Purplebricks confirms launch of £4,499 fees trial in London

first_imgPurplebricks has confirmed over the weekend that it is conducting a ‘Gold’ fee trial in London that offers vendors a £399 upfront service followed by a £4,100 completion fee.The service includes professional photography, floorplans, a for sale board and VAT.“This was flagged in our annual report last month which stated that ‘we recognise that, to extend our market leadership, we’ll need to evolve our pricing’,” says a Purplebricks spokesperson.“That means looking at different pricing strategies and we’re now in market with those tests.”If this is then taken to the wider market, ‘Gold’ would represent a major departure from its existing fixed-priced commission structure, which is £999 outside London and £1,499 in the capital, both including VAT.It would also place Purplebricks much closer to most traditional agents’ fees – at £4,499 in total this is more than the 1.42% average fee most agents charge based on the average UK house price of £230,000. But in many areas of London and the Home Counties it will still be less than most agents charge.But this trial does include viewings, which is departure from its previous fee offerings, which charge for viewings as optional extras.At the beginning of August, when the new strategy was announced, Purplebricks’ CEO Vic Darvey (left) said: “Reducing the upfront fee will reduce the barrier for many customers in instructing us – while higher fees on completion will allow our LPEs to earn more from each sale, ensuring our self-employed model will not only remain sustainable but become more attractive to the best talent in the industry.”Purplebricks fees Gold fee vic darvey September 7, 2020Nigel LewisOne commentAndrew Stanton, CEO Proptech-PR Real Estate Influencer & Journalist CEO Proptech-PR Real Estate Influencer & Journalist 8th September 2020 at 7:24 amVic Darvey needs to understand the Purplebricks model, which is – ‘a certain vendor will use an estate agent lite model if the cost is low’. The problem is that the old low fee model has collapsed, in that five years ago the fee was £665 to list in most of the UK, it is now £999, that is a 50% increase in fees. And in London it was in 2015, £965 to list, now it is £1,499, that is a 55% increase in fees.The other part of the model, Vic needs to understand is that cash flow upfront keeps Purplebricks alive, as it loses over 1M a month, every month. If, all of a sudden, Purplebricks lists 5,000 properties in London at £399, that is 5,000 x £1,100 or 5.5M of upfront fee less. And yes, bigger fees on the sales that go through, but the cash will come in on completion, so maybe in 4/5 months, and only on 50% of instructions.It amazes me, Countrywide under the ‘leadership’ and I use the term loosely of Alison Platt, tried to become Purplebricks, offering super low fees when its overheads to sell a property were twice that fee, now Purplebricks wants to charge fees at Countrywide levels, yet it has even fewer staff year on year and definitely does not have 690 physical offices.Is it me or is there no one with an agency brain running these Behemoths? If either of these lumbering giants roaming about in the dark, would like to see the light I am always up for a call. Proptech-PR where fantasy stops and profitability begins with some common sense and business acumen guaranteed.Log in to ReplyWhat’s your opinion? Cancel replyYou must be logged in to post a comment.Please note: This is a site for professional discussion. Comments will carry your full name and company.This site uses Akismet to reduce spam. Learn how your comment data is processed.Related articles BREAKING: Evictions paperwork must now include ‘breathing space’ scheme details30th April 2021 City dwellers most satisfied with where they live30th April 2021 Hong Kong remains most expensive city to rent with London in 4th place30th April 2021 Home » News » Agencies & People » Purplebricks confirms launch of £4,499 fees trial in London previous nextAgencies & PeoplePurplebricks confirms launch of £4,499 fees trial in LondonEstate agency says customers pay £399 upfront and then £4,100 on completion, but can still choose its two existing packages.Nigel Lewis7th September 20201 Comment5,267 Viewslast_img read more