Complaint about Purplebricks is upheld by Advertising Standards Authority

| Rosalind Renshaw

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.

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39 Comments

  1. Chris Wood
    July 5, 2017 at 07:10

    Congratulations to Arun Estates and all of the other agents who made similar complaints (there were many).

    If agents mislead the public and investors to secure business there need to be adequate sanctions in place, not simply a ‘don’t do it again’ statement.

    The upside is, agents and journalists can point to this ruling and state that Purplebricks have used misleading advertising about fee savings to win business without fear of a heavyweight lawyers email trying to bully them into silence.

    Report
    1. Bless You
      July 5, 2017 at 13:46

      So true,,what is the point in asa??  Now they have been found guilty they should have  2 choices..
      1) Be fined the amount estimated to have been made from misleading the public.
      2) or run an advert with Bruce reading an apology for breaking every single rule in the play fair manual of business. 
      This is what happens when govt. are asleep at the wheel. The rats start getting bigger and the nurses dont get pay rise due to lack of profit and tax. 
       

      Report
      1. AgentV
        July 5, 2017 at 14:31

        Bless You,
                        Will you please come to the meal out? I really want to meet you….I bet we could have a real laugh.

        Report
        1. Bless You
          July 5, 2017 at 15:41

          ha : i think i am at a ceila meeting that day followed by a meeting with onthemarket boss at his penthouse. .  Let me know dates :0

          Report
  2. chriswoodsthethird92
    July 5, 2017 at 07:21

    Chris, we should have dinner.

    I bet you’re a bundle of fun.

    Report
    1. Chris Wood
      July 5, 2017 at 07:33

      I don’t dine with anonymous nobodys

      Report
      1. AgentV
        July 5, 2017 at 07:46

        I’ve been told I am good company on a meal out…..especially when I am being treated.

        That aside, it’s about time the online listers now started using the latest commission survey which quotes 1.3% including VAT.

        For many agents in the Midlands and North of the country average fees can be £2,000 to £2,500…….which makes a mockery of the ‘you can save thousands’ statements frequently used.

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        1. PeeBee
          July 5, 2017 at 10:11

          AgentV

          “For many agents in the Midlands and North of the country average fees can be £2,000 to £2,500…….”

          Many Agents here ‘oop North wouldn’t know how to write a fee of £2000 on the Agreement – never mind grow the ‘nads required to ask for one…

          …and there wouldn’t be enough space for it on their current Agreement anyway!

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      2. PeeBee
        July 5, 2017 at 07:47

        That’s me eating alone, then!

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        1. Frown Please
          July 5, 2017 at 07:57

          Party for the anonymous lot!
           
          is the mallard invited?

          Report
          1. AgentV
            July 5, 2017 at 08:07

            Of course, I would love to debate face to face across the table!!!

            My suggestion would be a medieval night.

            Perhaps where we all dress to a theme?

            Any suggestions?

            Report
            1. mrharvey
              July 5, 2017 at 08:55

              I wonder how easy it would be for all of us to match the person to their username!
              I reckon PeeBee would be pretty easy to spot after a couple of minutes. He’d be the one shouting! 😀

              Report
              1. PeeBee
                July 5, 2017 at 12:07

                “He’d be the one shouting!”

                That would entirely depend upon the topic of conversation, I would suggest.

                Report
            2. Mark Walker
              July 5, 2017 at 10:17

              https://en-gb.facebook.com/ExcaliburRestaurantLancaster/

              Report
              1. AgentV
                July 5, 2017 at 14:32

                http://www.coombeabbey.com/mediaeval-banquets/

                Report
                1. Chris Wood
                  July 5, 2017 at 17:21

                  The Meadery in Newlyn. No contest!

                  Report
        2. Chris Wood
          July 5, 2017 at 17:20

          Ah, but I am one of the few who knows your alter ego and the postcode of your bat cave;) 

          Report
  3. smile please
    July 5, 2017 at 08:05

    Christ, Arun Estates taking the moral high ground!

     

    Seen it all now.

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    1. nextchapter
      July 5, 2017 at 08:49

      Lol. So true!  I will say though, I’m getting fed up of everyone attacking purplebricks.  What they’ve achieved in such a short space of time is unbelievable!!  Are you telling me, if guys had a chance to be in the shoes of Michael Bruce worth £160 million you wouldn’t take it!  It’s inspirational what he has achieved in such a short space of time. 

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      1. AgentV
        July 5, 2017 at 09:13

        I would only take it if I truly believed I was doing the absolute best for my vendor customers, investors were getting value for their money, and I didn’t have to base my business model on going out of my way to destroy other small businesses and livelihoods. 

        But then that’s just me. 

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      2. smile please
        July 5, 2017 at 09:18

        I agree to an certain degree.
         
        Of course we would all like 160 million. And he has done an exceptional job at creating self wealth.
         
        The attacks are because many believe PB are misleading the public and not playing on a fair playing field. They have created a myth that they are innovators (what have they innovated, cheap agents have been around for years). They alledge they offer the saem service (Look at the Trustpilot cooments from them directly saying no point in chasing a sale).
         
        PurpleBricks has a place, but they are need to be more transparent on the costs and services they offer. – I am sure they will not as they do not care as the share price is rising.
         
        Unlike Amazon, Google, Netflix and Uber – House selling is a one off transaction, i am already aware of a number of sellers who claim they had no idea they signed a loan agreement and are having their credit file threatened if they do not pay.
         
        Soon as a number of these appear in the mainstream media, you will see the share price sharply fall

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        1. AgentV
          July 5, 2017 at 09:27

          And as soon as lots of people start realising the more work and effort that is put into selling their home, the more money they will achieve from their sale.

          However that time and effort ‘real estate agency’ comes at a cost….it simply can’t be done on the  cheap.

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          1. cyberduck46
            July 5, 2017 at 10:20

            AgentV,
             
            I’m sure people do realise that in the main, the more effort put into selling their home the more money they will achieve. I think the problem is that they don’t trust estate agents. I keep asking this question but how do people know which Estate Agents are really trying to do the best for the client?  

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            1. PeeBee
              July 5, 2017 at 12:03

              “I keep asking this question but how do people know which Estate Agents are really trying to do the best for the client?”

              They don’t. 

              Just like they don’t know which window cleaner will leave portholes; which taxi driver will take them the scenic route; which solicitor will stick a hundred quid on the bill for a two-line letter asking them to get in touch; which software developer will rip their eyes out of their sockets for the supply of unfit-for-purpose glitch-ridden programmes – the list is endless.

              People have, in the main, an information processor commonly known as “a  brain”.  That “brain” is capable of complex processes – one relevant example being “choice”.

              More people should use their “brain” to make “decisions”, and accept that there are “consequences” if the wrong “decision” is made.

              How’s about the Government insist on a ‘Sense Warning’ on all Estate Agent literature? Something along the lines of:

              “Reliance on easily-manipulated and produced statistical billshuttery, reviews and/or gimmicky marketing flim-flam is at your own risk and any blame can only be dumped at your own doorstep for your choice.”

              Report
            2. AgentV
              July 5, 2017 at 13:14

              Cyberduck46
              Just a few quick pointers I can think of. Potential vendors should;

              a). look at the way other properties are represented on the agents website. What are the photos like…is there a floor plan. Does the description highlight the key features of the property. These things generate interest which normally means more viewings.
              Very good representation of the properties indicates a degree of care

              b). Who will be doing the viewings? Are they accompanied? Is the person highly experienced with dealing with potential buyers? Ask the questions. What process is used to negotiate and increase any  offers?

              c). How quickly can an enquiry for a viewing be arranged (this can be tested on a mystery shop). Viewings should be able to be done within three days. Delaying by a week or more can cause the buyer to lose enthusiasm, unless it is at the buyer’s request.

              d). Are buyers allowed to view without having to commit to other services of the agent first…such as an FS appointment, This can put buyers who have made their own arrangements off. 

              e). What history of price reductions does the agent have? A high proportion of listed properties having been reduced suggests ‘overpricing to win instructions’ which is a terrible way of selling. 

              f). What contact will you have if you want it with the people who have a vested interest in the property selling i.e the owners or directors.

              g). What is the agents success rate from listing to completion as a percentage? Why not ask the question.

              However these are mainly relevant to our area. Other areas might have other key indicators.

              Report
              1. PeeBee
                July 5, 2017 at 14:41

                You DO realise that ducky will now be selling that as a 7-Point Action Plan, to an NSPR Listing Agent that he may or may not have an off-on financial association with, don’t you, AgentV?

                Points ‘e)’ and ‘g)’ will no doubt be met with total shock:horror and therefore go down like – keeping it clean out of deep respect for Frau Renshaw – proverbial lead balloons…

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            3. cyberduck46
              July 5, 2017 at 14:25

              Thanks PeeBee & AgentV.
               
              Something to look at if my current sale falls through.
               
              My concern with concentrating on data though is that they can always mean different things. So for example an agent whose properties sell quickly at close to or above the asking price might be pricing too low.
               
              Also I’m not sure the raw data is avaialble to Joe public. I know GetAgent provides some data but they choose just a few agents who are best in a certain aspect and really you’d want to look at all the data because the best agent might not be #1 in any of the particular aspect but have the best overall data.
               
              I suppose you could get multiple estimates as well as using Rightmove ‘price comparison report’ and ‘sold prices’ report to potentially flag up any agents who are valuing high to win business or who are valuing too low to improve their stats.
               
              I don’t think many people will go to these lengths though. They’ll either go with an online agent for perceived cost savings, pick the agent who values highest, go on a recommendation or just randomly choose an agent.

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              1. AgentV
                July 5, 2017 at 14:38

                cyberduck46

                Get your rightmove ‘property performance report’ through your current lister and then get a ‘Rightmove Webinar Master’ to interpret the results for you.

                There is enormous amounts you can learn from the report, including indicators on how to maximise your interest levels….which helps to achieve… guess what?

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              2. PeeBee
                July 5, 2017 at 14:59

                “Something to look at if my current sale falls through.”

                Really?  You actually expect us to believe that?

                I, for one, very much doubt that would happen if you were unfortunate enough to lose this second prospective buyer.

                Time will tell…

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      3. PeeBee
        July 5, 2017 at 10:17

        “Are you telling me, if guys had a chance to be in the shoes of Michael Bruce worth £160 million you wouldn’t take it!”

        I wouldn’t. Don’t get me wrong – I certainly wouldn’t say ‘no’ to the amount of money you refer to – I’d just be more choosy as to whose shoes I had to wear to ‘earn’ it.

        There you go – now you can struggle to get your head around believing that. 

        (For the record – I don’t give a fuppenny whether you do or not.)

        Report
  4. FromTheHip64
    July 5, 2017 at 08:46

    I worked for Arun for 6 years.

    People in glass houses…

    Report
    1. mrharvey
      July 5, 2017 at 08:56

      Unless it’s at another person’s glass house – an evil and twisted glass house!

      Report
  5. dave_d
    July 5, 2017 at 09:40

    The ASA is an absolute JOKE. This isn’t a win at all.. the damage is done.. – no doubt the enquiry took a few months during which time purple bricks mopped up vendors with their unfactual claims.

    Every single time I see something “upheld” against a company they give them a slap on the wrist and tell them to stop running said advert.. Is that justice? What about the thousands of pounds worth of “commission” they have taken at the expense of other hard working independents?

    I’ve reported two agents in my area for displaying fees not inclusive of VAT and in some cases I’ve not even had a response.. what’s comical is they still advertise their fees on their website plus vat..

    Unfortunately this industry really is going down the pan – when a company can blatently flaunt the rules and receive nothing but a telling off in return what hope is there?

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    1. Mark Walker
      July 5, 2017 at 10:46

      That is neither our nor PB’s fault.
      Consumer protection was weakened by a business-friendly Labour government and the succeeding showers since are not about to row back against business interests.
      A wild west free-for-all was created in which any shysters can say or do what they want to with very, very little comeback.  Funding for enforcement is so low to make it barely perceptible.  

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  6. cyberduck46
    July 5, 2017 at 10:05

    Just sent in a complaint about an agent not being able to substantiate the claim that ‘cheap’ agents are costing consumers around half a billion pounds per year.

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    1. wardy
      July 5, 2017 at 10:10

      I can substantiate the claim that I sold a flat for £40,000 more than a certain online agents valuation if thats any good? To be fair it did cost them an extra £1,300 in fee’s though….so swings and roundabouts.

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      1. cyberduck46
        July 5, 2017 at 10:40

        I doubt that would swing it wardy 🙂

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  7. cyberduck46
    July 5, 2017 at 11:08

    Sounds like the first case of grassing ones competitors up was back in 2002 when Winkworth reported Foxtons and the ASA rukled agaisnt Foxtons. http://www.independent.co.uk/news/uk/crime/estate-agent-wins-dispute-over-rivals-false-claims-135727.html

     

    It is not suggested that until then there was no exaggerated advertising but that agents had stuck together and turned a blind eye to what was going on.

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    1. PeeBee
      July 5, 2017 at 16:09

      “Sounds like the first case of grassing ones competitors up…”

      Funny, that.  Tell me:

      …if someone was to ring the police having seen a man in a ski-mask entering a bank with an Uzi slung around his neck, it wouldn’t be called “grassing up” in court, would it?

      …if a nurse walked in on a cardiovascular surgeon rolling down his/her sleeve and hurriedly packing away paraphernalia associated with intravenous drug use in the scrub room as the unsuspecting patient was being prepped and hastily advised the anaesthetist of the scene, that surely wouldn’t be labelled “grassing up” during the resultant GMC Tribunal?

      …if a church elder discovered undisputable evidence of serious ‘goings on’ involving the parish minister, vulnerable persons and the blood of barely-dead animals and notified their superiors of the issue, would that be seen by the rest of the congregation as “grassing up”?

      Don’t get me wrong – in no way, shape or form am I suggesting or otherwise insinuating that any heinous acts of criminality, depravity or public order affrontery is involved in the information contained within this article.  Far from it – in fact the opposite would appear to be the case and judging by your use of wording it would be the accuser(s) that should be viewed as wrongdoers and not the accused (and, as per the ASA decision, the guilty party).

      I am using the above analogies simply to demonstrate that it would seem – in your eyes, at least – that a proven case of misleading advertising be something different to any other breach of Legislation – and that no decent, rule-abiding Agent be able to draw to the attention of those who could be potential past, present or future victims for fear of being labelled “a grass” for giving sound, proper advice to prospective clients – as is required under the law of the land.

      I know I said it at the top of the post – but…

      …funny, that…

      Report
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