The advertising watchdog has upheld two complaints against online agent eMoov.
Two claims made by eMoov – that it negotiated a great price for sellers and outperformed other agents, and that it saved sellers a large amount of money – have been ruled as misleading.
The claims must not be repeated unless they can be backed up.
A third complaint against the online agency, run by Russell Quirk, was not upheld.
The rulings could have important implications for claims made by the online industry, and indeed by other agents who set out their stall on the basis of money savings.
The complainant, estate agent Chris Wood of PDQ Estates in Cornwall, asked the Advertising Standards Authority to investigate three issues relating to claims made on the eMoov website.
On the ‘How it Works’ page, the heading read: “Our team negotiate a great price.”
Under this heading, the text stated: “eMoov outperforms UK and London estate agents’ average by 3% (Source: Hometrack.)
“Our expertise will help you pick the right buyer. Each one is verified and every offer is qualified for financial authenticity.
“We then negotiate the highest possible price for you, informing you of any updates along the way. It’s your decision to accept or reject an offer.
“Our sales performance in 2014 shows that on average we achieve sold prices of 99% (103% in London) of the asking price. This compares with the national average of 96% of the price (says Hometrack).”
“Text on the page entitled “Why eMoov?” stated: “These days, most homes are sold via the major portal sites regardless of the agent involved.
“This is why more and more people are now turning to eMoov.co.uk to save millions of pounds in fees … Our business model depends on us selling a higher proportion of our inventory … Our customers have saved £11m+”.
PDQ Estates challenged whether:
- The claims under the heading “Our team negotiate a great price” misleadingly implied that eMoov sold properties at a higher price than traditional high street agents, when they understood that was not the case;
- The claims that eMoov had saved their clients over £11m in fees were misleading and could be substantiated; and
- The claim “Our business model depends on us selling a higher proportion of our inventory” was misleading and could be substantiated, because they believed that eMoov’s business model worked irrespective of whether they sold property or not.
eMoov gave lengthy responses to the ASA.
The firm denied that its statement, “Our team negotiate a great price”, implied it would achieve a higher selling price than a high street agent. eMoov said the wording related to the percentage of asking price achieved. It argued that traditional high street agents are incentivised to set a higher asking price because of the possibility of higher commission.
It said this explained the discrepancy between the average percentage of asking price achieved by eMoov and the average high street agent.
eMoov said that between January and September last year, it achieved an average of 99% of the asking price, compared with the national average of 96%.
eMoov also defended its reference to having saved vendors over £11m. It said the figure did not include the fees it had received from clients who withdrew their properties and did not complete a sale with eMoov.
eMoov said it had made the £11m calculation using a variety of sources to calculate typical estate agency fees, including an OFT report. It had also based its calculation on its own standard rate package.
However, the ASA upheld the first two complaints, saying eMoov had failed to substantiate its claims.
It said that consumers would believe that eMoov achieved a higher percentage of the asking price than the average high street agent.
The ASA also said that the data sources, with the exception of the OFT, used to calculate high street agents’ fees were “unreliable” as they either stated a wide range of fees or were based on a very small sample.
The ASA expressed further concerns that eMoov had used its own average fee as the basis of its calculations rather than the fees actually paid by customers. In some cases, the ASA said that customers had paid double the standard fee.
The third complaint against eMoov was not upheld.
The ASA said that eMoov offered four fee options, including the most popular – a non-refundable fee paid upfront – and PDQ Estates had argued that eMoov’s business model did not actually require it to sell properties to stay viable.
However, the ASA said that eMoov promoted all its properties on portals and were charged according to the number of properties listed.
If eMoov did not sell a sufficient proportion of the properties on its books, its portal costs would be unsustainable.
eMoov has been told that in future it must have sufficient evidence to substantiate its marketing claims.