The programme revealed Purplebricks offers a deferred fee arrangement, which turned out to be a loan arrangement with Close Brothers, which customers flagged as misleading.
In the studio, Purplebricks CEO Michael Bruce (who was a grilled by presenter Steph McGovern) defended the practice, at first suggesting it was completely clear that it was a loan arrangement, but added: “I’m happy to sit down with Close Brothers and discuss how to make it more transparent.”
“I apologise to all our customers who didn’t get the 100% service they required from Purplebricks. There will be occasions when we get it wrong,” he said.
A mystery shop also revealed agents exaggerating sales numbers and a “local expert” who lived 30 miles away.
Purplebricks remains the most positively reviewed estate agent in the UK on Trustpilot, however, McGovern added: “we’re getting loads of complaints from your customers, that’s why we are following it up”.
The Advertising Standards Association (ASA) has banned six of the estate agency firm’s adverts in the last 18 months, including a promise that Purplebricks could save customers £4,158 compared to a traditional estate agent. The ASA reported that Purplebricks could not back up that claim and that “it was likely to mislead”.
The ASA queried the reliability of the calculations that led to the £4,158 figure – which included a 2011 Which? survey – and the flimsiness of the evidence substantiating the calculations in general.
Equity analysts from Jefferies UK Building and Residential services said its analysts were “comforted the CEO agreed on prime time TV to work harder to be more transparent.”
“Hopefully now he 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 key performance indicator disclosed by all of the other UK estate agents we cover,” it said.
The analyst added: “In our view, [the firm] has yet to prove the efficacy of its business model. Should the model stumble, the share price may do likewise.”