Online estate agent eMoov recently set itself apart by directly addressing the issues of openness and transparency that have long dogged the online business model.
By offering a new ‘no-sell-no-fee’ payment structure - as a few other firms have done in the past - have they now found a way to rebuild lost trust in the online model? And if so, will more firms follow suit?
Back in April, leading UK barrister Ian Rees Phillips, raised several questions about the duty of care that online estate agents owe their customers. He was talking largely about the fact that online agents are incentivised to list properties, but not sell them - they get their money either way.
On top of that he said there is little to no transparency as to how many of the properties that are listed actually go on to sell through the online platforms.
Purplebricks, for example, has had some bad customer reviews, based largely on this very issue. The agency is now in a legal battle with AllAgents.com, the website on which many of those reviews were posted. As such, the Purplebricks page on AllAgents was suspended. Some have argued, therefore, that rather than address the complaints, Purplebricks would sooner just limit the number of eyes which see them.
In his opinion piece, Phillips argues that an agent "must not place itself in a position where its own interests conflict with those of the principal or where there is a real possibility that will happen; and it must not profit from its position at the expense of the principal".
I don’t think you can say fairer than that. If the agent has no financial interest in selling the homeowner’s property, and works on a business model which very much accepts this as the norm, how can they believe that they are offering a fair service?
And so eMoov, one of Purplebricks’ competitors, has stepped up. Alongside its usual offer of charging customers £795 upfront regardless of whether the property is sold or not, it is now also offering a no-sell-no-fee payment structure, too.
The customers who choose the no-sell-no-fee structure will pay nothing if eMoov fails to sell their property, but if the online agent succeeds, the customer pays them £1495, handed to eMoov by the seller’s lawyer upon completion of the sale.
I think most of us are in agreement that this is great news for those who want to sell their property through an online agent, and even better for us in the industry who want to see innovation succeed and have been eternally disappointed by the sometimes less than compassionate business practices of some of the online sector’s biggest names.
Transparency and honesty are vital components to the future of online agency (not to mention PropTech as a whole). It seems that eMoov has thrown down a gauntlet with this decision, and it’s going to be fascinating to see whether its two major UK rivals, Purplebricks and YOPA, follow suit. I would suspect that the latter is far more likely to follow than the former.
It will also be interesting to see what ratio of eMoov customers go for the cheaper £795 fee, regardless of sale or not, and how many opt for the more expensive yet less risky option of no-sell-no-fee.
My prediction is that those who are looking to sell property that is well located in desirable areas, with convenient transport links and amenities, those who are confident that their property will sell quickly, will continue to choose the lower fee because they know that there is a good chance the property will sell quickly.
But those who have homes in less popular locations, as well as those who have put their homes on the market speculatively, with no real rush to sell, will likely opt to pay a little extra in fees if the property sells to avoid having to shell out if if doesn’t.
This is exciting; it’s what I, and many others, have been calling out for for some time now. I think it’s an important and morally astute play from eMoov, one which may also turn out to be fiscally savvy and one which I hope will force its competitors to take similar action.
If so, customers can stop being misled by advertising and the non-disclosure of accurate success statistics, and the industry as a whole can stop being splattered by the negative paint coming off the broad strokes of the ‘all online agencies are liars and cannot be trusted’ paint brush.
Throughout PropTech, and property as a whole, there is one thing that is undeniable and unavoidable; we have to give the customer control. Online agency has damaged PropTech’s reputation by not following this simple rule. One can only hope that this step from eMoov will encourage others to do something similar.
We have to remember that the whole idea of online agency came about as a result of consumer outcry. Homebuyers and sellers, not to mention renters, were fed up of being taken advantage of with unreasonable hidden fees from some agents. It seems now that the online agencies are falling into that same trap; if they continue to be immature with the truth, failure is surely their destiny. As far as I can tell, transparency is the only path to success.