Purplebricks boss says traditional agents have charged too much for too long, for too little

Purplebricks boss Michael Bruce has said that traditional estate agents “have been able to charge people too much for too long for too little”.

In an interview with the Mail on Sunday, Bruce said as a result agent were not incentivised to go out and create technology that would drive down their fees by 70%.

Bruce, who told the paper that Purplebricks is making a sale every 16 minutes, said that customers could save between 50% and 70% using his firm, depending on whereabouts they are in the UK.

He said: “It’s a considerable saving but at the same time they get a much better service. We’ve got over 10,000 rated excellent reviews, and try finding an estate agent anywhere in the world that gets positive reviews. They’re very difficult to find.”

Bruce also criticised the estate agency model which “requires the leads of estate agents to send their troops out to get a property on at all costs, tie a customer into 12 to 16 week agreements, spend the next 12 to 16 weeks chipping them on price.

“If they chip on price they sell, if they don’t they churn in the market. That’s why 60% of houses sold in this country sell with a second or third agent”.

Bruce said that people do not want a totally technology-driven service, but one where someone can advise them. He said the first Local Property Experts hired by Purplebricks “must have been mad” because they had to sign non-disclosure agreements, and were not shown the technology: “We just told them about our dream and how we were going to achieve it,” Bruce told the Mail. “What surprised me is how many people believed in the same dream.”

Purplebricks enjoyed a good day on the stock market on Friday, with its shares finishing at 151.75p, up 7.75% on the day.

The firm also announced that two members of staff last week exercised options to subscribe to options in a total of 600,000 ordinary shares at 0.01p each. Director of marketing James Kydd has been granted 500,000 options and chief technology officer David Kavanagh has been granted 100,000 options under the employee share option plan.

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56 Comments

  1. AgentV

    ‘Making a sale every 16 minutes’ and ‘they get a much better service’

    So where are the numbers of completed sales Mr Bruce? And why are you dropping review sites and reviews that aren’t so favourable?

    See #CONmisery invented by PeeBee

    this is a joke to court publicity and keep raising the share price!

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    1. AgentV

      To cap it all I think he also claimed their profits where were vastly increasing. What profits? http://www.dailymail.co.uk/money/mortgageshome/article-4097968/House-prices-set-stay-flat-profits-SOARING-online-estate-agent-enjoying-purple-patch.html

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      1. AgentV

        It’s says he has become a multi – millionaire out Purple Bricks though!!!

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  2. Hillofwad71

    A sale every 16 minutes . Not in Aberystwyth!.Admittedly not a fair example to use as a yardstick,I freely admit  -a small  university town in a sparsely populated area  but interesting  nevertheless

     

    https://www.purplebricks.com/search?ref=header#?q&location=Aberystwyth&page=1&latitude=52.41501008087895&longitude=-4.083684025761486&searchType=ForSale&sortBy=1

     

    7 available, 4 of which have been listed for over a year! One is fast approaching its second birthday so of those 4  who have deffered and saddled with the dreadful conveyancing firm have already had to pay  the fee,. Comisery the feeling you get when  you have paid a fee and your house hasnt sold.No new listings for over 3 months

    Interstingly enough for those budding Jon Hunts they  are looking  for a LPE for the territory OTE £45k. They  are certainly going to earn their  corn since they only have 18 instructions within 20 miles of the town and the Irish Sea is to the west

     

    Th

     

     

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  3. Chris Wood

    Using publicly available data from a major portal (which I am happy to make available to PIE or any other Bona Fide journalist) here is the story for my neck of the world.
    12 months
    Headlines:

    Current (07.01.17 11.39) live stock volume
    32

    Current (07.01.17 11.39) live stock TOM** Av in weeks
    24.2

    Current (07.01.17 11.39) live stock average asking price
     £                                     345,057.81

    Past 12 months

    Total new instructions in past 12 months
    54

    Success rate/ New instr to sold
    28%

    Average price
     £                                     311,856.39

    Ask to sale* price difference
    -£                                       47,259.72

    Total asking price
     £                               16,840,245.00

    Likelihood of a price change
    63%

    Price changes
    34

    Percentage of stock slow mover (8 Wks+)
    44%

    Average reduction
    -£                                       25,119.41

    Total amount
    -£                                    854,060.00

    Fallen through
    2

    Slow movers
    24

    Average time on the market current live stock
    13

    Av time on the market for slow movers
    29.6

    Withdrawn
    17

    Sold
    15

    Weeks to sold
    12.86666667

    Average asking price at time of sale*
     £                                     264,596.67

    *Not necessarily the actual sale price

    For postcode sectors TR3,11,12,13,14,17,18,19,20,26 & 27 inclusive

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    1. AgentV

      Great monitoring Chris! Out of interest have any of the sold properties appeared on land registry data yet? We could then get a feel for the ‘confirmed completion to listing ratio’.

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      1. AgentV

        Actually, has anyone anywhere got the postcode and house number of a confirmed PB completed sale please? I’m interested to look at a few.

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  4. smile please

    What have PB innovated? ???

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    1. revilo

      Local Property Experts!!

      There are allegedly several in my area and in my 28 years in the ‘patch’  have never heard of any of them!

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    2. Thomas Flowers

      Did they ‘innovate’ mind boggling conveyancing referral fees that ought to be promoted as part of their fee if upfront payment is deferred?

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  5. Robert May

    Getting well on for £20 million cumulative losses suggests Purplebricks has been charging far too little for far too long.

    To make a profit Bruce said he had to list 3000 properties a month; 36000 in total, 98 properties every day,  4 every single hour. So far in 2017 he hasn’t managed to achieve 1/4 of his own target.

    Instead of advising  profitable agents how to run  their business he  would do well to consider running his own very charitable organisation a little better, he and his investors can’t afford to subsidise every single sale they achieve forever; the volume of unsuccessful vendors isn’t enough to offset the losses.

     

     

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    1. AgentV

      Problem is Robert, I am not sure they are as I nterested in making profit as grabbing as much market share as they posssibly can. I may be wrong , but it feels as though that is their main aim….because they think it will drive the share price higher, enabling them to both raise further subsidy money and increase their own personal wealth.

      I think they are in the ‘publicity at any cost phase now’ …. which is why they are creating inflammatory and provocative articles in the press…. and the press are falling for it, giving them free publicity.

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      1. Robert May

        Any firm buying market share on such a sparse coverage needs to do  a storming job of making every instruction count  otherwise all of the  advertising is wasted and has to be continual otherwise people just forget the advert and the firm, especially when the old advert suddenly gets changed for a rubbish one with a confusing message and little branding. (Tweedle Dee and Tweedle Dum were at least recognisable, I have yet to notice the new advert on the telly)

        The problem  they have is they aren’t doing a storming job, they aren’t making a positive impact.  The couple they have listed here were a disaster; the bungalow was undervalued which caught the village’s attention but then because the rep lives so far away only 1 couple got to look inside.  The others who I know who were interested weren’t impressed and that is the talk around the village.  Same thing happened across the river this time lots of people looked at a mis-priced property which is cementing their reputation of cheap but you are getting what you pay for.

        they can be as positive as they like with the press, can continue to buy instructions but every negative thing the public are witnessing and hearing from people outside of the industry is working against them. Of the 10 applicants who look at a property 9 are naturally disappointed they can’t all buy the 1 property and without enough stock  for them to buy something else on the register 9 people have a bad experience.

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        1. AgentV

          I hope you are right…..guess it will take time, but the full truth will get out there eventually.

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          1. Robert May

            The truth is out there, I wouldn’t want the reputation they have  4 years into a project that  has been burning £230,000 more each week than it is earning. Even if it  were listing 36,000 properties a year that is  only 1/3rd of what they predicted they would have buy now.

            Yes they are a competitor but their plan isn’t working out well at all.

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  6. inthefield

    They seem to be motoring on in the stock exchange again. As I look up another 0.33% today at 153.25. Granted, Im no expert on the stock market but why do they keep rising??! I wonder if the two directors that sold stock recently are buying them back to shore it up? Anyone with more knowledge than me on this please post as I just cant fathom it out.

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    1. AgentV

      Articles like the one in the mail increase investor demand. When demand increases, we all know what happens to prices!

      The cynical part of me wonders if articles like this are done to create exactly this effect….,and the press fall for being used..lock, stock and smoking barrel!!

      #CONmisery

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  7. Property Paddy

    Oh phoooeeee!

    Please mr Bruce, just tell the truth!

    PB not delivering on service. Last year I took on two ex PB properties that they failed to sell because they had encouraged the owners to ask an unachievable price. So I resold them not PB.

    As for their share price. look at gocompare share price it makes a real profit and they are 60 to 70 pence per share I don’t understand why so many speculators are prepared to invest in such a high risk business model like PB.

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    1. AgentV

      An asking price so high that it deters viewings is a great customer for their model….as it means far less work for them, and they still get paid anyway. Taking into account that they  then don’t have to arrange viewings, follow up, offers, negotiation, due diligence, liaising with solicitors, chasing , arrangements for completion etc….I just wonder if a property that won’t sell is exactly the type of instruction they really want!!! Perhaps that’s why they won’t tell anybody their completion to listing numbers!!

      #CONmisery

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      1. AgentV

        Property Paddy…..fancy a collaboration on a new project ‘Independent Rescue’. I can set up the emergency contact email addtress (instead of going to the expense of building a monitoring space station…which might be a tad over the top);

        jack@thunderbirdsarego.co.uk

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        1. Property Paddy

          Actually.

          I haven’t chased any PB properties yet. Other than the usual leaflet drops which I do fairly regularly over the whole town I haven’t targeted PB stock at all. (4 properties in 2016 were listed by PB in my area)

          Reason: Owners that use PB and aren’t sold within 2 weeks or so, tend to be pretty cheesed off they spent £800 or £900 and got nothing back and are already motivated to speak to a professional.

          There is a new one just come on 26/12/2016

          It looks to be £25K to £30K OTT on asking price. I am not going to canvas them. I’m not sure I want a property on my books in a prime bread and butter area that’s so over priced. It just queers our market.

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          1. AgentV

            Guess they have earned their fee, and the price will deter interest and viewings……so no extra work for no additional fee there….LPE probably pleased with his successful listing!

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            1. AgentV

              By the way LPE stands for ‘Listing Property Expert’

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              1. Property Paddy

                I thought LPE stood for: ( Now we got the business)  “Lets Prey Everyone” !

                or

                Leftover Puerile Excrement

                or

                Left Penniless Experience !!!!!!!!

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              2. AgentC34

                “Local Property Expert”

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  8. Chris Wood

    Are you an LPE or PB investor?

    As a franchisee of PB, did PB explain and advise you of your legal requirements to belong to a redress scheme, HMRC and ICO etc?

    Are you happy with that?

    The six figure income sums that were dangled, have any of you achieved anything close to that level of income yet (looking at my local LPE, he would seem to have earned no more than a couple of hundred of pounds per week in the past 12 months)

    As an investor in PB do you feel comfortable that the company you bought into, did not have any of its franchisees belonging to an approved redress scheme required by law, or that it appears that they are not complying with other legislation such as anti-money laundering?

    As an investor, how happy are you that pre-IPO, PB claimed in its literature that all of thie LPEs were “qualified” when, in fact, this was not true?

     

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  9. PeeBee

    “That’s why 60% of houses sold in this country sell with a second or third agent”.

    Can anyone tell me where this guy gets his ‘statistics’ from – other than ‘they fly into his brain at a slightly quicker speed than they roll off his tongue’?

    Bit like the ‘MoneyBox’ interview – which I transcribe here as it was heard:

    (Interviewer) They pay you even if it doesn’t sell

    (Bruce) Yeah… I mean…  No Sale No Fee is fundamentally unfair it’s a tax on the seller. No Sale No Fee only helps one person that’s the person who never sells and everyone else has to underwrite the cost of those people.  

    So what percentage of your customers pay a fee – but their property doesn’t sell?

    Erm… very few people… err…err we sell a… the greatest percentage of properties that we take to the market than ANY other agent in the UK

    So what is the percentage? I’ve seen estimates that it’s only one in seven or one in three that sell.

    No – it’s… eighty-eight percent of people err… errr… sell their house prior to the period of deferment which is ten months, erm… and… you know, at the end of the day, we sell more houses a percentage of what we take to the market than ANY other Agent in the UK we’re also the most positively reviewed Agent than ANYONE else in the UK and THAT is because we have a strong reputation for selling houses and getting the job done better than anyone else.

    So – EIGHTY EIGHT percent of the people that list with you SELL their home?  

    Correct.

    So twelve percent don’t – so they’re the ones who in the sense are subsidising them cos they’re paying what is now the eight hundred and forty nine pounds and don’t actually get a sale.

    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.

    Relax… breathe… attempt removal of lower extremity from severely stretched oral cavity… which you sorely wish you’d never opened in the first instance.

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    1. AgentV

      Does anyone believe that 88% statistic….problem is he said it on radio, people believe what they hear, and no-one has managed to challenge it and prove it wrong.

      Can anyone in the country spot the lesser spotted ‘PB confirmed completion’ and post on ‘Completion Watch’ please? Needs to be land registry confirmed. Anyone please?

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  10. Ding Dong

    tin hat ready (I work in lettings and not sales)

    two friends have sold through PB and did not encounter any negative issues

    price achieved was within their acceptable range taking into account their own research of sold prices.

    no chains, which i appreciate makes life easier

    PB will work for some, and not for others…

    I am not sure we need the continued PB bashing on here…for someone who is an outsider to sales, they must be doing something right for the continued posts as demonstrated above

    I have a pretty good idea what my house is worth and what someone is willing to pay for it….when I sold my house before PB came into being, I was in the same ball park in terms of valuation as the two bricks and mortar agents who turned up.

     

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    1. AgentV

      So you are happy to receive the first reasonable offer you get then…..even if you’ll never know if more viewings and proper negotiation would have gained you an extra £5,000 or more walkaway result, and cost you maybe an extra £1,200 on your fee?

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      1. AgentV

        I am interested to know because presumably the agency you work for (unless you own it) does sales as well? And if they do, do you not believe with all their experience, knowledge and contacts they would not achieve a better overall end result for you? Far better than going with a listing agent.

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        1. Ding Dong

          I did not say they accepted the first offer, all i know is that they accepted an offer which they were happy with.  Could they gain more with a high street agent?  I dont know.  Could they have gained more using PB rather than a High Street Agent? I dont know – and I assume those answers would apply to you as well AgentV

          I own my letting agency and I have done since 2002.  I cannot answer your question with any degree of certainty.  I can only talk about my friends experience and if I were to put my house up for sale, I would probably consider using PB because of the following two reasons:

          (1) I know the price I would be willing to accept for my house

          (2) I have sold three times in my life, and each and every time, I 100% wanted to sell.

           

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          1. AgentV

            And would you be happy for all your friends, family and existing clients to use their letting services as well. If not…why not…if they are cheaper than you?

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            1. Ding Dong

              Lettings is somewhat different from a full management perspective…(i only offer full management because let only is a pain in the b u m)

              PB has not penetrated lettings and I think we struggle to do so, even more so, with the tenant fees ban coming.  I charge 12.5% for full management, and have had the same price since day 1.  If a landlord wants to me to drop to 8%, then he can use the new guy around the corner or go online (because that landlord will skimp and moan about everything) .  I ask for 12.5% because you are paying me to look after your £400,000 investment and my experience and knowledge comes at a price.

              Property Management IMHO, is a different world to sales.  (tin hat at the ready)

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              1. AgentV

                No need for a tin hat actually, I think you are entitled to your view…

                I just think you would see things from a different perspective if you were either actively involved in selling (and therefore knew how much effort is truly involved in getting the best result for your vendors) or your small business was being threatened more directly on the lettings side.

                At 12.5% management on £400,000 houses I would guess you earn more per property each year than the £2,000 average fee we charge for selling. My experience and knowledge in getting the very best sale price for our clients comes at a price as well……or do you not agree?

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                1. Ding Dong

                  fair points AV

                  and we that get that commission each and every month (so long as the tenant pays the rent)

                  personally I would never get into sales as I have seen so many people work hard only for the deal to fall through last minute….you almost have to charge so high to pay for all the time wasters and chancers you get in sales (which is why the PB model sort of gets rid of them)

                   

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                  1. AgentV

                    With the strategy and methodology we use, we rarely have fall throughs….our completion rate is well over 90%. However respect to you sir for the debate…..

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    2. Property Paddy

      Dear Ding Dong,

       

      Your two friends were more unusual than you think.

      We are not PB bashing simply analysing the real deal. They charge upfront to list, that’s their modus operandi. The fact they actually sold your friends houses is a by product of their business model. Whereas bricks and mortar agents HAVE TO SELL to make any money at all.

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      1. AgentV

        Totally agree. From their business model perspective, actually getting the price and marketing right and generating lots of interest, especially from chain laden buyers, might be regarded as collateral damage!!!

        #CONmisery

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  11. Woodentop

    You know when something is going wrong when directors have to resort to blowing in the wind to shore up a business and start selling their shares. The simple truth is PB are spending £millions with no real return? The business itself is not showing any great result, has no hope of ever recovering the so far spent £20M based on their current fee structure and whenever challenged to produce proof …. silence! All they can resort to is slander agents for charging more without being HONEST that agents would charge more as their overheads and service exceeds anything that PB has or will ever provide. The consumer knows this and most are not falling for the hype as they continue to use the high street. I think that PB days are now numbered, they are nothing more than a disrupter, have had long enough to be successful but it all looks to have turned out to be failure on a grand scale. Surely has to be regarded as a failure, as their has been no viable return for any investors? Normally this would show a falling share price? Bruce is trying to put spin on a catastrophic failure before his investors start knocking on his door?

     

    All the cheapo web only portals have ignored the one golden rule in sales to be successful. You only survive by bribing consumers you can do it on the cheap. Poor salesmanship and no confidence in your service to be able to charge the same ….. the public in general have never fallen for it ….. ever …. and are not falling for it today!

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  12. PeeBee

    “I am not sure we need the continued PB bashing on here…”

    So – they can make up and say what the chuff they want and we don’t have a right to reply – yes?

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  13. Stubby26

    The long a short is we can moan on here as much as we like, but Bricks pays for Interviews and advertising. It pays people to go on Sky and say its wonderful. So the public only see what they what it to see. It advertises on TV . No one knows they have a 20% fall through rate!

    Our service is being devalued and we have ourselves to blame. How much we allow it to be devalued is up to us individually and how much we feel we are worth?

     

     

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    1. AgentV

      Unless we join forces to counteract it a bit.

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      1. Stubby26

        Agreed 100%

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  14. P-Daddy

    Don’t just debate PB and online agents on property sites…unite your voices and find a way of getting an equivalent article in Daily Mail etc. Despite the protests…his message got to the house owning/buying public, so agents need to up their PR. Better find a more effective body than NAEA,  ARLA or RICS though, they are reactive not proactive. This is where PB are very effective! It’s not only property…look which airlines get loads of coverage in our media..the online Ryan Air and Easy Jet

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    1. AgentV

      P-Daddy if you want to join our small but growing group with this one aim in mind…..how can we contact you? Or tweet to us.

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      1. AgentV

        #independentestateagentsvalue

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    2. Ding Dong

      Valid points P Daddy, but you need deep pockets

      Unsure how much a national TV ad would cost?

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  15. ansesyb18

    Interesting comments by Michael Bruce!! look at the past history he has in the Industry!!

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  16. AgencyInsider

    Has anyone else noticed that the core of the first four stories in PIE today all have one thing in common?

    Every one of them has a gob on a stick talking pure, unadulterated billshut (doff of the cap to PeeBee for that moniker).

    There must be something in the water.

     

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    1. AgentV

      a gob on a stick talking pure, unadulterated billshut …..desperately trying to gain publicity!

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      1. gk1uk2001

        But sadly he is getting publicity, and people are blindly buying into their pure unadulterated billshut (although not in the volumes that they need to continue in business). As long as people buy into it then unfortunately it will continue.

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  17. Stubby26

    The Team Network in the of old and The Guild now are all in the position to offer a credible alternative. Multi listing is the only answer, but it has to be accepted and by a group that has always had trust issues.

     

    The Guild are devaluing themselves and the brand with their own online offering.

     

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    1. AgentV

      I think it best we start with something completely new….just for independents. Make contact with us if you are interested.

      #independentestateagentsvalue

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  18. Hillofwad71

    Peel Hunt have producd their report on the Housing sector today -“House Rules”-a weighty tome with some mighty research   and are very bullish on the sectorgnerally   Berkeley particularly   so  with mixed reviews of the listed agents Sell note on Fotons but extremely bullish about Bricks  which I suppose they  would be as they are joint-nomad

     

    They forecast 40k instructions for this  FY rising to 75k for FY 2019, They  believe all the favourable reviews too . Peelers  are an impressive outfit I think The Bruces have excelled themselves in their selling job to them

     

    I reckon they might equal  H1 18k for H2 at best (ignoring Oz)  Any thoughts?

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  19. Gameon

     
    As a small independent working 7 days a week to keep my staff in their jobs and my modest business afloat this is what I do to keep the call centre agents at bay in my area.
     
    If us small independents all adopt these ‘disrupter’ strategies we can stop the call centres getting market share, or ever being profitable.  That way we can keep our businesses and our staff in their jobs.
     

    When a call centre lists in my area I immediately write to the vendor and offer a High Street presence, local knowledge and personal service for the same fee.  I remind them that they have 14 days to come out of their contract with the call centre.  Whilst this might not make you any money its about keeping your market share.  I have taken instructions from the call centres using this strategy.

    If strategy one doesn’t work I have set up accounts with the main call centre agents and I book viewings at their listed property.  I ask friends and family to do the same.  These bookings are of course ‘no shows’.  I sometimes book second viewings as well.  After 3 of 4 ‘no show’ viewings I write to the vendor again to offer my reliable services, where all viewers are contacted and screened.

    In parallel with action one and two I use my dummy email accounts to book Valuations with the call centre agents at random addresses to waste the ‘local’ account managers time and make them unavailable for anything else.

    Another strategy is to contact the vendor when you see the call centre reduce the sale price.  I highlight the loss of value and the fact that a local agent knows the real value of their property and what people will pay for it.

     
    Whilst these actions do take up time these companies are trying to destroy our businesses and our livelihoods – ‘disrupting’ them from getting market share is worth it in the long term.  The more of us that implement these strategies the better.   Protect your business – Act today.

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