Cheap agents could cost UK consumers half a £Billion in wasted fees (see update notes)
Cheap agents could cost UK consumers up to half a £Billion in wasted fees (see update below)
UPDATE – 12.7.2018 (edited 04/09/2018) Please read this post in conjunction with recent ASA decisions and my response to that decision posted yesterday 11.7.2018. Please note, I voluntarily asked Cornwall Trading Standards to assess a complaint made about this blog post several weeks ago as I believe the data I used was reliable at the time of posting and that the ASA had potentially misinterpreted the law.
Note to journalists: the ASA is not a statutory or government body and has no statutory powers.
The Company whose data I had paid for and relied upon, Zoopla Property Group PLC, has since stated to the ASA that the headings they used in their data may not reflect the actual true final status of a property. E.g. clear headings used in the data by ZPG PLC included “withdrawn”, “sold”, “for sale” and “sold subject to contract”. Whereas, the ASA state that ZPG PLC informed them that a property marked as “withdrawn” might, in fact, be “sold” or still for sale.
Having independenltly cross referenced this data with HMLR, The EPC register etc, it is clear that the data I had relied upon was not robust. However, the post was written in good faith based on the reasonable assumption that commercial data from a PLC should be reliable (and believed to be relied upon and accepted by the ASA in other cases).
Whilst the figures used in my post are for West Cornwall only and may not reflect the whole of the UK, the final (verified and cross-referenced) figures still show that if the listing to conversion ratio of West Cornwall were extrapolated to National figures, they would be very similar (but rather worse for consumers) to the £1,000 “coin toss” National listing to sold ratio assessed by Jefferies in February 2018 Source BBC
The 60 to 70% of customers who didn’t go on to sell (based on the West Cornwall figures extrapolated nationally) would have paid almost half a billion pounds to these firms for nothing/ no completed sale as advertised (to the end of the sample date in May 2016 from January 2014).
NB: Taking the Jefferies report of 51% listing to sold Nationally, this equates to tens of millions of pounds paid out up-front (or via a deferred loan agreement) by consumers who were invited to “sell your home” and “save thousands” but who have not as yet sold and have not saved thousands. Allowing Purplebricks customers a notional and reasonable 6 months to sell before giving up and using another agent, this equates to millions of pounds lost rather than saved.
As the attached image of the spreadsheet data shows, this further demonstrates that
- Zoopla data is not checked before publishing/ sold to business users (so its reliability must be questioned)
- Purplebricks were misrepresenting the legal status of properties to Zoopla and, by extension, consumers and investors
- There are a number of ‘anomalies’ which may suggest portal juggling or, at least, are worthy of further investigation
- The data that was cross-checked, shows that Purplebricks are reporting different property status’ to different portals for whatever reason. Whether as a result of technical problems or, a deliberate policy, there are a number of civil and criminal laws that may be broken by such actions if proven.
There has been a great deal of press coverage of the savings that owners might be able to make with an on-line agent as opposed to the more traditional agents. However, notwithstanding, recent ASA rulings that some of these claims are misleading; the hidden costs of putting your home up for sale with an on-line agent do not appear to have been calculated by many journalists or consumer champions and, has been conveniently left-out of these agents ‘savings’ calculations in their advertising literature.
the hidden costs of putting your home up for sale with an online agent does not appear to have been calculated by many journalists or consumer champions and, has been conveniently left-out of these agents ‘savings’ calculations in their advertising literature.
Put simply, if on-line agents had every property currently up for sale on Rightmove (1.2 Million homes) and sold a typical percentage of that stock (average industry norm’ for online agents is estimated to be circa 30% to 40% of stock) then the 60% to 70% of customers who didn’t go on to sell would have paid between £468,000,000 and£500,000,000* (half a billion pounds) to these firms for nothing. Not much of a saving for the vast majority of their customers in my view.
The traditional high-street agent, however, would have charged all those unsuccessful customers a cumulative total of around £0.00
The difference between the cost of selling with an online agent and a traditional one when all of the successful and unsuccessful fees are added in? Around £650 per sold property (assuming the current average UK sale price of £177,377 using HM Land Registry figures). A far cry from the thousands of pounds in savings that online agents would have the public believe and, all of which without the expert negotiating, valuation skills and local knowledge a good agent can bring to the table for sellers.
Journalists and consumer champions, please do your sums before singing the virtues of these allegedly cheaper agents.
* Assuming an up-front fee of £600
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About Chris Wood: Chris is an estate agent with over 25 years of property experience and is a leading campaigner against #PortalJuggling
His business PDQ Estates Ltd based in Penzance and Helston, West Cornwall. He has worked with all sizes and types of businesses from single office independents to the management team and board of RBS and Tesco. A former President Elect of the NAEA and board member of NFoPP until he resigned in 2009, Chris has always championed the highest professional standards forestate agents in the UK. No stranger to the media, he has appeared on various programs including BBC, News 24, ITV, independent and BBC radio and is a regular contributor to trade journals, local and national Newspapers. Chris is on KloutLinkedIn Ecademy Facebook and Twitter
He lives in in Penzance in his beloved West Cornwall and I n his spare time; Chris likes to keep fit and is a former long-standing member of the Territorial Army. In 2010 he mobilised for a tour of duty in Afghanistan with 1 Rifles as part of 3 Commando Brigade.