Tesco have announced today that they are to withdraw their innovative ‘For Sale By Owner’ offering today and their website has been changed to reflect this. The news comes less than six months after the launch of the controversial private sellers offering and was the first significant brand to promote a ‘FSBO’ model. I understand that all of Tesco’s existing clients will receive full refunds plus a good will payment.
Tesco Property Market launched in the early summer offering the public a chance to sell their house privately for £199. The offering immediately ran into trouble with estate agents and the property portals one of whom, Fish4 had actually agreed to supply properties to Tesco to advertise on their web site. Fish4 received numerous complaints from their estate agent advertisers that they were helping Tesco to launch a rival offering using their stock and other portals stirred the pot with claims that they wouldn’t have undermined their clients (the agents) by advertising with a brand like Tesco. Fish4 quickly saw the error of their ways and withdrew their support.
At the time, Tesco had sought guidance from the Office of Fair Trading who they met with in May and whom, one must imagine, gave Tesco confidence in the product they were launching. However, complaints made by agents to the OFT since the launch are believed to have resulted in a controversial about turn and a ruling that Tesco were in fact acting as an estate agent and as such were governed by the 1979 Estate Agents Act, the Property Misdescriptions Act and The 2004 Housing Act and as such, must ensure that they comply with all the legislation as traditional estate agents do. This costs money and can’t be done for £199.
It remains to be seen whether this will be a hollow victory for estate agents who may well find that Tesco return with a fully fledged estate agency offering which is likely to have much more impact than the more modest product that they started with. It would also seem unlikely that Rightmove and the other portals would be able to refuse listings from a bona fide agent – even if it is called Tesco!
What does remain unclear is exactly how much pressure the OFT came under following the launch and whether the public have been well served by the apparent cave in to pressures from the property industry. Have the OFT reacted to concerns from the public about Tesco’s cheap offering or from an industry that has required a makeover for years?
Watch this space…..