The advertising watchdog has ordered that claims made in a tweet about Purplebricks and in a three-and-a-half year old blog about online firms by estate agent Chris Wood must be taken down.
However, Wood is defying the instruction.
Wood, of Cornish agents PDQ Estates, was reported to the Advertising Standards Authority.
Wood used Zoopla data, unsuccessfully, to try to substantiate his claims to the ASA. The ASA interpreted the data differently after Zoopla said that the fact that Purplebricks’ listings withdrawn from its website did not mean that the properties had not gone on to be sold via other platforms.
The PDQ tweet, dated October 7, 2017, claimed: “Mid & W Cornwall Oct 16 – 17. @PurplebricksUK listings: sold 50.4% i.e. 49.6% of customers lost> £1,000 (C£64,000).”
The blog, on the PDQ website, dated December 15, 2014, said: “Cheap agents could cost UK consumers up to half a £Billion in wasted fees”.
The sub-heading stated “… the 60 to 70% of customers who didn’t go on to sell would have paid almost half a billion pounds to these firms for nothing”.
The blog stated “… the hidden costs of putting your home up for sale with an online agent do not appear to have been calculated by many journalists or consumer champions, and has been conveniently left out of these agents ‘savings’ calculations in their advertising literature.
“Put simply, if online agents had every property currently up for sale on Rightmove (1.2m homes) and sold a typical percentage of that stock (average industry norm’ for online agents is estimated to be circa 30% to 40% of stock) then the 60% to 70% of customers who didn’t go on to sell would have paid between £468,000,000 and £500,000,000* (half a billion pounds) to these firms for nothing.”
The asterisk at the bottom of the page stated “assuming an up-front fee of £600”.
In bold, italicised text, the blog then stated “Not much of a savings for the vast majority of their customers in my view”.
The next paragraph then stated “The traditional high-street agent, however, would have charged all those unsuccessful customers a cumulative total of around £0.00”.
An unidentified complainant challenged whether the claim that 49.6% of Purplebricks customers lost £1,000 was misleading.
The complainant also challenged whether the claim that cheap agents could cost UK consumers up to half a billion pounds in wasted fees was misleading and could be substantiated.
PDQ told the ASA that data from Zoopla showed that Purplebricks had instructed 132 properties, withdrawn 75 properties and sold 65 properties during that period.
PDQ said that meant that 49% of listings instructed by Purplebricks had been sold and 57% of the listings instructed had been withdrawn.
PDQ explained that the figures had changed slightly since the tweet. The firm calculated that based on the 57% of properties withdrawn, approximately £81,000 had been lost in fees following withdrawals without a sale based on a £1,080 average fee.
PDQ provided an updated spreadsheet during the investigation which it said showed the properties’ final or current status.
PDQ said the data showed that, out of the 100 properties listed during the period, 36 of the properties were listed as exchanged, meaning that 64% of PurpleBricks’ customers lost in excess of £1,000.
PDQ also provided a spreadsheet of all Purplebricks’ instructions between 2014 and 2018 in the mid and west Cornwall area.
The firm said that showed that around 33% of Purplebricks listings had been exchanged, while 55% of all instructions listed since 2014 were now marked as withdrawn.
PDQ provided a further spreadsheet of the number of instructions during 2016 to 2017 with different start and end dates. They said that showed that out of 63 properties that had been instructed, 51% had been sold.
PDQ provided further spreadsheets from Zoopla of instructed Purplebricks properties between 2015 and 2017.
PDQ had cross-referenced those properties with the information on the Land Registry to see if Purplebricks had eventually sold those properties.
PDQ cited published research, which indicated that Purplebricks had sold 51.6% of the homes that it listed within ten months.
They also showed that four of the properties on the spreadsheet were still listed as available or as sold subject to contract (not exchanged) on the Purplebricks website.
On the second challenge, PDQ said that the claim was based on all online estate agents from January 1, 2014 to November 4, 2014 who had advertised on Zoopla in 2014, when the blog post was first published.
PDQ said that all online estate agents advertise all properties on all online portals, so the Zoopla figures encompassed all of the properties listed by online estate agents in the given period.
PDQ said that during the given period, 14 consumers’ homes were listed and the final/current status showed that only five of them were exchanged.
PDQ added that the figures did not account for any property that may have been subsequently sold by an agent other than those included in the spreadsheet, so the final figure could be even lower.
The ASA upheld both complaints.
In today’s published ruling it said PDQ had made the claim about Purplebricks in good faith, based on Zoopla data.
However, the ASA said it understood from Zoopla that the properties cited as withdrawn only reflected withdrawals from Zoopla, “and could include properties that he been sold on other websites”.
The ASA concluded that properties which PDQ had said were withdrawn had been sold on other sites, such as Purplebricks.
While the ASA acknowledged the research [by Jefferies] that Purplebricks had sold 51.6% of properties within ten months, it did not mean that properties were sold after that period.
It considered that PDQ did not have evidence that 49.6% of Purplebricks customers in mid and west Cornwall had each lost over £1,000 in fees because they were unable to sell their property.
On the PDQ blog, which claimed that cheap agents could cost UK consumers up to half a billion pounds in wasted fees, the ASA noted that PDQ had provided further data from Zoopla to substantiate the claim.
However, the ASA said that the data related to only 15 properties, which was not enough to support a claim about the whole UK market.
The ASA said: “We told PDQ to remove the claims “49.6% of customers lost> £1,000” and “Cheap agents could cost UK consumers up to half a £Billion in wasted fees”.
“We told them not to make claims about how much money customers had lost to their competitors, unless they had adequate evidence to substantiate the figures.”
However, yesterday Wood told EYE: “The matter is now in the hands of Cornwall Trading Standards and I will not be withdrawing the blog.”