Purplebricks, a new estate agency founded by entrepreneurs Michael and Kenny Bruce has raised £8m in an investment round led by Neil Woodford. The company offers a traditional high street agent service without the physical office. As a result, Purplebricks offers lower fees for home owners to sell or let out their property.
Former Invesco Pertual star fund manager, Neil Woodford, reportedly took a 30% stake in Purplebricks, which values the agency at £21m. Woodford joins Previous investors DN Capital, Alchemy Partners and Paul Pindar, the retired CEO of Capita.
We spoke with Founder and CEO Michael Bruce to find out more about Purplebricks.
Purplebricks has been classified as an online agent; is that how you see yourself?
No, we're a hybrid agency. Online is DIY, whereas we have local support in the form of local property experts.
We offer everything but the high street storefront.
Where did the idea come from?
My previous business was an estate agency group. We were seen as innovative, so were being courted by the corporate estate agents.
Before we sold, we looked at how to improve the process. So we sold up to start Purplebricks in 2011 and started with a blank piece of paper.
What are you trying to achieve with Purplebricks?
By April 2012 we had spoken to thousands of people: sellers, buyers, landlords, tenants. Based on these conversations we started Purplebricks wanting to offer convenient, transparent service, without the poor high street reputation.
People tend to interact with property when estate agency offices are shut. 51% of our traffic comes outside of normal agency hours.
What do you offer?
Our platform allows buyers to contact us at any time, wherever they are in the world. They can make an offer online, instantly.
It's the same for the owner, they can change their sale price instantly and it'll update on Rightmove and Zoopla for buyers to be alerted.
What makes this different from traditional estate agency?
Transparency. We make sure everything we do is viewed by the customer.
The seller is the first one to see an offer coming in, and no agent conflict of interest can come in to play, like commissions from conveyancing and mortgage services.
Agents are often seen to represent the buyer, as they want property to sell, regardless of the seller's interest.
Do you hire people with property experience, or those with a fresh point of view for you to train in your way of the world?
Property experience is most important to us. We're looking to hire the very best.
I know it sounds like a cliche, but there are some great people in the industry. We've been very surprised at our ability to attract people.
The best agents see the sea-change and have taken great comfort with what we've done.
Will technology ever replace agents?
As time goes on, I can see technology change the face of property.
There will be a tension in the future: people will say what you're doing is so simple and straightforward, we don't need a local property expert.
For landlords, it's as simple as the press of a button, but I don't expect change to happen in the next 3-4 years.
Property owners selling a home through Purplebricks will pay £599 up-front, instead of the traditional no-win, no-fee. Is a lower price hampering you or winning customers over?
6 of one, half a dozen of the other. We've introduced a price that engages customers, although some think there is something missing. It can put people off, because they haven't learnt about the service.
Is there another story to Purplebricks, other than price?
Service. You get a local property expert, someone who takes ownership over your sale. They visit your property and conduct viewings if you so wish. You are given a personal mobile number, so they're accessible to you.
Purplebricks is less about price, more about service. It's key for us to really get this message out there over the next 3 to 6 months.
Better service sounds wishy washy. Do property owners care enough to desert high street agents?
What property owners want is to get that local expertise, but they are more tech-savvy and want to see what happens as it happens. You don't get this on the high street. We need to be a credible alternative to the high street.
Will there be an inflection point when bricks and mortar agencies close down en-masse? If so, what will be the trigger?
There'll be a greater concentration of agents reviewing their position. Agents will remain, but be more boutique in their approach. But the ability to justify the traditionally high fees over the next 2-3 years will get harder.
If Purplebricks does well and you become ludicrously wealthy, what would you do next?
I'll always be slightly restless, so I wouldn't sit on the beach and let the world go by. I'll maybe look at other areas of the market to improve Purplebricks, or focus on a different place where there are technological ways to advance.
If Agents' Mutual welcomed you in, would you drop Rightmove or Zoopla?
Agents' Mutual is set up for all the wrong reasons. It's for agents, not for customers. It is set up to only allow agents that charge a certain amount to advertise.
Leaving Rightmove or Zoopla is not in the interests of customers. Dropping all that traffic in favour of an unknown site, that's not in the interest of the customer, and that's not what we're about.