It’s been more than a year since our first review of online estate agent Purplebricks, and a lot has happened since. After their share price fell from 5.1% to 4.6% last year, the online agency withdrew its overseas efforts to double down in the United Kingdom. In August, they announced that their strategic focus was now ‘fully on the UK’.
Along with this renewed UK focus, Purplebricks has also made some changes to their business model, the biggest being a new Money Back Guarantee. Having once proudly made the distinction between their fixed fee service and the high street agent’s proportionate ‘no sale no fee’ charge, Purplebricks have now adopted a NSNF policy - provided that certain criteria are met.
While many might be surprised, the groundwork for this change has been there a while - or at least, since Purplebricks began facing financial difficulties. Back in 2019, Chief Executive Vic Darvey told the Press Association, ‘With any successful business, you need to adapt and evolve your pricing strategy . . . In certain markets (...) there is a moment of hesitation from customers saying: ‘I know I can save £10,000 but actually do I want to commit to an £899 upfront fee when my house may not sell?’ At the same time, Purplebricks had reported a £52 million operational loss, and had begun withdrawal from the United States and Australia.
After successful trials in the North West of England, Purplebricks took their Money Back Guarantee scheme nationwide. The Pay Now and Pay Later structure covered in our last article remains the same: Pay Later customers must pay a £365 administration fee to hire conveyancers outside of Purplebricks, while Pay Now customers don’t have to.
The Classic and Pro packages, aside from a £100 increase, remain intact and unchanged:
Classic (Individual viewings)
Pro (Assisted viewings)
Back in July 2020, we concluded that, due to their stripped back approach to homeselling, and 50% of their stock not selling, Purplebricks were not a viable option for first time home sellers. Now, with their new Money Back Guarantee, the online agency has taken another cue from the high street agents they promised to outprice and outmarket.
Has anything changed since 2020 to make Purplebricks a reliable option for home sellers? And is their Money Back Guarantee worthwhile?
The smallprint of the Money Back Guarantee reads:
‘*Money back guarantee of fixed fee redeemable if no qualifying offer is made within 10 months. Qualifying offers are 90% of the property valuation provided.’
This seems pretty straightforward. Fixed fees can only be returned if no qualifying offer of 90% of the property valuation has been made.
Let’s take a look at the terms and conditions. There’s a lot to unpack here, so we’ll address each one in order.
Your valuation must be the same as or less than the valuation provided by the Local Property Company (LPC). If you instruct an LPC to advertise at a higher price than the price you were given, you won’t get your money back.
One of the main issues with the Money Back Guarantee is that it relies on your valuation being static. If you instruct your LPC to advertise at a higher price, you won’t be able to claim your money back if your house doesn’t sell.
If you don’t like the valuation you receive, you could request another LPC to evaluate your room - however, this is contingent on another Purplebricks LPC being available. If they aren’t, you’re stuck with the valuation you were given.
Even if you do manage to get a different LPC, you might still end up violating the Money Back Guarantee. The terms of this aren’t clear, but we know it depends on which expert you instruct, and the valuation you receive.
This is a far cry from the flexibility of high street estate agents. Valuations from these agents are usually free, and you can get them from as many agents as you like.
Here at GetAgent, we always recommend choosing three different agents to evaluate your property. That way, you can pick the best, realistic valuation for your property. You can compare local agents and request valuations for free using our Agent Comparison Tool below.
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If you delay or frustrate the sales process by declining property viewings, then the money back guarantee will not apply and cannot be claimed.
Another takeaway from the terms and conditions is that declining viewings will lead to the Guarantee being rescinded. This can make things awkward. House viewings should work for you, the home seller, especially if you’ve paid for a Classic Purplebricks package where you arrange viewings yourself.
Aside from declining viewings, it’s unclear how else a home seller might ‘delay’ and ‘frustrate’ the sales process. Ambiguities like these could further jeopardise your chance of claiming your money back if your home doesn’t sell.
Purplebricks must be given ‘sufficient time’ to market the property. The Money Back Guarantee is only allowed if you continue to work with Purplebricks for 10 months from the Service Agreement date.
Purplebricks must be given at least 10 months to market your property. This is a long time for a house to be on the market. If your house doesn’t sell and you reclaim your money, it’ll be much more difficult to sell in the future. Property listings tend to stagnate after a number of weeks of going live, which means the first few weeks are crucial to success.
If you wait the full 10 months, you might even lose your window to sell altogether. The property market could take a turn for the worse, your financial situation could change, or an unexpected life event could throw a spanner in the works.
This leads us to the next clause:
Money Back Guarantee won’t be valid if you appoint another agent to market your property, and you accept an offer from this agent before expiry of 10 months is over.
If your LPC is getting nowhere with your sale, it might get frustrating knowing there’s an agent who could do a better job, but you’re unable to switch because of the 10 month contract.
With high street agents, it’s a much different story. Like Purplebricks, high street estate agents include a tie-in period in their contracts, but they’re usually much shorter. Typically, they last for 6 weeks, with a notice period between 1 and 4 weeks. Of course, there are penalties if these terms aren’t met, but there’s clearly much more flexibility than Purplebricks’s 10 month contract.
Another plus point with high street agents, is that you can market your property using several of them. Essentially, this makes them compete to get your property sold. While this method has its pros and cons, it’s just one example of the extra freedom found in high street agency’s contracts.
If property prices reduce by 5% in any quarter as measured by the nationwide house pricing index, the Money Back Guarantee will no longer apply.
If house prices fall by 5% in a quarter, the Money Back Guarantee will no longer apply. This means that should a recession hit the market, Purplebricks won’t relinquish your money.
Recessions are inevitable and some real estate agents have recession clauses in their contracts to insulate their business from the worst of the storm. Still, it’s a discomforting thought that should the property market go south, you’ll have the most to lose from your property sale.
While the Money Back Guarantee is undoubtedly an improvement over the original fixed fee service, there are ambiguities and issues with both the service, and ultimately, Purplebricks as a whole. As a result, the Money Back Guarantee doesn’t seem worth it under current circumstances.
In the past few years, we’ve seen Purplebricks return to the UK and overhaul their business model due to financial losses. The Money Back Guarantee is just one of many changes Purplebricks has made to improve the company’s chances of recuperating. This year they’ve also abandoned their old self-employed model and hired their sales agents as permanent employees.
Whether or not the revamped structure will improve prospects, remains to be seen. If 50% of their home sales continue to fail, Purplebricks will see a double loss in profit as customers will almost definitely seek to invoke the clause.
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