An online agent which said that it provided “a complete estate agency service at a fraction of the cost” has been found not guilty of illegal or misleading advertising.
In an important case, the Advertising Standards Authority this week refused to uphold a complaint against Hatched.co.uk
Another agent, Country Properties, had complained to the ASA about Hatched’s claims on its website.
The Hatched website said: “A complete estate agency service at a fraction of the cost.”
It stated: “With over 90% of house sale enquiries now coming via the internet, we recognised that there was no longer any need for estate agents to have expensive high street offices in multiple locations, company cars, and newspaper adverts. So we’ve done away with all of these – and are passing the savings on to you.”
Country Properties challenged whether the claim “a complete estate agency service…” was misleading and could be substantiated, because Hatched did not offer, or perform, a number of services that other high street agents did, such as providing office windows, local newspaper advertising and property particulars.
In addition, they believed that Hatched did not possess local knowledge when deciding on an asking price, were not able to make “properties more saleable by working up and down chains” and were unable to “piece together sales”.
Hatched was invited by the ASA to respond to the complaint.
Hatched argued that there was no legal definition of the phrase a “complete estate agency service” and no guidance from any professional body or any law as to what estate agents should or should not offer in terms of a “service”.
They highlighted three references that they judged to be significant: The Estate Agents Act 1979, The Property Ombudsman’s Code of Practice and the NAEA Code of Conduct. They said they fulfilled the criteria set out by the Act and were members of both TPOS and the NAEA and adhered to the relevant codes.
Hatched said there was no obligation for estate agents to offer a window display or to advertise in local newspapers. Hatched argued that the priority for an agent was to get properties seen by as many members of the public as possible, which is what Hatched did by listing their properties on numerous property portals including Rightmove, Zoopla and Primelocation.
Hatched claimed that the elements suggested by CP as a “complete service” were actually embellishments not mandated by law or by the relevant regulatory bodies. They stated that every agent was different.
Hatched said that, although they didn’t offer some services as standard, they would make the required arrangements if a client so desired. They explained that they prepared a pdf brochure for every client and produced a glossy brochure if required, and provided an example of a glossy brochure they had recently produced on a client’s instruction.
They said they were able to advertise their properties in their office or in a window, but that none of their clients had ever instructed them to do so.
They also stated that no agent could offer a window display to all of their clients as the number of properties on an agent’s books would vastly exceed the number that could be advertised in their window.
With regard to newspaper advertising, Hatched said the majority of their clients instructed them not to do so, and that they actively advised against it, as it was a costly exercise for the seller now that the internet was the starting point for most searches. However, they provided a recent example of an ad they had placed in a local paper after the client had instructed them to do so.
Hatched denied having a lack of local knowledge when valuing houses, and explained that they researched areas using various sources such as Rightmove, Zoopla and checkmyarea.com, as well as the Land Registry and Ofsted websites.
They explained that those resources helped them to locate local amenities such as schools or stations that would impact upon the price of the property, and listed recently sold houses along with the price they sold at and competing properties on the market. Hatched also highlighted that they visited every property to undertake a valuation.
Hatched also believed that they were better placed than many agents to “work up and down chains” because they covered the whole of England and Wales.
In addition, Hatched stated that they offered several “extra” services as standard including: floor plans, unlimited photos, text messaging to set up viewings, a vendor login area and a conveyancing department. They claimed that they were the only estate agent to cover the whole of England and Wales.
They stated that they actively encouraged their customers to sell their houses in a different way from a conventional high street estate agent because there was a substantial cost saving to be made, but that they achieved the same result which was to sell a house for the best price possible. They therefore considered that Hatched offered a “complete” service.
The ASA did not uphold the complaint, saying that Hatched fulfils the criteria set out by the Estate Agents Act 1979 and was a member of the TPOS and NAEA.
While it acknowledged CP’s concern that Hatched lacked local knowledge, it noted that Hatched used a number of different resources to gain local insight and to help them reach a suitable asking price for a property.
The ASA also said it recognised that a consumer would have different expectations with regard to an online estate agent and a high street agent, and in approaching an online agency, would already anticipate that the methods used might vary from those of a high street agent.
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Comments
Hi Peebee
I deem that pretty damn good, given that stats show the average for London is between 139 and 156 days (source Home)
The reason I said average time on market for unsold property is most relevant to the online model is because this will give an indication of how much it is really likely to cost the vendor.
Average percentage of sold price to ORIGINAL asking price, and percentage of sales to instruction are of course good indicators of performance for all types of EA's
"...the most relevant statistic to Vendors for this model is average time on market for unsold property. Do you have those figures to hand mate?"
Yes I do, actually - MY average time on market for unsold property is currently 5.3 weeks.
Do you deem that 'good', 'bad' or 'ugly'?
In terms of stats, I would suggest that the most relevant statistic is NOT average time on market for unsold stock.
In my opinion,
average time to OFFER
average percentage of sold price to ORIGINAL asking price, and
percentage of sales to instructions (ie instructions that actually sell...)
are by far the better indicators of an Agent's performance.
And there are others.
My previous company - everyone is entitled to ONE mistake and that was mine... ;o) - were proud to announce that they had "the highest number of properties for sale in town".
Pity that was because they couldn't actually sell any of them...
Like I've said a million times before, Sir - anyone can make a statistic to suit them.
I prefer to let my 'Sold' boards do my talking.
Peebee -
The ruling states Hatched supply a full estate agency service not an identical service
When commenting on performance the word I used was CAN, and I chose the word carefully, In one case this has been proved and therefore my statement is factually correct. I have no other head to head evidence do you?
We seem to agree a good agent is a good agent regardless of fee model and the opposite equally applies
Many traditional agents though, deride the online without justification just because they dare to be different.
Now on to your statement about stock at the on line agent, the most relevant statistic to Vendors for this model is average time on market for unsold property. Do you have those figures to hand mate?
Does any of this really matter?
Things change, there is room for both on-line and high street. Many people prefer the personal contact of the local agent, others will use on-line. It is a choice.
If a service is offered and does what it says, the public will use it and if satisfied with the results - it will be successful.
Okay - here's my two penn'orth...
Happy Chappy.
"...online estate agency is just a different model, get used to it." No problem with that, matey - but a "different model" by virtue cannot offer an IDENTICAL service - thus rendering the ASA decision invalid.
"We have already seen evidence (source: what sam saw today website) that Hatched can outperform a traditional agent." Hmmm... define "evidence". Have you actually READ Ms Collett's blog? THE Ms Collett, who states "It’s no wonder people dislike estate agents so much... I vehemently hate estate agents."? THE Ms Collett, who, in January, blogged "Well the new estate agent has now had 8 viewings. Hatched have had 4 viewings. I am not sure how the new estate agent has managed to get double the amount of viewings than Hatched. Maybe there is a “dark art” to being an estate agent…maybe there is something to be said of the oft-heralded and (I believed before) “mythical” mailing list. Maybe it is even something to do with the “call outs” they claim to do to customers. I don’t know, but the numbers do not lie."?
Apparently in the end the online agent got the buyer. Well done to them - but ONE CASE is hardly worthy of your claim that the online model can outperform traditional agency - or do you want several hundred (...or thousand...?) instances where the reverse proved be the case to be thrust up your tailpipe like the banana in that Eddie Murphy film??
For the record, I don't have a problem with ANY Estate Agent - online, High Street or whatever - who do what they say on the tin.
One of the onlines who are fluffing up their feathers on this very story claim on their website "Last year we sold 520 properties..." Sounds great when quoted in solitude - but the fact that they are apparently sitting today with a stock of over 2000 units makes a bit of a mockery of that figure I would suggest. How many DIDN'T they sell, I wonder? How many people paid THEM and then sold through another Agent? They use the figure 183 MILLION property searches per month on their website(that's 2.2 BILLION per annum...) - yet they only register 11500 applicants? And from those, only arrange 8500 viewings?? And ONLY SELL TEN PROPERTIES PER WEEK??
Maybe this 'internet' contraption isn't what its cracked up to be... ;o)
Good always beats bad...x agents who couldnt make it in the real world go online and provide a service with no soul to vendors who have no soul and moan when your service disapears the second they need a sale chase or it gets a bit stressful.
I would rather be a traffic warden then hide in an office peddling online cheap crap..
if you were solicitors you would be ambulance chasers,so keep on being clever, no one has respect for what you do.
Let the Flood Gates Open!
It's all getting a bit boring now, not a week goes past about a boring online estate agent story.
There's a place for both in the market.
Have to say though some of these guys that are ex agents and now own/work for an online agent, probably weren't worrying about saving their vendors money when they were charging them 1.5, 2 percent or possibly higher in the past.
Maybe hatched and Emoov should team up, get in bed together, then they can both go tits up at the same time, the portals will kill you coz they want you finished.
A 'complete' estate agency service is one where the property ends up sold (or let) in a timely and satisfactory manner.
What a waste of time whinging about competition - why not just work harder - or employ some people who can think creatively.
There's something a little distasteful about 2 online agents publicly stroking each others egos and reveling in the fact that they are trying to kill an industry that they originally came from. In fact it's your heritage isn't it?
Yes change is good and competition is what this industry needs but let's not bring the bad etiquette of High street agency into the Online arena aswell.
Dose anyone consider impulse buying a cd or book the same as what will inevitably be a commitment to 25 years of the vast proportion of your monthly income to be the same thing or even vaguely parable?
What the ASA have established is that internet agents offer the basic full service. Basic being the operative word.
Any agent knows pitching for business is about identifying why you are different, building the benefits of your service opposed to the cost.
Are venders exposed to the charming crooks of the industry?
yes they are should, we ban an industry or medium with the threats of crooks and scams? The internet is not immune to the odd dodgy scam, crook, fishing virus and countless other means of ripping of the innocent user, regulation is far easier to implement in are industry than there's.
There are very diligent people in all walks of life and some agents are in this job because they care (ok not as much about some venders as others) but when you can and do help someone then an agent is worth every penny, and being an agent is very rewarding.
Good luck to the completely basic service that is offered by online listers.
One really has to wonder how slow the majority of Estate Agents are.
In any line of business one has an obligation to oneself to look at what others are doing, if it is profitable and requires no additional investment, copy it
There is no earthly reason why a traditional Agent should not add an online Agency service onto their range of products. Just as many added lettings onto Sales to supplement their income when sales volumes fell they should now add this £XX web agency system. After all raking in a few quid from punters that only want that level of service stops the cash ending up with the competition that can only offer an online service.
Obviously with a mixed Agency offering that the online Agents can not match without investment in premises, it is the full suite Agent who ends up with market advantage.
It isn't hard to control competition especially when someone tells one how.
JDSTM
Do you really believe the people buy from people mantra, if this is really so, why is so much of the the high street struggling, why has amazon become the giant it is in the book industry, where are all the high street insurance companies?
House buyers buy the house that feels right for them regardless of who is selling it.
Now if you say people instruct traditional agents based on personality and gut feel perhaps you are right.....because it is so difficult to get quantitative information out of traditional agents. This can leave the vendor exposed to the charming crooks of the industry. So perhaps those that go online are just removing this risk from the process of selecting an agent.
You have to admit that many traditional agents have properties languishing on the market for months on end
Chief whipping boy your figure of £1200 per property does not tell us much, is that the cost on average from marketing to sale? If you cannot work out how the on line model works don't expect those that are making a living from it to tell you how it works
Perhaps maybe you need to look at what advertising is effective fir you and what isnt this will help you to reduce your costs.
interesting comments on both side of the debate, but i do wonder how the online business model works, as i have in the past done calculations on how much it costs me (I am in hertfordshire) to advertise and promote properties and the average was £1,200 per property.
When an online agent does charge that I am a little confused how it can be sustaineable, maybe somene at hatched or e-moov can advise.
I have never had a fee issue with what i charge as i show what I do and will stand by my record at all levels or the market, and more often than not, i win the instruction even when an online agent has been called out, so in my view peopel still buy people - will this change, as estate agency is no longer the dinosaur of the 80's
Thanks for all your comments as usual. As Russell from emoov says, surprisingly few comments on here. Especially as last time we were mentioned, there were about 80 or so!
Maybe the penny is dropping with you high street agents. We offer a COMPLETE estate agency service. It's now official
Russell, I think we have Country Properties to thank ;)
High Street agents... We're coming to get you
One thing to say .com bubble. Sooner the better.
How can you possibly say that they offer the same service, people by from people. Yes you buy a house because it is the right house for you, but how many "traditional agents" have sold a house to someone who said they wanted something completely different in a different area, this is after meeting with the buyers and having a conversation, not a faceless form online. Yes it will always be around because who hasn't come across an owner who knows best and do not want to pay but then has seen there property languish on some online listing agents books.
Good luck to online sellers, they need it as that what sells there property.
RIch
"vendors who lose 1000's in value from not exposing their house properly to the market" is equally misleading. How can you prove that.?
Also you cant blame the vendors or online agents if you offer free valuation with no commitment don't moan of you are unable to persuade the vendor to instruct you that is your own fault
Is an online company anymore dodgy than an highstreet one? Please substantiate this claim.
"As an industry we always compete on price, why not compete on providing a difference in service." I quite agree I take it you would claim to be providing at least the same level of service as a traditional EA if not better but you charge 1.35%. Why are you not taking the lead and charging 2.5%
Ouch, what a tremendous backfire!
CP: I know guys, let's get the ASA to state that their service is rubbish, we could go to town on that, yee-hah!
Three months later...
CP: B*gger!
Without a doubt, especially considering the government's changes to the rules and regulations about online agencies, the playing field has now been made level, rather than tilted in favour of crusty old agents in their crusty old offices.
Stop thinking that it's never going to happen and that you are protected because you are special.
The business model of "no sale, no fee" is dying, lying twitching in a corner. The problem is not the internet, it is rather that the general public do not like being ripped off - and rightly so.
Why should I pay thousands for a job that honestly costs hundreds - the reason is all those failed "no sale" properties need to be subsidised.
The problem is of course inertia, the majority of people expect it, but are slowly waking up to the idea.
Five years will probably be long enough.
Why do they need local knowledge..these vendors just use real estate agents to value for free and then award a dodgy online company a nice big admin fee for doing nothing.
TAX all online businesses. The govt. is on to this now so it wont be long until these businesses have to play by the same rules as 'real' businesses with real costs and service.
chow
There will only be one or two cheap online agents in a few years. As they will have to consolidate to get an economy of scale. The best thing Country Property could have done is not taken action. They've just given their competitor a shed load of publicity.
While i'm on my soap box;
I have no idea why 'online agents' take a value model. We have been running our mid-high-end 'online agency' for four years and it has been profitable since day one. Average fee about 1.35 per cent sole. Most people don't quibble about the fee and none are bothered about the fact we don't have an office.
As an industry we always compete on price, why not compete on providing a difference in service.
We make about £150k profit per member of staff. That's better than most of my local retail based agents by a country mile.
Never worry about competitors that charge peanuts, they never have the money to expand. Worry about the ones that charge more than you.
I wonder how many fewer properties would be sold if agents all charged 5%? I bet it would make very little difference. Why erode the size of the marketplace by offering cheap fees. It doesn't make more people move.
'90% of all enquiries coming from web'
should have been the misleading part. How can you prove that.?
Incredible that trading standards defend tenants who might get charged a few quid in admin fees but do nothing to protect these green vendors who lose 1000's in value from not exposing their house properly to the market..
Surprisingly few comments on here so far today from traditional agents. None in fact. Can't think why....?
Well done Adam and the Hatched team for formalising this important clarification that online estate agents are the same as ordinary estate agents. Albeit that it's what online agents have been proving day in, day out for a while now :-)
Will some traditional agents stop at nothing to prevent competition, online estate agency is just a different model, get used to it. We have already seen evidence (source: what sam saw today website) that Hatched can outperform a traditional agent. Note to Country Properties, some traditional agents no longer advestise in newspapers.