In a recent BBC Watchdog program it was revealed the the main disruptor, Purplebricks, was using tactics that really do make you wonder how they operate. Apart from having a number of their commisery adverts banned for telling flagrant untruths (promising savings of over £4k against traditional estate agent fees) the vendors actually enter into a credit agreement with Close Brothers if they choose to defer the upfront fee. Now this means that Purplebricks still get paid immediately when listing your home for sale, it also means you are saddled with debt whether the home sells or not.
To some vendors, who do not have the up front fee readily available, this may seem a good option but, unlike when you use a traditional estate agent who offer no sale no fee, if your home doesn't sell you still have to pay the full fee. How can this be good for vendors in this challenging market?
247 Property Services do offer an upfront option, only £899 inc vat not £1199 like Purplebricks, but we almost always steer vendors to the pay on completion, traditional service. With a rate of 1.2% inc vat it is often, given our investor based sales portfolio, a cheaper option for vendors and it is far cheaper than the majority of agents in our area.
Do not be misled by fake sales and listing stats, the smaller independent estate agencies like 247 Property Services pride themselves on service rather than price. We offer a far better service than the disruptors and your advert will still appear on the online portals that are the norm now. The original article from Estate Agent today, not entirely an unbiased source, quotes the BBC article below:
Purplebricks’ share price this afternoon dropped to a recent low of 406.50p before recovering to close down about five percernt on the day. Much of the stock market roller coaster followed a slating given to the company on BBC Radio 4 - a taster before a similar critique of the company on this evening's BBC One Watchdog show. BBC Radio 4’s You and Yours was sharply critical of Purplebricks and included comments from Steph McGovern, the personal finance journalist who presented this evening’s Watchdog programme.
The introduction to the Radio 4 piece claims: “The online estate agent Purplebricks is making exaggerated claims that it has already been banned from making by the advertising regulator.” A little later McGovern says: “We have seen emails that Purplebricks has sent to existing and prospective customers repeating those claims." She specifically says one disputed claim - that sellers will ‘save’ £4,158 on average - has been repeated by Purplebricks’ Local Property Experts in communications with current or potential clients.
The You and Yours programme played an audio recording - repeated with video in this evening’s Watchdog - from a customer, John Bristow, who instructed Purplebricks and chose to defer his £1,199 fee.
“I received an email after I deferred it to say I’d entered into a credit agreement” says Bristow, who suggests he had not been informed of having entered into such a deal, which was with a separate firm called Close Brothers. BBC Watchdog also went undercover, inviting Purplebricks LPEs to five different properties around the UK; in the radio programme this afternoon it said that in three of those cases the expert failed to mention that the sellers would be entering into a credit agreement with a separate company. Although the LPEs were praised on You and Yours for having good knowledge of their local areas, McGovern told listeners that at least one appeared to have exaggerated the number of homes they had sold. Purplebricks co-founder Michael Bruce, interviewed on the telephone by You and Yours presenter Winifred Robinson, insisted that the disputed £4,158 claim had been removed from “over a thousand different places” after the Advertising Standards Authority ruling.
He claimed he had within the previous 24 hours been sent a copy of an email showing the claim still being made, and said that this claim was also removed immediately afterwards. He said that the LPE who claimed to be listing up to 25 properties a month could have been referring simply to the number of listings made by himself and colleagues. In terms of agreements entered into with Close Brothers, Bruce said all vendors were made well aware of this by LPEs and on-screen at the time of signing up to the deals. Asked whether this was really a loan by another name, Bruce called it “an unregulated facility agreement” and insisted that The Property Ombudsman was aware of the arrangement, and how it was made clear to vendors on the Purplebricks website.
Selling your property in a challenging market is hard enough but to take on debt on the basis that an agent might sell your home, without it being properly explained, well that is just financial madness.
247 Property Services offer a nil deposit option through the REPOSIT scheme, it is an option that has been taken up by a few tenants but we still prefer a traditional approach of a custodial deposit via DPS.
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