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.
Comments (53)
I much prefer <a href=”www.myhouseadvert.co.uk/”> online estate agents</a> and find them a lot more trustworthy!
Dude, just when I thought I was out…jeez this was worth crashing my 12 step program especially Russ’ spin. The guy’s a factual terrorist and he’s going to crash his business straight into the side of a building.
Look I give the online guys a fair shake, there’s room for them but I’m bent out of shape keeping up with Russ. He’s pimping his business and I dig that about him but selling on price was always going to come back and bite him in the ar*e so enough already. Sure, Russ is making lemonade but this aint Sesame Street and I have to figure he’d rather bend over and gape (yes I said it) before acknowledging the valid points Chris made. Customer service and a high street location will keep you honest dude. OK I’m kidding about the location but you get where I’m going with this. I guess the online guys only care about money not vendors. To them vendors are replaceable but money buys more ad space.
Sick up, brah, you is breddrin!
Of course its about money. Hood winking the consumer and investors while they make a load of dosh.
Savings:
Unless we know what each agents valuation to sold ratio is, it is impossible to say whether customers are indeed ‘saving’ any money on fees. Nationally, instructions to exchange ratios vary wildly between companies and West Cornwall (my area) is no exception. In 2014, based on data from ZooplaPro, this ratio varied between 22% (eMoov, as it happens) to over 100*. The average for the area was 63%
Example:
If an agent charges £700 (let’s not get into the VAT offence here) upfront for 100 customers but only sells, say, 22 of those customers properties, the agent has made £70,000 but 78 customers have lost £54,600 collectively (an average cost per customer of £700)
If another agent with the same instructions to sale ratio charges an average £2,896** on successful exchange of contracts only, then the agent will have made £63,712 whilst the other 78 customers have been charged nothing (an average cost per customer of just £637.12)
Of course, to make a real saving, a customer needs to be financially better off, which then brings in the question of price achieved.
Asking price to selling price statistics can be highly misleading (as the ASA have just agreed) and can be distorted by many factors.
What really counts is a like for like comparison of sale prices achieved of near identical properties in near identical locations selling at the same time with identical reasons for sale (no pressures to take a low price etc). Unless an agent can show good comparable evidence that they do achieve more for similar properties under these conditions, an agent cannot claim they are achieving more for a customer and, thus, it is very difficult to prove the average customer is better or worse off.
*One agent had a very heavy January invoicing followed by a subsequent drop in market share in 2014
**Source: Prop Ind Eye article http://www.propertyindustryeye.com/agents-fees-is-this-what-you-are-earning-2/
No sign of Russell on the forum this morning…….I wonder, just wonder if he is man enough to come on and offer us an apology, bearing in mind we have all told him about misleading comments on the emoov site and he told us we were totally wrong!!!!
No his probably still out on an extended lunch with his Zoopla investors.
No, he is probably being hauled over the coals by Messers Caan and Butt for single-handley dismantling their investment.
You are right….. Russell seems to have the knack of attracting bad press. Maybe it’s time he took a long, hard look at the way he conducts himself to avoid any further run ins with the ASA. It’s one thing to sling mud at us professional agents regularly, but not complying to ASA standards puts at risk his investors money….the same investors that trust him to run emoov within legal regulations and compliance.
You only have to google Russell to see a number of articles where as a council member in Essex he does exactly the same kind of thing. He has even been forced to make an apology to his local Fire Chief and his wife…..he’s an egotistical manic. He ain’t gonna change……
I think what this ruling has proved and no doubt more will to come, is that these types of so called online estate agents, do in fact simply offer what we all know; which is just a way for sellers to get their properties onto an advertising portal. Any claims to do anymore than that are fundamentally untrue and as the ASA have shown here, if customers are to use them then that is all they should be basing their decision on and not tricked into believing, that the service they receive is in some way comparable to that of a local estate agent. It cannot, or will ever be, a better way to sell a property it is merely a cut price option for those who are prepared to accept the increased risks that come with that cut price option.
Wouldn’t it be a scary world if the service levels were comparable, or (God forbid) even BETTER than traditional agents?
But thats the point though agentgreyed, they never will be while two things exist; A business that is built on listings not sales and a business that relies on marketing a property remotely.
If they don’t offer high levels of service, then word will spread that they’re no good and not good value afterall. In which case, they won’t survive. Which begs the question of why traditional agents are so rattled by online agents?
But again you are missing the point.If any competitor makes claims that are unproven and in most cases untrue then that would serve as an irritation. No one likes to see customers conned and when you list a property, without the local expertise, thats EXACTLY what you do.
My point remains. No business survives (or at least thrives) in this modern age through false claims and lies. Word will get out that online agents are a con (if this is the case) and the status quo remains.
I have no doubt that they will eventually fail but when you see someone ****** a handbag in the street, you don’t wait for word to get around that there is a thief in the area do you?!
Prizes for what word I used there! …Lets try Grab then.
Every day we are being exposed pushed into a world of consumer price cuts. Is there really any consumer who can’t remember cheapest isn’t necessarily the best. Pay peanuts and you may get a monkey! and yet some are blinkered to the fact. And we all know how quick they are to complain about when it goes pear shaped …. our industry, web portal and high street come, all regardless of culprit.
A variety of estate agent firms, whether on line or high street have been making the claim “we’ll get you more money” for years and continue to do so. How can any company make such a claim when invariably it comes down to the relationship and competence in most cases of one individual. I suspect the ASA will be very busy going forward…….
err NO. Not unless you complain to them, they are only reactive. And if we all did they would have a nervous breakdown.
Just a couple of thoughts: 1) “…a great price” is nowhere near as misleading (and difficult to prove) as “the best possible price” which so many agents peddle, and 2) experience shows that there will be plenty of “traditional high street agents” also shutting up shop when the going gets tough.
Fencesitter – in response to the first point, I’m just going to cut’n’npaste a comment I posted on an article here on EYE on 19 May:
“The Quirkster states “If you truly believe that the price dictated by an agent actually determines the price that is ultimately paid by buyers and that buyers are sufficiently gullible to simply to be ‘negotiated’ on, then your traditional business model really is vulnerable” Interesting comment when you read it in conjunction with the claims on his website – “We’re achieving an average of 98% of asking price per sale compared to 95% by the typical UK agent (Hometrack)*” and “Our team negotiate a great price… eMoov outperforms UK estate agents for sale price achieved”
YET MORE conflicting ******** from the greatest producer the world has ever known…”
In response to the second – how true. In fact – Mr Quirk can tell us all how to go about it… ;o)
………(trigger happy) he doesn’t really have much of a proposition and just lifts 500 quid off people to put them on Rightmove – Jonnie
No, I can’t believe this, Quirk seems such a straight up sort of chap, there is nothing to suggest he is the sort that would use half baked data, give it all a twist, a sprinkle of cobblers and pass it off as fact in a big shouty way, the two things he yaps on about most have been ruled as utter nonsense, it’s as though
Im guessing PDQ lost an instruction to Emoov. I still find it hard to believe that all you agents pay RM the enormous monthly fee and then let online agents take your business, why don’t RM do something? Oh yeah, just remembered, they don’t care.
Is the fee really that enormous? Or reasonable value for money? Currently 3.5% of my turnover goes to Rightmove. And they ‘assist’ in finding buyers for my clients homes. We hit the phones too but calls and people cost too…. And more than 3.5%. Only saying.
Depends on when you joined, I know my fee was insane, but everyone pays different amounts.
Last new account was approx 4 years ago. I know lots of people describe their fees as insane but have you worked out the % cost to your business? Is it less than a trainee neg?
And that is what RM want you to continue to believe. It doesn’t matter that the service they provide isn’t cost reflective! Now this is the political view today when you charge a consumer, so why doesn’t it apply business to business ….. ooopps I feel an OTM hot flush coming on.
That’s like saying a newspaper shouldn’t allow adverts from 2 different agents in their paper!
The cost of Rightmove is ridiculously cheap when you compare it to said print adverts or any other marketing you might be doing.
I just don’t get the whole bitterness about portals and their pricing. As someone said on the recent Rent Fee topic, it’s a free world, you don’t have to use them.
Drop RM and try spending the same amount of money for the same return. I’ll give you back whatever you spend if you are successful!
Because it emasculates the agents by doing a large proportion of their ‘original’ job for them
‘That’s like saying a newspaper shouldn’t allow adverts from 2 different agents in their paper!’ Not really the same coz RM is purely for you agents to promote properties and your business, a newspaper covers everything, you don’t support the local rag but you do RM. Also after reading this I think RM will be upping their fees very shortly.
Of course they will. They are a business that you have the option of not using.
copied from above….. And that is what RM want you to continue to believe. It doesn’t matter that the service they provide isn’t cost reflective! Now this is the political view today when you charge a consumer, so why doesn’t it apply business to business ….. ooopps I feel an OTM hot flush coming on.
eMoov’s market share in my area in 2014 was 0.21% compared to their National average market share of 0.24% (using Zoopla publicly available data) If I did lose an instruction to eMoov, I’m not aware of it and, to be frank, am unlikely to have noticed it given those figures in any case.
What prompted my complaint was being incensed at a barrage of misleading information from eMoov in the media and on their website that I believed was misleading to consumers. A belief that has been upheld by the ASA.
How about the NTSEAT awards debacle?
I agree that it will all change when they stop selling so easily. Looks like the ASA route however is a lot more effective than OTM to the slow internet down…
As already mentioned well done to the agents that are challenging these online agents and their misleading claims. Whilst they might be getting under your skin the truth is that all these online, cheap and cheerful agents are only an attractive option in the boom years. the minute the market toughens up they disappear back under that rock. Their £600 fee (notice I included the vat there) doesn’t go very far when the average sale time is more like 3 months than 3 days. Enjoy it while it lasts, this is a service industry, people will always pay for top service.
Well said Grant….servicing a service industry demands even higher levels of service I can think of 3 who would do well to remember that!
Have you ever used an online agent to know that they scrimp on service levels? Do a quick review of independent reviews online, and the vast majority seem to get very positive ‘service’ related reviews. Have a look at Foxtons, Haart etc and the reviews are far less favourable…..
Err as documented fully on here I have tried to use an online agent! 2.5 hour wait for a no show on a valuation appointment! Would you like me to detail the full catalogue of failings?
I believe it would be rude not to, Robert – however I appreciate you’re a busy man so I won’t request it!
Errr…In that case they must all be terrible. No traditional agent has ever left a customer waiting in the cold afterall.
the ones that lied to me to win the opportunity to get through the door didn’t get the cahnce, this shocking service the best I could find from the sector.
Tarnishing a sector because of one poor experience? How original
one poor experience? It was radio4 in about 1998 who first alerted me to the passive intermediary internet listing firms and since then the subset of central office area rep agency have consistently demonstrated why their market share refuses to grow in proportion to the cash and confidence poured into it.
I am an advocate of traditional local agency without a traditional window display and think it unfair such agents are lumped in with this sort of spivery. I have no doubt the local reps and franchisees are thoroughly nice people but there are 4 or 5 business heads who are seemingly determined bring the whole sector into conflict and disrepute much to the detriment of those they represent. These business heads can obviously do as they wish with their own reputation, cash and livelihood, but they ought to have some consideration for those they are also damaging. Effectively these leaders are applying an indelible barge pole warning to any CV of those who might want a salaried agency position in the future.
Well done PDQ Estates!
Thank you, it was a pleasure!
I see Purple *ricks still showing prices + VAT rather than showing fees incl VAT to consumers
Hopefully the ASA action will stop other cheaper fee models advertising that they save sellers £housands on fees, when in some instances traditional Hg St presence or main/sub agency practices may have gained clients a better stc price
I’ve read elsewhere that the company have amended their website to reflect the rulings.
Should have changed your pricing structure while you were on – saved another @$$ kicking and yet more adverse publicity – which, thank you very much… not, affects the entire industry and not just your outfit, Mr Quirk…