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CIELA Challenge Purple Bricks Over Misleading Adverts Causing Millions Of Pounds Being Lost By Vendors!

Tue 11 Apr 2017

CIELA (Charter for Independant Estate and Letting Agents) accuses Purplebricks of breaching Consumer Protection from Unfair Trading Regulations

 

CIELA, has written to Purplebricks to demand they change their advertising regarding fees, and comparable savings with High Street Agents, as they are misleading, untrue and in breach of regulations. 

 

Many consumers are signing up to the Purplebricks service without fully understanding three key facts:

 

1. 22% of customers signing a contract with Purple Bricks to sell their property LOSE THEIR MONEY, using Purple Bricks' own figures!!!

2. The savings claimed (based on an unsubstantiated 1.8% no-sale, no-fee comparison), are often over-inflated and not a like-for-like comparison.

3. The savings claimed ignore the fact that professional agents, who employ full time negotiators, may achieve a higher price than amateur home-sellers negotiating on their own behalf, which would out-weigh the true savings on the sale fee.

 

 

CIELA fears that the financial harm being done to consumers that is often overlooked, runs into the tens of millions, when the lost fees are combined with the additional likely sale price a fully trained estate agent would be able to negotiate.

 

Although Purple Bricks state the 78% of their listed sales properties achieved a “sale agreed” status, their annual statements DO NOT say what portion of those properties went on to successful completion.

 

It is widely recognised in the industry that some “agreed sales” do not reach completion. These reasons can often be outside the control of vendor or agent, such as a simple change of mind, being refused a mortgage, or failure to secure a buyer of their own property if in a chain.

 

Estimates on the national average rate of agreed sales that DO NOT reach completion range from 25% – 35%. If this is applied to the 78% of sales agreed quoted by Purple Bricks in their interim report dated 5th Dec 2016, it would suggest a successful completion rate of around 55%... SO ALMOST HALF DO NOT COMPLETE!

 

However, there are fears this figure could be worse. Given that the Purple Bricks service does not include thorough prequalifying of prospective buyers or professional sales progression in-person when necessary, as you WOULD get with a traditional agent, it is reasonable to assume that the fall through rate is likely to be far worse than the national average.

 

Based on calculations using figures from Purple Bricks' own financial reports for 2016, it suggests that overall vendors are handing over, £5m per year of hard earned cash, in UPFRONT, NON-REFUNABLE fees for properties that Purple Bricks do not sell.

 

Accordingly, CIELA believes that Purple Bricks' misleading advertising and marketing is in breach of regulations and as a result, is harming not only the property industry, but also consumers.

 

It is also CIELA’s intent to pursue this matter with the Advertising Standards Authority if Purple Bricks do not come up with a satisfactory response.

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