Purplebricks speaks out about its Below Market Value property business for investors

Purplebricks is offering “exclusive access” to investors looking for off-market, Below Market Value properties.

The properties are said to be typically 20% to 30% less than market value. The agent has emphatically said there is no conflict of interest.

Investors are invited to “be the first to see investment opportunities that are specifically sourced below today’s current market value”.

These include a range of distressed buy-to-let, Houses in Multiple Occupation and a variety of tenanted units.

Investors are told that the range of investments is exclusive to Purplebricks and marketed on a sole agency basis, “giving you the peace of mind that you will have first access to the very best opportunities available on the market”.

All properties are said to have gone through “vigorous due diligence to ensure they meet a high investment standard”.

A Purplebricks spokesperson told EYE yesterday evening: “Through its investor app Purplebricks has opened up the previously secretive investment market to the masses, allowing all buy-to-let investors access to the best deals, both on market and off market.

“Purplebricks continues to lead in innovation, while staying true to its values of fairness and transparency.”

The service was launched last year, but the spokesperson said it has since been refined and improved to reflect consumer feedback and technology developments.

The team behind the BMV offering is also said to have strong backgrounds in investment, whether on- or off- market.

The spokesperson also clarified: “The off-market properties are not those of traditional Purplebricks customers – as such there is no conflict.

“They are properties that don’t typically make it on to portals and are usually only available to expert investors who register and have contacts with investment consultants.”

https://www.purplebricks.co.uk/app-investors?ref=search_form

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34 Comments

  1. 40yearvetran08

    you take your money upfront to sell a property and sell it for 20% below market value. I can see the tv advert now!!

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  2. Chris Wood

    It may be legally ‘separate’ but, if you were a seller, would you have ANY confidence in your local ‘experts’ valuation knowing this?

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    1. Mark Connelly

      A couple of observations, Off market is not a claim you can make just because it hasn’t hit the portals. Off market buyers in my sector are buyers who are buying product that others don’t know is for sale and is being offered directly to them. Off market sellers also do not wish it to be known that they are selling. Once everyone knows the property is for sale the product loses its luster. And for these guys it is a product.

      Secondly, true 30% below market is like hens teeth despite what the BMV investment companies would have you believe. As pointed out by a number of other commentators there are market dynamics to consider. If you can buy at 30% below market value I would suggest market value is wrong and is based on comparables from significantly better properties or a right dodgy val.

      Doubt if any serious investor would look to PB as a source of BMV properties. It’s a minefield. Properties with apparent good yields (read no capital growth so strong rent makes it look good). Bit like purpose built student accommodation. They will still be trying to sell it a decade from now for what they paid for it.

      The world of BMV investment is pretty murky and a testament to ” smoke and mirrors” . Certainly a market sector that I believe PB are not remotely qualified to operate within other than the “smoke and mirrors” bit. They must have tied up with a BMV specialist to offer stock on their platform. And I bet I could shoot holes through the ” vigorous due diligence” that these companies claim to carry out.

      Wouldn’t be surprised if it was all just quietly removed as an offering within the next six months.

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  3. Robert May

    Distressed or forced sales simply do not need to be 20-30% below market value. The mathematics of supply and demand for any property show an  exponential growth in demand as price decreases. 100% full asking price means there is one buyer willing and able to pay more than any other buyer. Each 1% drop in price sees the number of able buyers grow exponentially. At 90% full asking price an agent will quite literally have a bun fight of applicants desperate and able to buy

    Given that no vendor needs to sell at  a penny less than they can get quickly  where are these properties coming from?

     

    It goes against the first rule of investment to sell anything less than its worth so its not investors  freeing up a portfolio or assets,  No vendor is  going to philanthropicly pass on a massive saving to the next owner of their home so  it really does  drive the question,  who is selling property 10-20% less than is ever needed to?

    Thinking this through and reaching a single conclusion it isn’t palatable and would no-doubt  give Ros and Nick an uncomfortable  and busy morning so I think  I’ll leave it as where are these massive bargains coming from and why are some vendors knowingly underselling properties when they simply don’t have to?

     

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  4. ArthurHouse02

    Pretty sure Purplebricks dont understand the meaning of secretive.

    With a High street agent, a property with good investment opportunity hits the open market, is advertised to to EVERYBODY, both big time investors and people starting out, this helps the owner achieve the BEST PRICE.

    With Purplebricks “investor properties” they only let their mates know about them, holding them off the main portals. This helps the owner sell for the stated 20-30% market value.

    Some advice for PB and the other call centre companies with little experience. Every property should sell for market value, that is what the property is worth, anything less and you are either badly advising your client or doing something far far worse. I would also hope that everything PB does goes through vigorous due diligence, isn’t that what proper estate agents do?

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  5. Chris Wood

    I’m guessing Ed and Nicks legal teams’ lower colonic sphincters are going to be twitching like a lab-rat wired to a rheostat watching the comments appear on this story today.

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    1. ArthurHouse02

      I dont see why. People are just commenting on a purplebricks published report stating that they have develpoed a way to sell some properties for 20-30% under market value, to selected purchasers without making these properties available to everybody else. I guess this is what they mean by transparency?

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      1. Robert May

        The overriding obligation of agency is to achieve the very best deal for the principal. A 20% discount is too much, if the property was not offered exclusivly to selected prurchasers would the agent achieve a better price? If the answer is yes then the question why wasn’t it offered outside the exclusive group of purchasers?
        Mortgagees in possession have obligations to their mortgagors. In the early 90’s when repossesions started being handled by assett managers rather than the individual building society branch there was a notable shift in attitude towards the distressed previous owner.
        Once you start  thinking that lot through the opportunity for accusation is bound to make people sweaty.

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        1. AgencyInsider

          The overriding obligation of agency is to achieve the very best deal for the principal’.

          Not wishing to be pedantic but in fact the overriding obligation of agency is to carry out your Principal’s instructions, within the law. Which may or may not include achieving best price. If the client wishes for the property to be offered and sold off-market or at BMV, then that is their instruction and the Agent may follow it.

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          1. Robert May

            Hence the word deal not price. Achieving 70% in 4 weeks from an exclusive purchaser  is madness if 10 not selected purchasers are able to complete in 4 weeks at 90% , IF they are given the opportunity.

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        2. Property Poke In The Eye

          PB must be acting as an acquisition agent and charging the buyer.

           

          Otherwise you are right, they would be negligent.

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  6. PeeBee

    I wonder if this explains why dom-boy’s latest flip doesn’t appear to have been previously ‘marketed’ when he snapped it up end of last year…

    …but of course the answer will be an emphatic ‘NO’.

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    1. Property Pundit

      I think you could be on to something here PeeBee. IIRC he has acknowledged this part of their business on here before. Would certainly explain his #FanBoy activities. His twitter feed makes me laugh and cringe in equal parts.

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  7. Eric Walker

    If they are ‘distressed’ properties are they actually below market value or are they cheaper until the reason for distress is remedied? Maybe the term ‘below market value’ is a lure. I know from experience if you market anything below market value properly, the bidding starts – it’s often a good way of selling a problem property. We used to call it ‘auction’ or ‘tender’. The only BMV that really could work is the secretive version which PB say they are trying to prevent. 

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  8. AgentV

    I wonder if this service was trialled previously with people who subsequently made money  from it by selling soon after for 25% more. Would some of those people then become massive advocates for the company?

    Could we possibly know who some of those investors are?

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  9. Reborncoyote25

    In my 38 years of doing this job, I’ve always been of the impression that getting the best price for the client and acting in their best interests is paramount – unless of course the client specifically confirms that thy want to offload at an undervalue. By advertising to a  cabal of buyers that these properties are (purportedly) so much below market value seems slightly at odds with this. And why?

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    1. PeeBee

      I think we all ‘grew up’ having been told pretty much the same thing, Reborncoyote25.  The job of an Agent is to get the best price, from the best buyer, within the timescale that the vendor would like it to happen.  Robert May sums it up perfectly above – “to achieve the very best deal for the principal”

      The problem is that not all of us grow up remembering our teachings – or practising what was preached to us.  Some choose to stray from the path we are shown.  Some forget the ‘rules’ – some choose to ignore them.  Some may even be of a background that they were never taught the rules in the first place.

      Sometimes the rules are ‘there are no rules’: the goalposts are there to be moved the second you shoot at them.

      That’s “progress” for you, innit…

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      1. Reborncoyote25

        …or maybe they’ll just say they ‘misspoke’!

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        1. PeeBee

          I’m gonna borrow another quote from Mr May – one posted here on EYE, as recently as April 28:

          “…while others are, to use their own words, ” ignoring the rules and breaking to rules to suit the investment” “

          Seems fitting, somehow…

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  10. Property Poke In The Eye

    PB are currently testing an auction setup.

    So the first people who view at 30% BMV are probably used as spare tyres to position the first stage marketing.  This keeps the vendor happy with numbers coming through the door.  Then it opens up as an auction.

    This alone is misleading, as the guide would need to be within 10% of the reserve price.

    I will do a bit more investigation and report here later.

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  11. Thomas Flowers

    Simply a cross-selling vehicle to draw in enquiries for their telephone sales teams to include listings, conveyancing, mortgages etc endorsing the ‘Which’ reports on some agent mortgage and conveyancing service selling tactics in order to gain a referral fee?

    Sign up to receive information on our ‘Below Market Value’ properties?

    To secure one of these below market value properties you must show us that you are ready to move quickly?

    Desperate stuff? – May show things are not going to plan?

    Please sign here BMV seller stating that you know you have sold your property between 20 and 30% below market value to protect us from any potential future legal action?

    Where do I sign?

    Yeah, course they will all sign away that right when correctly presented to them?

    Nothing more than #Fake advertising that they are renowned for based on those many ‘misleading’ ASA rulings? 

    How about ‘proper’ estate agents countering with we can get you 20 to 30% more than Purplebricks on some properties making you £1000s more!

     

     

     

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  12. CountryLass

    Um, surely this is what Auctions are for? If you need to sell quickly and it is a ‘specialised’ property then surely that is the best way to go?

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  13. paulnewboy26

    This is a wind up, surely.
    No LPA Receiver, bank or institution, that is remotely connected to the FCA will look at this as an option, as it clearly conflicts against the moral and professional duty to achieve best price and every ethical process that has been set up over the past 5-10 years.
    The vast majority of “distressed buy-to-let, Houses in Multiple Occupation and a variety of tenanted units” will be managed by a handful of receivers across the UK, of which I know most of them and they simply would not entertain going near this (for the above reasons).
    As per my comment earlier in the week re Auction House, this is just adding another miserable ingredient into what is already a horrible mixture of greed, spin and deception.
    Heaven knows how the PR team at PB can actually write ““Purplebricks continues to lead in innovation, while staying true to its values of fairness and transparency.”
    Crack on!!!! 

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  14. J1

    This whole principle flies in the face of representing a client as an agent.

    An Agents role is to provide a service for the betterment of their client.

    Then again it is possibly perfectly aligned with the principles of PB’s approach to taking money for not selling houses.

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  15. GPL

    Let’s start with this visual for the TV Ad……

    music playing…… doaaa doa, doaaa doa,  doa doa doa doa doa doa doa doaaa!

    PURPLE coloured waters…..

    HUUUUUGE! Letters/Logo rising out of the water dripping with helpless Homesellers!

    PIRANHABRICKS!!

     

     

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    1. Room101

      Haha GPL – I will hazard a guess that your property descriptions do not start with, “A well presented……  or   This 3 bed property………”

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  16. PeeBee

    Just a tad confusted here – someone help me out, please.

    I’m reading that “Purplebricks emphasises that its new BMV business is separate from its estate agency”

    So – and this might just be me trying harder than usual to be a Simple Simon or something – but why, then, on the dedicated page on PurpleBricksUK website, does (as already pointed out by Frau Renshaw in the main article) it state

    “Exclusive to Purplebricks

    Our range of investments are marketed on a strict sole agency basis…”?

    And, why, then, does the image of that app malarkey thing on that same PurpleBricksUK website page, clearly include the words

    “Are you looking to sell an investment property through Purplebricks?” on it?

    Erm… misprint, perhaps?

     

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    1. paulnewboy26

      Obvious miss print Pee Bee. As PB are the epitome of “transparency and fairness”……..did you not know?

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      1. Traditionalist

        White socks, dangly watch brigade out in force again.  If  buyers of these so called BMV properties dont do their homework – the lenders valuer will.

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      2. Traditionalist

        Looks like the white socks, dangly watch brigade have rocked up at PB.  If  buyers of these so called BMV properties dont do their homework – the lenders valuer will certainly be looking at sold comparables.

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    2. J1

      Because as usual it is boll.cks !

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  17. AgentV

    If anyone anywhere really wants to sell their property at 20 to 30% below market value then please come to me. I’ll get you an extra 10 to 20% more at the very least and still find you a buyer in a position to proceed straight away…..and I will only charge you a fee of 1% of the final sale price….so you are still likely to be 9.5 to 19.5% better off.

    Let us do our full works on it and be more flexible with your choice of buyer and you should be able to walk away with up to 99% of its market value.

    BSOS23PC

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    1. PeeBee

      “If anyone anywhere really wants to sell their property at 20 to 30% below market value then please come to me.”

      But… but… but… they won’t, AgentV.

      Why on Earth would they?

      You said it yourself – they really want to sell their property on the cheap. NOT to get FMV for it.

      THEY WANT TO LOSE MONEY.

      They want to give it away – to someone that they’ll probably never meet.

      They want the next owner to make hay… to have their cake and eat it… to reap what has been sown, grown and ripened.

      Makes perfect sense to them – so what’s YOUR problem with it…?

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  18. revilo

    Show me a seller, anywhere, who doesn’t want the best possible price for a property!

    Smacks of a good advertising agency to me – designed to shock and get people talking / reacting…

    Why do we give them air space??

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