After struggling to make a profit in the UK market, Purplebricks, an online estate agency, has just been placed up for sale. Industry analysts have begun to wonder whether Purplebricks has been successful in its goal of upending the conventional estate agent business.
When Purplebricks was established in 2014, UK homeowners seeking a less expensive option to main street estate agents rapidly took notice. As opposed to traditional estate agents’ commission-based structures, the company’s business strategy uses a flat price for its services. Regardless of whether the property sells or not, this cost is due up advance.
What were the Losses?
In spite of its early success, Purplebricks has had trouble making money in the UK market. In contrast to the previous year’s loss of £19.2 million, the company reported losses of £34.1 million for the 2020 fiscal year. Purplebricks also struggled in the US and Australian markets which lead to a cease in operation within a short space of time.
Many elements could have played a role in Purplebricks’ difficulties in the UK market. The dominance of established high street estate agents in the UK real estate sector is one of the company’s biggest problems. Some agents have longstanding ties to their neighbourhoods and have developed friendships with both buyers and sellers.
In addition, Purplebricks’ business model has come under fire. According to some, the upfront fee structure encourages the company to prioritise securing instructions above actually selling homes. The organisation has been accused of overvaluing houses in order to obtain instructions. This can leave sellers feeling frustrated and disappointed when their property doesn’t sell.
Can Purplebricks be Saved?
Several people still think that Purplebricks’ business strategy has potential despite these difficulties. For instance, the company’s web platform has received accolades for its user-friendly layout, and some homeowners still find its set cost structure to be appealing. Also, the Covid-19 pandemic has pushed the tendency towards online real estate sales, which could be advantageous for Purplebricks.
It is obvious that Purplebricks has a number of obstacles to overcome if it is to be successful in the UK real estate market. It would be premature, though, to declare the business a complete failure. There will inevitably be ups and downs with any revolutionary company strategy, but Purplebricks may be able to adjust and get past its current difficulties.
In conclusion, some have questioned if Purplebricks has succeeded in its objective to challenge the established estate agency paradigm in light of the announcement that the company has been placed up for sale. It is obvious that the company has had difficulties in the UK market, but it would be premature to call the company a failure. It will be intriguing to see what Purplebricks’ future contains, whether the company is sold in its entirety or in pieces.
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