Purplebricks tells BBC viewers: ‘We have not led vendors up the garden path’

Purplebricks last night on prime time TV rejected claims that it has led vendors “up the garden path”.

On the Watchdog programme on BBC1, one seller complained that their Local Property Expert was in fact based 30 miles away.

Another complained that the Purplebricks advert on TV said it would “hold her hand” but it had not. The vendor went on to sell through a high street agent.

Other parts of Watchdog focused on how sellers who deferred payment have to sign up to a credit agreement with Close Brothers, saying they had not been warned about this.

All the allegations were refuted by Purplebricks boss Michael Bruce, but he did say that if his firm was getting it wrong, the claims would be put right.

He said: “I apologise if we don’t get it 100% right.”

Bruce, who said that a ‘seismic’ change is going on in estate agency, said he would be sitting down with “our partners” Close Brothers.

An update on reaction to the item quoted reaction from two emailers, both saying they had not been aware that they were taking out loans with Close Brothers when choosing to defer their payments.

However, reviews last night made clear that vendors had understood the terms: https://twitter.com/PurplebricksUK

Meanwhile, Purplebricks shares had a tumultuous day on the stock market yesterday after the BBC radio programme You and Yours took it to task over various claims which were later raised in Watchdog.

The shares had a roller-coaster ride between a low of 392p and a high of 478.5p.

They finished the day at 438.75p, according to the London Stock Exchange, down 7%.

Last night’s Watchdog programme is likely to provoke another day of volatility for the shares today.

Last night City analyst Anthony Codling said: “Hopefully now he [Michael Bruce]  will disclose how many of the homes listed by Purplebricks are actually sold by them, rather than just the fees they earn from listing the homes whether they sell or not.

“Purplebricks tell us this figure is commercially sensitive, but it is a KPI disclosed by all of the other UK estate agents we cover.”

Codling also said: “Having watched last night’s Watchdog show we reiterate our Underperform rating on Purplebricks shares.

“Our take is that the very fast pace of growth is leading to operational issues and management do not have the necessary span of control to stop its LPEs falling short.

“We appreciate that there are bad apples in every cart, but perhaps the pace of growth is leading to lower quality LPEs than are needed being recruited. The shares are counting on a lot of success in the future, however we believe that in order for Purplebricks to deliver the profits so eagerly anticipated, it needs to slow its growth and get its own house in order before seeking to sell the homes of others.

“Under questioning from BBC presenter Steph McGovern Michael Bruce commented that although it occasionally gets it wrong, Purplebricks remains the most positively reviewed estate agent in the UK. Ms McGovern questioned whether Purplebricks got things wrong ‘on occasion’, replying ‘We’re getting loads of complaints from your customers, that’s why we are following it up’.

“In our view there must have been a high volume of complaints to warrant a feature about Purplebricks on BBC’s Watchdog, a prime time show, on BBC’s flagship channel, which investigates viewers reports of problematic experiences with businesses across the UK.

“The fact that Purplebricks has made prime time UK TV does lead us to question who has correctly assessed Purplebricks model, the BBC or Trustpilot?”

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30 Comments

  1. cyberduck46

    Anthony Codling: “Purplebricks tell us this figure is commercially sensitive, but it is a KPI disclosed by all of the other UK estate agents we cover.”

     

    Anthony Codling is broker to Countrywide. It appears he is being a little mischievous because he should know that PurpleBricks disclose the number of instructions to their shareholders. If they also provided the number of homes sold then they would be publishing their conversion rate which none of the Estate Agents publish.

     

    So it is commercially sensitive.

     

    It was only recently that Mr. Codling was saying he would be publishing the data for listings and sales for the major Estate Agents which I presume includes Countrywide. You have to wonder why he’s not published it yet. 

     

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    1. Frown Please

      I wonder if you will ever talk about anything other than mr codling and purplebricks?

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    2. Robert May

      You don’t have to wonder at all he already said part 2 would be available late in 2017 after monitoring and collecting data  for a full year and yes it does include Countrywide numbers, the report is independent of Jefferies or their clients

      We already established other estate Agents do publish their KPI’s, perhaps you forgot to remember that?

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      1. cyberduck46

        Thanks for the update Robert. So when the report comes out will it be based on data a year old or will it include data that is a few months old too?

         

        >We already established other estate Agents do publish their KPI’s

         

        I remember you saying but I must have assumed you were referring to just sales figures.

         

        So Countrywide publish the number of listings too?

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        1. Robert May

          The data will include everything that has been observed  for all the agents observed, just as  the original report did.

          The intention is to show KPI’s measured to land registry so there is a fully independent rating system that shows who sells what, in how long, for what % of original asking price.

          The bit you are desperate for, full transparency, is what I have built.  If there is a duff rogue local agent  I want them out of the industry as much as  we all do.

          All the Countrywide numbers Mr Codling is asking Purplebricks to confirm are made available by the firms Purplebricks want to be  measured against, that’s why he’s asking.  It’s the reluctance to reveal  basic numbers that’s perplexing him.

          You’ll appreciate I get to talk to Mr Codling about what is going on in the industry, so I know how disciplined and regimented he is on compartmentalising the multiple facets of his job. Although you seem to think he has a vendetta against PB, he hasn’t, he is simply analysing what is going on without  influence from the pro or the anti sentiment. He should be respected for his intelligence and his independence. I do!

           

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          1. cyberduck46

            Yes Robert, I’m sure Mr. Codling wants more information from PurpleBricks but unless other Estate Agents are publishing their conversion rates then it is commercially sensitive information.

             

            They’re not going to publish this information unless everybody else does.

             

            I haven’t checked whether Countrywide publish their conversion rate or the number of listings but I’ve been following the comments on here for 6 months now and I’ve never seen it mentioned.

             

            If Countrywide don’t publish the number of instructions or their conversion rates then Mr. Codling is asking PurpleBricks for more than other Agents provide and I don’t think this is because he is naive.

             

             

             

             

             

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            1. Robert May

              Just  checked on 29th June I told you where to see Countrywide’s published numbers. I didn’t bother  typing them out but they are in the public domain.

               

              He is not asking for anything  secret  he simply wants to see  why the  numbers contradict themselves 25,000 listings at £1034 the theoretical number of listing based on 83% KPI or  51.2% KPI based on turnover/£1034 to give 41,000 listings.

               

              Maths always trips up marketing people!

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              1. cyberduck46

                Just checked the latest published figures from Countrywide and as suspected no mention of the number of instructions that produced the 20,693 sales figure.

                 

                Please explain what you are talking about “83% KPI”. Sounds like “Sales speak” to me.

                 

                 

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    3. El Burro

      Codling is asking how many properties they sell, not list, there’s a big difference.

      I bet it’s sensitive information though, I think if there truth were out today’s share price would be a distant memory.

      After all if you’re working on an upfront fee model and a significant proportion of sellers don’t get what they paid you for, ie moving house, those numbers could make or break you.

      It’s rather like going to a restaurant, ordering your meal and the waiter calculating your bill and taking your money there and then.

      I bet Trading Standards would be interested in how many people actually got their meals and of those that did, how many were edible or ended up with food poisoning!

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  2. dompritch134

    Mr Coding is still providing an underperform rating, this has not changed and is not new!!!

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    1. PeeBee

      There’s yer ‘Like’ for the day, Sir…

      ,,,unless you find the secret trick that lets you repeat the exercise, that is.

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  3. AgentV

    What is clear from the programme is that they are getting a lot of complaints from customers. Watchdog would not have ran the article if they weren’t.

    People might say that dealing with a large amount of property listings you are bound to get a lot of complaints. Why? Can many independent agents out there remember the last time they received a complaint about their charges or service? If you took 500 independents completing up to 100 sales per year…I wonder how many complaints there would be in comparison?

    And despite all this the model seems to be costing many consumers upwards of £1,100, with viewings. So that multiplies up to £1,900 Fee Average per Completed Sale (FACS) if only 60% of customers actually achieve the end result with the company (rather than go on to relist and sell with a full service agent). Add in another £500 odd if you take into account the higher than normal charges of their conveyancing services…and you’re up to £2,400. The cost of subsidy from investors, with their current investments of tens of millions of pounds for no return, probably takes it way above the £3,000 mark!!!

    I suspect £3,000 is way more than the average fee of most independents. It is certainly 50% more than ours. And to cap it all, the end result is a product that ends up on watchdog because of the number of customer complaints!!!

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  4. PeeBee

    ‘We have not led vendors up the garden path’

    The above is essentially true – they haven’t led anyone anywhere.

    Well… not unless they were prepared to pay additional for the service.

    Everyone else got a map and a starchart and were sent off to find their own way.

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  5. LettingAgent-PropMan84

    PurpleBricks vs The Estate Agents – It’s just not a competition because they are two very different things.

     

    One will put your property on a portal the other is an Estate agent.  I hope investors will see this….

    I’m sure PB will be successful, but I don’t believe it will be to the scale everyone suspects.

    Just my view but you can’t compare apples and pears.

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  6. IHS

    Having watched the program last night I would like to make the following observations:

    1. Deferred Payment Scheme:

    If  a vendor decides to defer payment which. apparently, most are now doing, then, presumably, Purple Bricks are paid the fee up front by Close Brothers who then enter into what is effectively a loan agreement with the vendor. The fee is then paid to Close Brothers, either directly by the vendor, or from the sale proceeds once the property is sold.

    Two questions arise:

    One: If there is no fee or interest charged to the vendor for deferring the payment of the PB fee how do Close Brothers pay for the schemes administration?

    Two: When and how do Close Brothers recover the fee if the property does not sell and/or the vendor is unhappy with the service provided by PB. If a vendor refused to pay, then Close Brothers would have to take them to Court to obtain a judgement. The vendor could claim that they were unhappy about the service provided by PB but Close Brothers could counter claim that this was nothing to do with them. Could get very messy!

    In any case I believe that any High Street Estate Agent worth their salt should be able to offer their customers two levels of service, the traditional Estate Agency and the PB model (they already have LPE’s in their offices!) which would counter PB’s intrusion into their area.

     

    .

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    1. Chris Wood

      Excellent points. I do hope the various consumer journalists involved in this story read the above comment and observations. This is a story that is going to grow and grow.

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      1. AgentV

        I agree….there surely has to be a cost to the loan as why would Close Brothers do it for free? If there is a cost don’t you have to tell people what that is rather than hiding it in charges elsewhere (like higher than normal in house solicitors fees)?

        Also Chris, if people are effectively setting up loans or encouraging people to take them out, don’t they have to have a Consumer Credit Licence?

        It appears from the declared numbers that the vast amount of customers are choosing to take this route of paying, so this all has to be very important.

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      2. Property Paddy

        as the story grows and grows, will their share price fall and fall?

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        1. dompritch134

          Property Paddy
          AUGUST 3, 2017 AT 2:51 PM
          as the story grows and grows, will their share price fall and fall?
          PURP up 3.65% today, PropertyPaddy Stick to Agency buddy.

           

           

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    2. J1

      Close Borther’s will collect their fee no matter what the customer experience

      In my experience of Close Brothers, which is limited, they are likely to be taking a third or maybe a little less out of the deal as their commission, leaving PB with probably around £500

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  7. BillyTheFish

    “All the allegations were refuted by Purplebricks boss Michael Bruce, but he did say that if his firm was getting it wrong, the claims would be put right.”

    OR

    “I am 100% certain we are getting it right so refute all the claims that we are getting it wrong, however if somehow I have missed something in my 100% certainty and we are getting it wrong we will put it right”

    I think my version makes more sense

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  8. Fairfax87

    The Close Brothers scheme is, i guess, almost identical to what they operated in the days of HIPs….  they make their money when the property does not sell, the interest free period ends, the Seller doesn’t pay, and the loan rolls on – what punitive rate of interest kicks in then ?

    I also believe that it is a condition of being offered the “deferred” option that you have to use PB’s Conveyancing service, so Close Brothers are assured of receiving the money from the PB law firms upon completion of a sale.

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  9. Jonhad67

    I note with interest that Purplebricks, in its statement to the Stock Exchange, chooses to refer to its ‘managed reviews’ via Trustpilot rather than the rating on allagents  – https://www.allagents.co.uk/purplebricks/vendors/

    I wonder why there should be such disparity?

    Any statistician able to tell us what the chances are of such different scores based upon the different sample sizes?

    Most peculiar methinks.

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    1. g4lvo17

      if you go on BBC Watchdog’s Facebook page, you will see many many complaints of people who did not realise they had signed a credit agreement, and also many who felt the service was abysmal. Mr Bruce was like a rabbit caught in the headlights when Steph McGovern didn’t accept his glib statements and threw more questions and asked for straight answers, none of which he did.

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      1. revilo

        Yes, makes interesting reading.

        That’s a good place to educate more of the public about what they’re signing up to!

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        1. AgentV

          Needs everyone to tweet a link out.

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    2. comment75

       

      As a PLC company now, Mr Bruce needs to be completely transparent now, whilst he clearly boasts about his firms 23000+ reviews,  I think the next investigation they will be getting is why there such a difference between Trustpilot and allAgents. What is their relationship with Trustpilot??

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  10. PeeBee

    OKAY…

    So it ain’t “a loan”.

    And that’s official – cos the CEO of a PLC told us.

    The CEO is also a Solicitor – so we have Law Society backing as well on that, I guess?

    Not to mention CRRs etc 2008. Oh… and all that other pesky Legislation that businesses in general – and Estate and Lettings Agents in particular – are shackled with having to comply with in order to trade legally.

    Just one little whassname in the woodpile, however.

    The joint-branded communication – to the beneficiary of what is termed by the company as ‘the deferred payment facility’ in their published statement to The City today, as reported here:

    http://www.propertyindustryeye.com/newsflash-purplebricks-defends-itself-in-statement-to-stock-exchange/

    – seems, however, to state otherwise, as the example on the Watchdog programme was clearly headed

    Re: Close Brothers Retail Finance Loan Agreement

    So – maybe that was a one-off; a rogue communication to a customer that slipped through the net – just like the other ‘rogue communications’ that Watchdog managed to come into possession of when they were producing the programme – which I hereby suggest will be known by the industry as #PurpleGate.

    Hopefully that IS the case – because there are a lot of those communications flapping about that could well come back and haunt the senders… the Company having quoted a figure that, assuming the words “the last 47,000 facility agreementsin their above-mentioned City statement mean that there were  more than a few more than that figure which have been entered into.

    Hmmm.  This could very well get…

    …interesting.

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  11. Property Paddy

    It’s pretty obvious to me PB are targeting vendors on lower incomes for their “close finance” and I am pretty sure they tie in with solicitors on their deal too.

    Am I wrong ?

    Are not people on low incomes already vulnerable ?

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  12. PeeBee

    “PeeBee, if I wanted to give myself likes I could.”

    That’s funny, cyberduck46…

    …I wasn’t posting that to you, but to your PB co-fanboy, ‘dompritch134’.

    Errrr… wasn’t I?

    ‘Dom’? Or ‘ducky’?

    Which one of you – assuming there actually IS two of you – is posting here?

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