Banned! Online firm claimed High Street agents "charge 1.5% to 4%"
16 August 2017
The Advertising Standards Authority has banned online agency HouseSimple from claiming that High Street agents charge “1.5% to 4% (plus 20% VAT)” after upholding two complaints about a TV advertisement and website content.
In February this year the HouseSimple website stated on its ‘Estate Agent Fees explained’ section that “High street estate agent fees are usually worked out as a percentage of the final sale price of your property. This can range from 1.5% to 4% (plus 20% VAT - which often isn't clearly highlighted as an extra cost), adding up to an average bill of £5,247.”
The website went on to claim that online estate agents were “much cheaper”.
Meanwhile in March this year a TV ad for HouseSimple included a voice-over saying ‘Get an expert evaluation, professional photos and floor plans … just like a traditional estate agent … but the big difference, HouseSimple customers saved on average £5,000 in fees.’ Text at the bottom of the screen stated “Based on responses of 391 previous HouseSimple customers surveyed.”
The ASA received two complaints about these. One complainant believed that the average estate agent fee was 1.3% and therefore challenged whether the claim “1.5% to 4%” was misleading and could be substantiated; both complainants challenged whether the savings claims in the respective advertisements were misleading and could be substantiated.
In its response to enquiries from the ASA, HouseSimple claimed the 1.5% to 4% claim was based on a HomeOwners Alliance article and a 2011 survey by consumer body Which? The agency also submitted two surveys - from May and December 2016 - of former HouseSimple customers citing the fees they were quoted from high street estate agents.
Specifically, HouseSimple said savings claims were based on a survey it carried out of 391 customers in May 2016 who had received a quote from a high street estate agent before switching to HouseSimple and had sold their house with them.
The survey calculated the average savings that customers would make by comparing the difference between the eventual sale price of their property with their estimated high street estate agent commission subtracted and the sale price of the property with HouseSimple’s fees subtracted. It said the May 2016 survey request was sent to 4403 customers who had sold a property with them between Jan 2015 and April 2016.
It was sent again in December 2016 to 2816 customers that had sold between 1 Jan 2016 and the date of the survey which was 29 December 2016.
In relation to the claim “much cheaper” the agency told the ASA that despite the ambiguity of the claim "much", for the majority of the UK, even on the lowest scale of the high street commission rate, a seller would still save a significant amount by using HouseSimple.
Using the UK average house price of £220,713, according to the government, and a low high street agency commission of 0.75% would yield a fee of £1,655 against their highest fee of £995 would still achieve a 40% saving which considered "much cheaper".
However, the ASA did not agree.
Its conclusion reads: “We ... concluded that the claim that high street estate agent fees ranged ‘from 1.5% to 4%’ (plus VAT) was misleading and had not been substantiated.”
On the “much cheaper” claim, the ASA pointed out that HouseSimple’s survey results were not weighted for different areas in the country nor for property size “and we understood that property prices and resulting estate agents fees could greatly vary depending on those factors.” The authority was also critical that multiple quotes from different agents were not accounted for when the survey gathered information on high street agents’ fees.
The ASA ruling concludes: “The ads should not appear again in their current form. We told HouseSimple Ltd to ensure that ads which made comparisons provided sufficient information about the services being compared to ensure that consumers would not be misled about either the advertised service or the competing service. We also told them to ensure they held adequate evidence to substantiate the basis of comparative claims.”
*Article originally sourced from Estate Agent Today https://www.estateagenttoday.co.uk/breaking-news/2017/8/banned--online-firms-claim-high-street-agents-charge-1-5-to-4