling in and owning shares in PB and that the estate agency side of the business is just an inconvenient side show.

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  16. Industry_Pro

    I note that the PB share price is up 20 pence this morning – the city likes this news and progress.

    The fact is PB are making profit and therefore the calls for further investment only to cover losses has now diminished. The business has now reached the point where it is self funding.

     

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    1. Woodentop

      No it isn’t. It is still offsetting overheads with accountancy and tax to pay. It lost £6m in the last six months and once adjusted it will bigger over the next 6 months within a diminishing market. This is nothing but PR to try and keep it afloat. For some in the city, often the case, rally to make money before it all goes pear shaped. 2017 will be interesting to watch. This is a classic example of the city valuing blindly.

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  17. Woodentop

    With stocks reducing and forecast to be less in 2017 …. their game is up with no profit next year, if that is all they can manage to-date? Still questionable any profit this year as Bruces statement is a smoke screen. I suspect at least one investor may take humbridge, pull the plug and ask the city to investigate them, bringing them down?

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  18. Industry_Pro

    “I’m sorry i find it incredibly hard to believe that they are in profit, so presume that the numbers have been spun somewhere or other, or that the large amount of LPEs who are self empoyed. their wages are not included in this figure.”
    –  Please remember that PB is a public company and as such has to meet strict reporting criteria according to a prescribed format. To smudge the numbers or mis-report them would be fool hardy.
    Also, whether the industry likes it or not the hybrid EA model has reached a critical turning point – profit, and others will follow at the expense of the less efficient costly models, High Street or otherwise. Now that the customer has woken up to the new lower cost world of selling their homes, the challenge facing the industry is how to operate in the future with a lower cost base and still provide a good quality local service.
    Granted PB’s offering leaves a lot to be desired in certain locations, but dismiss them and others like them at your peril – they are not going to roll over at this stage, but instead they will up their game and address the quality issues having created their UK distribution network.
    PB have taken circa 18,700 listings from the market in 26 weeks; 720 listings per week on average, which equates to taking nearly £2m of fees per week from the rest of the industry (assuming average house prices and a 1.25% fee).
    Alison Platt at Countrywide has recognised this and that big changes are coming, why else is she taking a big axe to the costly estate, rolling out their hybrid model and drastically reducing operating costs?
    Change is here and everyone needs to wake up and address the fact and deal with it accordingly.

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    1. Hillofwad71

      The trend is your friend  They arent curently taking 720 instructions per week-those levels  are already historic

       

      0 July 16 8300/14924
      13 Aug. 16 9057/16129
      28 Aug. 16 9259/16561
      06 Sept 16 9456/16961
      12 Sept 16 9722/17307
      25 Sept 16 9830/17801
      05 Oct. 16 9868/18078
      05 Dec. 16 9164/17234

      These are the number of instructions over the last few months They have plateaued  and I can assure you its not because of more sales H2 revenue  unlikley to  improve drastically from H1  Their spectacular growth has come to a shuddering halt

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      1. AgentV

        Is there anyone out there who is accurately counting how many new properties (not relisted or recycled) they are actually bringing on each month (and effectively getting paid for)? This could be the number on zoopla added in the last 30 days…but how many of those are relistings (juggles). I think this is the most valuable information we can get ….to see any trend.

        PB are telling the martket one thing and we all believe something different….so I think the number of genuine new listings per month is the only way the truth can be shown. Anyone …can you help?

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  19. Property Paddy

    Just out of interest is there any part of the UK where PB (and similar) dominate the market (i.e. 30% market share)  or is like where I am 1 or 2%  market share ?

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  20. AgencyInsider

    PB will ‘increase our engagement with Rightmove throughout 2017’

    I wonder how many dislikes I can generate if I say that we could pull the rug out from under PB and RM in one fell swoop if we all pulled off RM (and Z for that matter) and went to OTM.

    No, I have not been smoking anything chemical this morning.

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  21. Industry_Pro

    I don’t dispute the historic facts or numbers, what is done is done and cannot be changed. What we can change is the future.
    As to the market turning or plateauing, this of course will affect ALL businesses; High Street, Hybrid or so called “Online”.
    Adoption rates by and demand from customers of the new lower cost, leaner yet well serviced models will only increase at the expense of the dinosaurs in the market. Note “lower cost” and not “low cost”.
    Quite simply there is an opportunity for all to review and adjust their operating model as required in order to thrive and survive. Those that DO NOT will perish.
    Please remember that when a new and disruptive operating business model enters the market, the disruptor firm has a number of target critical success factors in view:
    -To create a highly £ competitive, lower cost & flexible operating model.
    -To achieve a high gross profit margin from which future costs (mainly advertising in PB’s case) will be met.
    -To increase headline pricing over time.
    -To grow the distribution channel and volumes quickly with the expectation of creating losses in the first two – three years.
    -To stealthily take market share and revenue from the competition thus reducing their margins and profit, and once a presence has been established to THEN grow market share further still.
    – And latterly (stage two); deal with growing pains and quality issues within the network.
    -To reach a profitable trading position on a monthly basis during year three.
     
    Sounds familiar……….?

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    1. Thomas Flowers

       

      I agree with everything you say Industry_Pro

      However, both PB, CW and others have a massive ***** in their Armour?

       

       

       

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  22. RichardHill61

    Purple Bricks

    Doubt there a 2 words that provoke more comments on propertyindustryeye.com

    My dual branch operation used to make similar profit levels before I sold it so what does that say about PB’s wonderful achievement!?

    They still annoy the #hit out of  estate agents!

    £18.6m / 340 LPA’s means the LPA’s average about £54k T/O each! Way to go LPA’s….Even if they get 50% commission they’d be better off in a proper job!

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    1. RichardHill61

      I am all A’s instead of E’s this morning before anyone starts!

      Must be my 2 recent visits to A&E!!

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  23. PeeBee

    Someone help me on this, please…

    2015 –

    “Sales & marketing costs” for Q1 was apparently £6.6million.

    “Administrative expenses” for Q1 was apparently £3.8million.

    2016 –

    “Sales & Marketing Costs” for Q1 was, apparently, £6.6million.

    “Administrative expenses” for Q1 was, apparently, £3.8million.

    Yet, also apparently, “H1 instructions increase by 108%”. 

    All of that for NO ADDITIONAL EXPENSE??

    Bet we all wish we could do that… someone care to tell me how it can physically be achieved?

     

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    1. Property Paddy

      So in short to make £300,000 actual profit they spent how much ?

      Sledge hammer to crack a nut- not only did the kernel get obliterated so did the nut !

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  24. Keyser Söze

    As always, these figures conveniently do not take into consideration the £1-1.5m per month PB spend on TV advertising.

    The annual amount they spend on tv advertising is very close to their total revenue of £18.3m.

    Am I missing something or are they still losing around £1m a month?

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  25. Industry_Pro

    The £18.7m revenue is for 6 months (£3.11m per month). The annual advertising budget is circa £21m (£1.75m per month).

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    1. AgentV

      So that adds up to about £580 to £600 on advertising to attract each and every property (at say 3,000 per month). Is that your take on it ?. Add on the top of that say £350 per property to the LPE and the portal advertising costs of say another £200 to £300 per property. Then you have admin costs on top of that. It all adds up to a lot more than the £700 (plus VAT) charged. Where does the other £300 to £350 average additional fee come from? is that kickback from having to use their solicitors? Surely the customer is then paying more for their solicitors than they would normally have to? Shouldn’t that be taken into the whole equation of how much people are paying overall for the service.

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  26. Robert May

    these  numbers  do not support the claims made

    From these figures they list 32850 properties (they call a sale )

    they exchange 18500 per annum, that is a  ratio of 56% not 88% as Mr Bruce claimed

     

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    1. Thomas Flowers

      Robert, I am no IT expert as you know, so have a question?

      If all RM agents use RM’s real time feed. Presumably this uploads RM first thereby claiming the agents property as unique to them first?

      Not sure how that plays out in the SEO world but suspect it may be a huge advantage to RM?

      Is this is correct?

      Nothing, to do Purple B but Pee bee’s posting above about juggling and page impressions got me thinking.

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  27. Hillofwad71

    Yes  those are current instruction levels and totals SSTC  on a dated basis Difficult to calculate as they often leave those SSTC  post completion its clear though that instruction levels have fallen in the Autumn. The Hardman  Report accompanyng the listing  hoped they would be reaching 43K  The figures of course for H1 look frothy as they are being compared to  last financial year when they wer eonly just kicking off . What has happened is they have  sprinted up to over 9k  and since then have treaded water at best .The figures  for H2 are going to be very interesting as  November poor and unless they are going to pick up over the next few months which are normally quiet  they might slip back under water again  Certainly there will be no massive increase in revenue from £18.1m for H2

     

    Oz seems to be going Ok but unlikely to yield any profit this financial year “

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  28. PeeBee

    Revenue – £18.3million

    Average “revenue per customer” – £1000

    That’s 18,300 ‘Listings’ (6 months) – 3050 per month.

    Which they don’t appear to be achieving (credit: Zoopla listings – 31/10/16 shows 2303 ‘listings’ in last 30 days)

    They claim to be selling one property every 16 minutes – 32850 ‘sales’ (12 months) – 2737 per month

    There’s the backup to their claim of 88%, Chris – in fact it’s now gorn up to 89.75% – but then didn’t Mr Bruce clearly(?) state in that interview:

    Well – that… what I said was eighty eight percent of people actually sell their house prior to the ten month period – what I DIDN’T say was that twelve percent DON’T sell – all those people will remain on the market and stay on the market until they sell their house.”?

    So – only 10.25% of them need to get their fingers out and sell – give Mr Bruce the ONE HUNDRED PERCENT SALE record he actually eluded toward.

    Just a pity that the dwindling ‘Listings’ numbers will bu99er that (and everything else in their latest #Jackanory forecast) up for him BIIIIIIG style…

     

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  29. PeeBee

    Hillofwad71 – help me with your figures please:

    05 Dec. 16 9164/17234

    I’m probably being a little thick here – but what does the 17234 represent?

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    1. PeeBee

      Ahhh… I see Chris Wood has already asked the question.

      BUT… I’m still going to admit to being a bit thick.  Where did you get the 17234 from?

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      1. PeeBee

        D’OH!! Answer found!

        I’ll have a quick peek…

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  30. PeeBee

    Okay – so they currently state 17202 listings (including SSTCs) on their search page.

    Yet only 10,000 are apparently searchable.

    I want to see the other 7202.

    I’ll keep at it.

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  31. Ric

    Too much air time.

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  32. AgentV

    Is there anyone out there who is accurately counting how many new properties (not relisted or recycled) they are actually bringing on each month (and effectively getting paid for)? This could be the number on zoopla added in the last 30 days…but how many of those are relistings (juggles). I think this is the most valuable information we can get ….to see any trend.
    PB are telling the martket one thing and we all believe something different….so I think the number of genuine new listings per month is the only way the truth can be shown. Anyone …can you help? please?

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    1. undercover agent

      I hear some people are building just such a system. No idea when it will be operational. No agent sells everything they list, but I suspect PB do worse than most.

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  33. TheHybridAgent

    Brilliant Mr Bruce…

    Turned the whole industry upside down… While high street offices are closing or selling up to corporates. PB have grown and gained huge market share throughout the UK. The public wanted change…

     

     

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    1. Robert May

      A huge market share?  9500 exchange contracts in 26 weeks between  340 staff  is  1 sale a week

       

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  34. Thomas Flowers

    Chris

    Just imagine a PB SAVE £1000s direct marketing type initiative aimed at your future clients and existing clients? Courtesy of RM’s prospecting products, fuelled by addition data gained from a combination of YOUR real time data and RM’s instant alerts?

    Has such an initiative already been trialled? See below:
    http://www.propertyindustryeye.com/agents-anger-as-rightmove-partners-advertises-purplebricks/

    RM are not biting the hand that feeds them, they are devouring the body that feeds them from within?
    What happens when that body dies?
    Do RM then have total control of this sector and the moving related products within?

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  35. Robert May

    Calculate the burn of this company, it is about £231,000 a week so a woooo hooo hallelujah  profit of £300,000 is enough to last 9 days.

    Listings dry up in November and drought through to February  so good luck in breaking even by the end of the financial year

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