A complaint about Purplebricks has been upheld by the Advertising Standards Authority.
Arun Estate Agencies, a chain in the south, challenged claims made about savings in a series of nine testimonials in July last year at www.purplebricks.comm/reviews
The first three testimonials stated “Mrs Kay, Blackburn, March 2016. Fees saved £5,682”; “Mrs Roach, Bournemouth, March 2016. Fees saved £3,702”; and “Mr Penfold, Edington, March 2016. Fees saved £7,302”.
Arun challenged whether these claims were misleading and could be substantiated.
Purplebricks provided information from their records which showed the sale prices achieved by the individuals featured in the three testimonials.
Purplebricks told the ASA that based on an estate agent fee of 1.8%, compared with the £798 fee Purplebricks was charging last year – or £1,158 in London – Mr Penfold would have saved the amount stated, and both Mrs Kay and Mrs Roach would have saved slightly more.
Purplebricks told the ASA that it had based its assumed estate agent fee on a a customer survey it had conducted.
It had sent this to all the individuals who had sold properties through Purplebricks between May 19, 2015, and July 7, 2016, asking them to “select the level of commission you were quoted if you had your property valued by a traditional high street estate agent”.
Out of 2,308 respondents, 1,805 indicated the level of fee. From this, Purplebricks calculated the average commission as 1.5% for the 81 respondents in and around London and the 1,724 respondents outside London.
Purplebricks assumed that the quoted commission rate excluded VAT. It added 20% VAT to the figure of 1.5%, arriving at 1.8%.
Purplebricks said the findings of its survey were supported by evidence from independent parties.
They highlighted that the Citizens Advice website stated that estate agent commissions were “usually between 1½ – 2½ %”, and that an article on YourMoney.com stated that the “average high street fee is 1.5% … but charges can be as much as 3%”. Purplebricks also referenced a 2011 Which? survey and information from a national conveyancing firm which it had referenced during the course of a previous ASA investigation.
Purplebricks said the reference in the survey to “traditional high street estate agents” would be understood by consumers to cover all estate agencies with a high street office, excluding online or ‘hybrid’ estate agencies without high street offices. Purplebricks explained that the service offered for its fixed fees included the same services offered by traditional high street estate agencies, although its services were available outside of estate agents’ usual hours of operation.
Purplebricks did not believe its advertising was misleading, although “for the avoidance of doubt” it had made some amendments to its web page.
However, the ASA said that given that the testimonials related to properties sold in specific areas, it believed that consumers would expect the comparison in fees to relate to agents in those areas.
The ASA said it was concerned that the evidence provided by Purplebricks was not adequate to support the “fees saved” comparison.
The ASA said it was also not clear that the comparison was being made specifically against high street agents, and its ruling goes on: “We understood that the service Purplebricks provided was largely similar to that provided by ‘high street’ estate agents.
“However, we understood it was standard practice for ‘high street’ estate agencies to conduct viewings on behalf of property sellers as part of their fee, whereas Purplebricks charged additional fees if property sellers wanted an agent to conduct viewings on their behalf.
“We considered it was not clear from the ad that the service provided for Purplebricks’ fee was different to that of ‘high street’ estate agents.”
The ASA noted that Purplebricks had added 20% VAT to the 1.5% calculated from its customer survey to arrive at its 1.8% figure.
However, the survey question had not made a distinction between VAT-inclusive and VAT-exclusive quotes, and it was not possible to determine whether respondents were referring to VAT-inclusive or -exclusive costs.
“We therefore concluded the average figure of 1.5% based on the results of the survey and the 1.8% figure used in Purplebricks’ ‘fees saved’ calculations were problematic.”
The ASA also said that sellers often approached more than one estate agent for a valuation and to find out what they charged, but said that Purplebricks’ survey did not take into account that respondents may have received a range of quotes.
Regarding the additional sources which Purplebricks believed supported the findings of its survey, the ASA said the Which? survey and information from the conveyancing firm were not adequate. Because it had not seen the source of the figures stated by Citizens Advice and Your.Money.com, the ASA said these were not adequate evidence.
The ASA concluded that the ‘fees saved’ claims were misleading to consumers and had not been substantiated.
It told Purplebricks not to run the same advert again and to ensure that adverts making comparisons must be substantiated by adequate evidence.