Claims about how much an online agent could save sellers have been banned by the Advertising Standards Authority.
HouseSimple – backed to the tune of £13m by Carphone Warehouse funder Sir Charles Dunstone and his business partner Roger Taylor – claimed in TV advertising that it saved customers an average of £5,000 in fees.
The claim had been passed by Clearcast, the body that decides whether TV advertising can be broadcast.
The TV advert was one of two issues investigated by the advertising watchdog.
The other was a section on HouseSimple’s website (see screengrab below) which said: “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.”
It added that online estate agents were “much cheaper”.
The ASA received two complaints.
One complainant believed the average estate agent fee was 1.3%, and challenged the claim of 1.5% to 4%.
Both complainants challenged whether the savings claims were misleading and could be substantiated.
HouseSimple said that the range of 1.5% to 4% was based on a HomeOwners Alliance article, which referred to a mystery shop of estate agent fees and a 2011 survey by Which?
HouseSimple and Clearcast said that the savings claims were based on a survey by HouseSimply of 391 of its customers who had received a quote from a high street agent before switching to HouseSimple and had sold their house with them. That survey, in May 2016, was sent again last December.
In relation to the claim “much cheaper”, HouseSimple said 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 house price index, and an extremely low high street commission of 0.75%, would yield a fee of £1,655 against their highest fee of £995 and would still achieve a saving of 40% which HouseSimple considered to be “much cheaper”.
However, the ASA upheld both complaints.
It had previously concluded that the 2011 Which? survey was not adequate to support an average commission figure of 1.5% to 1.8%.
The HomeOwners Alliance article actually said that fees of 1% plus VAT could be achieved, or be even lower in some cases.
HouseSimple’s own customers reported having received quotes of 1% or less.
On the second complaint the ASA said consumers would conclude that HouseSimple was providing similar services to high street agents, and saving on average £5,000 in fees.
However, the ASA said high street agents provided other services including accompanied viewings as part of their fee, whereas HouseSimple did not, and would charge extra.
The ASA also said that HouseSimple’s survey of its customers was not robust: the survey was not weighted for different parts of the country or for different types of property, where house prices and estate agents’ fees varied.
Both of the adverts were banned.
A spokesperson for the ASA told EYE that the body does not keep records of instances where the ASA bans an advert previously approved by Clearcast, but thought these would be rare.
Niamh McGuinness, head of copy clearance at Clearcast, told EYE: “The ASA has ruled that further qualification is necessary to support the advertiser’s claims. We’ll work with the advertiser to ensure future ads comply with this ruling and to ensure they get on air and stay there.”
Yesterday, the TV advert could still be seen on YouTube:
EYE reported only on Monday that HouseSimple had removed two claims from a promotional email.
At the end of July, HouseSimple said on Twitter that its savings claims had been independently verified – a reference to Clearcast’s earlier approval.
Last year, Purplebricks’ claim to save vendors an average of £4,158 was banned by the ASA – although it emerged in BBC’s You and Yours and Watchdog programmes that the claim was still being made in emails until this month.