Estate Agent Today has been contacted by an individual who says he is one of three former Emoov customers intending to take legal action.
Emoov under its former ownership went into administration at the end of 2018 after failing to secure promised funding.
At the time there was media speculation as to the timing of the administration following a crowdfunding raise earlier in 2018, and some debate about what would happen to customers of Emoov who were effectively left stranded after the company collapsed.
“While we acknowledge that sometimes businesses do not manage to deliver on their promises, in this case we believe that it is the equivalent of a fraud” claims the individual who contacted EAT.
He suggests there will be two legal actions; these would be filed against the former chief executive and founder of Emoov, Russell Quirk, and against other members of the board of the company prior to its collapse.
EAT understands that the three individuals registered as sellers with Emoov in November, and are looking for other vendors from around that time who have not received compensation. The three are all from the London area.
It is thought that liability for fees paid to Emoov prior to the collapse rests with Emoov Limited and its administrators, and/or the credit card provider; however this appears not to have yet been tested legally.
In December 2018 The Times reported that some crowdfunding investors who staked money following a mid-2018 Emoov pitch on the platform Crowdcube were considering action.
There appears to have been no development on that front and the individual who contacted EAT is referring to lost vendor fees not wider company investment.
In January this year Emoov was bought out of administration by PropTech start up Mashroom.
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If a double glazing company received an upfront payment/fee, on the promise that they would install a double glazed window, say at a cost of £1,000 to a client. And in a year they had 65,000 customers, but only installed 31,200 windows failing to put the other 33,800 double glazed windows in - I think the company would have major issues with trading standards.
So, if an online agent receives an upfront fee, on the promise they will provide a service that allows a vendor to complete on the sale of their home, say at a cost of £1,000 or probably more. But only completes on 48% of sales - why does trading standards not take issue?
When Emoov failed, twentyci, stated that sales rates of instructions to sales was low, and from this I extrapolated that completion rates would have been less than 40%, so 605 of vendors paying out good money for no return.
I am not saying that online agents should not charge upfront fees, but they should give accurate conversion rates to potential vendors before the vendors part with their cash.
Purplebricks say they convert at 80% from instruction to completed sale, I am offering £1,000 to anyone who can prove this, as I think they convert at nearer 50%, which means last year nearly 35M of fee was paid by vendors who did not get sold, or in the case of a double glazing company did not get a double glazed window put in.
It is time that 'transparency' was the order of the day - if clients are paying cash upfront based on trust; on the no sale no fee basis, which over 90% of estate agents use -the trust is balanced the other way with the agent taking the risk that if they do perform a fee will be forthcoming.
Nice chat stantini.agree with everything except "I am not saying that online agents should not charge upfront fees, "
This should be criminal.
Well Trading standards seem to think it is ok. I wrote to them outlining the position that tens of millions had been paid and not even a cake in return for customers of Purplebricks, and Trading Standards position is that until customers complain no action can be taken.
Maybe ex-clients of Purplebricks and other onliners, who received no sale could get a class action together through a solicitor and get the momentum required for the regulating bodies to wake up to a possible mis-selling scandal on a scale of the recent PPI scandal in the financial sector.
Of course if online agents can prove they sell 80% plus of the stock they list, rather than 48%, then there would be less of a fuss, but even if, and it is a big if - an online agent sold and completed on 80% of its listings, that would still mean 20% of clients paid for a service they did not get, which with Purple bricks would be over 15M a year.
Isn't it Benham & Reeves who now deal with this guy? Having done a few split-deals with them that never received any payment, it is no wonder that the two share the same PR bed these days
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