Online Estate Agents

07th November 2017

By Catherine Leyland, Copy Group Manager

 

Clearcast has recently seen an increase in ads for online-based estate agent/house selling services.  Charges are (generally) lower than a traditional estate agent’s because customers can do much of it themselves (viewings etc).

 

This type of service has come under the ASA spotlight recently and we’ve seen a few upheld rulings.  This one on HouseSimple Ltd from February offered a chance to ‘sell your home from just £495 upfront’, however, the ASA found that the price was only available to customers who used HouseSimple’s recommended conveyancing and mortgage services.  If customers opted to use their own conveyancers and/or mortgage brokers they were charged an additional fee.  Clearcast considered that, because customers could sell their homes for the featured price, the ad was acceptable; the ASA concluded that customers needed to know that the price applied only in specific circumstances.  The upshot here is that the advertiser must make clear if an advertised price is only applicable to customers when other, related services are also used.

 

In August, there was another upheld ruling on HouseSimple.  This time, two issues were involved, both of which were upheld.

 

A website ad had stated that ‘high street estate agent fees are usually worked out as a percentage of the final sale 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’ and that online estate agents were ‘much cheaper’.   The ASA decided that the substantiation supplied by the advertiser was not sufficient to support the claimed range of high street agent fees and noted that fees of only 1% plus VAT could be achieved, or lower in some cases.

 

The TV ad stated that you could get an ‘expert evaluation, professional photos and floor plans – just like a traditional estate agent’ but went on to say that HouseSimple customers additionally save ‘on average £5,000 in fees’.  A super stated that this saving was ‘based on responses of 391 previous HouseSimple customers surveyed’.  The ASA considered that consumers would understand from this that HouseSimple was making a comparison between their online business model and high street estate agents, especially as the web ad said ‘when you sell with us you get even better results than with a high street estate agent and for a much lower fee’.  The ASA noted that it was standard practice for high street estate agents to also provide other services like accompanied viewings whereas HouseSimple didn’t include things like this for their basic fee.

 

The ASA thought that the services were different enough that a savings claim by itself could mislead.  They considered that the substantiation provided in support of the savings claim was not based on robust survey methodology and considered that the savings claim was likely to mislead in the absence of qualification about the basis for it.

 

In October, there was an upheld complaint on the house buying service Purplebricks.  Complainants felt that ads stating ‘commisery [sic]: the misery you feel when you spent thousands on commission but got nothing more for your money’ could misleadingly imply that Purplebricks didn’t charge a fee for their service.  The ASA didn’t agree that was the case, saying that the average consumer to whom the ad was directed was likely to be a home owner and be familiar with the selling process, expecting estate agents to charge for their services.  So this first point was not upheld, but a second point by the complaint was.  The second point challenged whether the comparison between Purplebricks fee and the commission charged by other estate agents was misleading.

 

The ASA agreed that consumers would understand from an onscreen qualification in the ad (‘Saving based on Purplebricks flat fee vs using a High Street estate agent’) that a flat fee was charged. However it didn’t think viewers would necessarily understand that the fee was payable regardless of sale, as flat fees were relatively new to the market, and upheld this point. Clearcast now requires Purplebricks (and any similar services) to state that the flat fee is always payable in their supers.

 

This is a market which is still fairly new and evolving.  If you are submitting a script for this type of house selling service to Clearcast, please send us full details of how it works. This market is evolving and whilst there may be similar general principles between online agents not all of these services are the same.

 

Having the right information up front will put us in a position to offer the best advice in relation to the BCAP Code and in light of previous rulings.