Banned - award-winning online agency's fees comparison advert

The award-winning online agency HouseSimple has had one of its advertisements banned by the Advertising Standards Authority.

The advert was a poster for the agency - which last week won Online Agent of the Year at The Negotiator awards - which prompted two specific complaints investigated by the ASA.

Both complaints, concerning alleged fees and savings, were upheld and in a statement this morning the authority says: "The ad must not appear again in its current form. We told HouseSimple Ltd to ensure that future ads made clear the basis of comparisons and that they held documentary evidence to substantiate their claims."

The poster, spotted on July 13 this year, stated:

"… you could just pay our usual fee of £495 and save thousands instead.* Not only do we potentially save our average London client £18764** in fees, we’re also [X]% more likely to sell a property than a high street agent - and we're three times faster at selling it++". 

A footnote stated:

"** Offer is based on an average Foxtons fee of 2.4% +vat (2.88% inc vat) (Based on Average Foxtons fee for 2014, Peel Hunt Market Report) and is available to clients whose properties are sold and completed at £377,000 or above ... ++ Based on data from Rightmove.co.uk".

A complainant contacted the ASA suggesting two claims were misleading and challenging whether they could be substantiated: the first was "we potentially save our average London client £18764** in fees" and the second "we're three times faster at selling [a property]".

For the ASA's investigation of the first complaint, HouseSimple provided details of all sold or sold subject to contract properties with London postcodes between November 11 2015 and June 8 2016. This document identified the fee that was either due or would be due if the purchase was completed for each property. The average fee for this list was £698.83. 

HouseSimple calculated the average asking price for the properties, which was £675,767.11 and derived from this the average fee charged by Foxtons (2.4 per cent plus VAT), which was calculated to be £19,462. The difference between this figure and the online agency's average fee was £18,764.

HouseSimple told the ASA it specifically used the word “potentially” because the claim was based on averages, which was also clarified in their terms and conditions. 

It said it\ used Foxtons as a comparator because that firm was the most identifiable competitor in London. HouseSimple provided an article by the HomeOwners Alliance stating that estate agent fees ranged from 0.75 per cent to 3.5 per cent, and said the Foxtons fee of 2.4 per cent was a fair middle ground.

For the second complaint, HouseSimple provided a table for the period October 23 2015 to April 22 2016 showing the number of clients on each of its package types and, on average, how many days each took to sell. 

The table stated that the average selling time across all clients was 25 days.

HouseSimple also provided the ASA with a Rightmove House Price Index report from February 2016, noting that it stated the average time to sell in January 2016 was 79 days. The agency clarified that this measurement was for the UK, excluding London. 

HouseSimple also provided a graph from another website, Home, showing the average time on the market for properties in the south-west region of London from August 2015 to August 2016, which indicated that the average number of days was about 120. HouseSimple noted that this was much higher than the figure used in the ad.

The ASA's lengthy ruling on the first point reads:

"We considered consumers would interpret the claim 'we potentially save our average London client £18764 in fees' as a statement that it was possible for the advertiser’s average client, namely a HouseSimple vendor selling a London property that was averagely-priced in relation to other HouseSimple customers, to save that figure on fees in comparison to competing estate agents. We therefore expected to see evidence to demonstrate that the fees paid by their average clients were at least £18,764 less than competitors in a reasonable proportion of cases.

"We understood that HouseSimple had chosen Foxtons as a comparator because they believed they were representative of the range of fees charged by estate agents. We noted the information on the HomeOwners Alliance website, but it did not state how the range 0.75 per cent to 3.5 per cent was calculated, whether this was nationwide or London specific, the source of the data, how recent these figures were or whether they included VAT. 

"It was not made clear whether fees were evenly spread along that spectrum (in which case the average would be 2.12 per cent) or whether they were clustered at one end. Moreover, the article stated that vendors should be aiming to engage agents with fees of one per cent. In light of these factors, we did not consider HouseSimple had demonstrated that the 2.88 per cent fee reportedly charged by Foxtons was representative of the average fee charged to London vendors. The nature of this comparative element was stated in a footnote, but we considered that it was insufficiently prominent to make clear the basis of the comparison and that, in the context of the ad as a whole, it contradicted rather than clarified the headline claim.

"Notwithstanding the above, we considered the evidence provided by HouseSimple. We understood that they had calculated the mean fee charged to their London clients (including fees that would be due on SSTC properties) over a seven month period and used this figure to compare against the fee that would be payable to competitors on a property with the mean value of their clients’ properties. We noted that the second half of the calculation determined what fees would be payable to competitors (our concerns about the actual percentage figure used notwithstanding) on properties of average asking price in relation to all properties sold by HouseSimple during the stated period. 

"However, the first portion of their calculation determined the mean fee charged to all clients, rather than the fee charged to their average clients (that is, the typical fee paid by those clients whose properties were averagely-priced in relation to HouseSimple’s clientele as a whole). As such, we did not consider that basis of this calculation matched the likely consumer interpretation of the claim. We also noted that the data provided by HouseSimple included a variety of fee types, and that some of these were inclusive of mortgaging and conveyancing services. We considered that consumers would not expect these extra services to be covered by the reference to “fees” in the headline claim, and considered that their inclusion in the comparative data therefore negatively affected its accuracy.

"Furthermore, HouseSimple needed to demonstrate that the stated saving was applicable to a reasonable proportion of their clients by showing that at least 10 per cent of their average clients paid £18,764 less than they would if they used a competing agent. However, the data provided did not include such a calculation. Because the comparison of the claim was insufficiently clear and the data provided was insufficient to substantiate it, we considered that the ad was misleading and concluded that it breached the Code."

On the second point the ASA ruling states:

"We considered that consumers would understand the claim 'and we're three times faster at selling [a property]' to mean that, in comparison with high street estate agents, HouseSimple would sell a house at least three times faster than each of them. As the ad prominently referenced London, we considered that consumers would expect this comparison to be substantiated in relation to London estate agents specifically.

"We noted that HouseSimple’s average sales time of 25 days did represent a three-times faster sale than the 79-day UK average reported by the Rightmove report. However, we also noted that the 79-day figure excluded London property sales and that the London-specific data from the same report stated the average selling time in January 2016 was 58 days. 

"Moreover, the Rightmove data was split into several months and HouseSimple had identified as a comparator a month when house sales were often relatively slow. Their own data, however, had been aggregated from a range of months and was therefore likely to be less affected by the typical winter slow-down in sales. The Rightmove report also covered a different selection of months than the evidence provided in relation to HouseSimple’s own selling speed, and it did not clarify whether it dealt solely with high street estate agents. Therefore, we did not consider that the report was sufficient to substantiate the claim.

"Notwithstanding the above, we noted that the comparison was based on data from the Rightmove property portal. We understood that not every estate agent was guaranteed to list all of their properties on a particular portal and that the data available was dependent on estate agents manually updating their listings. As such, there was the potential for discrepancies to arise between the data used in the Rightmove report and the actual speed of sales achieved by estate agents. The use of this data to support the claim was therefore a significant limitation requiring sufficient qualification. The nature of this comparative element was stated in a footnote, but we considered that it was insufficiently prominent to make clear the basis of the comparison.

"We also reviewed the Home data. We noted that it related only to the south-west region of London and was therefore not fully relevant to the claim in the ad. HouseSimple did not provide details as to how the data was obtained and whether it related solely to high street estate agents. 

"Therefore, although we noted that it indicated an average time on the market that was more than three times that reported by HouseSimple, we did not consider that it was adequately robust or relevant to substantiate the claim. Because the comparison of the claim was insufficiently clear and the data provided was insufficient to substantiate it, we considered that the ad was misleading and concluded that it breached the Code."

The ASA told HouseSimple the ad must not appear again in its current form and that future ads should make clear the basis of comparisons "and that they held documentary evidence to substantiate their claims."