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TODAY'S OTHER NEWS

Agents must be crystal clear on fees, watchdog tells industry

The advertising watchdog has told the agency industry to clean up its act on four issues, with clarity over fees being first and foremost.

1. Fees: In a guidance note issued by the Advertising Standards Authority, agents are told in no uncertain terms that their marketing must be clear with any ‘limitations and qualifications’ made obvious to consumers. 

In a reference to past ASA probes about adverts - including those from online firms HouseSimple (the online agency now known as Strike) and Purplebricks, the watchdog tells agents: “The ASA has previously investigated and upheld complaints about an ad that claimed to sell a property for a flat fee but failed to make clear that consumers would have to pay an additional fee to use their own conveyancer. 

“Similarly, the ASA upheld a complaint where the ad quoted a 0.5 per cent commission fee for the sale of homes, without making it clear that the advertised fee did not include accompanied viewings.  

“Further to this, the ASA also upheld against an ad which failed to make it sufficiently clear that an upfront, fixed fee was payable regardless of whether the property sold or not.”

The new guidance note from the ASA also makes it clear how agents should express their VAT charge.

“The ASA has previously judged an ad that offered a VAT-exclusive selling fee of “0.9% + VAT” to be misleading because  the percentage fee should have included VAT. Therefore, remember to present your fees inclusive of VAT, wherever this applies” insists the authority.

2. Comparisons: The ASA demands that agents making comparisons with rivals must include sufficient information to ensure consumers are not misled.

“Comparisons with identifiable competitors must be based on objective criteria, make the basis of the comparison clear and should be presented in a way that is unlikely to mislead. Adequate documentary evidence must be held to support any comparison” says the ASA, which also wants any such comparisons to be verifiable.

Any claims regarding savings must be supported with “comprehensive documentary evidence” and the ASA insists that “a simple customer survey will not be sufficient.”

3. Facts: The ASA says it receives frequent complaints about ads that inaccurately describe properties or their location. 

“Although this might seem obvious, property ads should not exaggerate the features of a property, and marketers should ensure they hold adequate substantiation for any objective claims that are made.  For instance, an agent’s ad was found to have broken the rules because it claimed a property offered a ‘private drive’ when the drive was shared with other residents.”

4. Local Experts: There have been several claims in the past that some agents have stretched the interpretation of ‘local’ when claiming they have offices or expertise linked to one location.

The ASA says: “Depending on the context, access to a “local property expert” could be considered to refer to local knowledge of a geographical area rather than necessarily the physical location of the ‘agent’.”

But it then adds: “However, particular caution is advised if marketers wish to make direct or implied claims about having a “local” presence and should not imply the existence of physical branches or being ‘based’ in particular locations, when that is not the case. The ASA upheld a complaint where it was felt an estate agent ad had implied they had a fully operational branch, when it was only a serviced office.”

  • Richard Rawlings

    I worry that estate agency may be on a slippery slope towards a fee environment whereby fees have to be clarified even before meeting the client. This would seriously undermine the essence of how and why people choose one agency over another. Research, along with most agents’ experience, continues to confirm that the singular most important influence on a seller’s decision is not as objective as regulators might hope. It is simply that the seller “prefers the individual”, closely followed by recommendations and good reviews.

    In a business where we are often called to be counsellors and mediators as much as salespeople, it is essential that the public should not be persuaded to consider the fee ahead of agents’ ability to deliver a smooth and enjoyable experience - where softer skills are often held in as high regard to performance stats.

    It is the partial intangibility of a good agency that enables some agents to shine and charge a healthy 2%-3% commission, which their clients are more than happy to pay. Surely this is true competition as it widens the playing field with a massive range of agency styles and personalities, where character is highly prized by those prepared to pay it. It also allows cheap agents to operate as well, ensuring healthy competition that credits the consumer with enough intelligence to decide which agency they prefer, on their terms.

    Have a great day.

  • icon

    Difficult one - whilst i see the argument for an agent not disclosing fees up front I have worked for companies where the fee was to an extent dictated by the vendor's ability to negotiate. So what tended to happen was young professionals who were confident about negotiating got a far cheaper fee than an old couple who were not as street wise. I so not think that can be morally justified.
    No way would I ever pay 2-3% there are plenty of good agents who charge less than that. As a developer I have paid between 1-1.5% the higher figure when selling in experience ares where I valued the experience and client base of companies such as Savills, Knight Frank etc

    I have also sold in less expensive areas where a local independent has charged 1% and got a higher price than the valuation of other more expensive agents.

    Richard Rawlings

    "Dictated by the VENDOR's ability to negotiate"??? Surely they pay US to be better negotiators than them! This really is cart before horse and probably only applies to agencies that have failed to train their agents accordingly! :)

     
  • Richard Copus

    I cannot see any reason why the agent can't emphasise the service he provides when quoting his fee. Many individual agents charge different fees for different properties depending on their type and location.

    Richard Rawlings

    or the fee he charges when quoting his service! (or her of course). Surely we should have the right to at least pitch for the business before revealing our fee. Otherwise it subliminally forces the consumer to focus on fee, not the service, style or personality of the agent.

     
  • David dOrton-Gibson

    Surely no reputable agent could support underhand fee display and declaration? However the problem with fees in adverts is you have not spoken to the customer so you don't yet know what you are doing for them. If you sell a standard product it is fairly easy, take petrol, few people differentiate between the actual petrol they put in their car (in many cases the tankers all fill from the same depot!). However, if you are offering a micro site just for that property, or a comprehensive full colour brochure, or you research the historical past of that interesting property, these are factors that need to be discussed about the merit and value before a proper pricing can be given. It is the classic criticism about sales people that they try and ram down your throat what they have to sell and don't listen to you. That is exactly why pricing should be clear, but cannot realistically be on the advert, as the professional does not yet know what services they will be providing and therefore what it is appropriate to charge. I suggest the problem is that those writing these rules don't actually understand the market (and indeed the different markets) that agents can be serving. To be professional we should be allowed to go and listen to what the customer wants, assess what that will cost and then offer them a solution to their specific needs at a clear, VAT inclusive, price. I still am looking for the solicitor or accounts adverts (and hundreds of others) where the advert includes a price. Why target agents and not have a universal policy one way or another?

    Richard Rawlings

    Agreed David!

     
    Matthew Payne

    Completely agree David. As with any professional service provider, there are too many variables to be able to publish a fee, as any lawyer, planning consultant, or architect would and do argue the same thing. Even then when you try to engage any of them to act for you, they insist on a first appointment, usually free of charge, to better understand the detail, very much like an Agents "free valuation", two words which in themselves create the impression of off the shelf simplicity that can be often found accurately online anyway without the need for a meeting.

    Perhaps the high street side of the industry needs to start looking at the language and terminology it uses to better help those that don't understand the complexity of different levels of service, time and expertise involved in selling a property. Since the cheaper publicly displayed fixed fee online agents became more prevalent, the debate has existed about how much extra value high street agents offer and how they should find a way to better articulate that to their potential customer. Clearly more work to do there, and to the regulators as well.

     
  • Colin Bain

    Good luck convincing agents to quote 1.2% rather than 1% plus vat

    David dOrton-Gibson

    I agree, but have spent years pointing out what the law says (currently the Consumer Rights Act, section 84 (3)(c)). This is where being a fit and proper person when licensing comes in will simply increase risk as not including it could jeopardise your right to hold a licence. It is the usual story, many don't do it and because they get away with it it causes more problems. For good agents, enforcement against those breaking the rules is essential to have a level playing field.

     
  • Hybrid Agent

    "In traditional UK estate agency the fee that the client pays is determined by a number of factors. The value/eventual sale price of their home and whatever they can negotiate as a percentage or fixed commission figure with the valuation agent on the day they sign up. Their agents pricing is a dark art, a closely guarded secret, try calling a traditional retail estate agent and asking what they charge and you will see this perfectly demonstrated. Not very transparent and a factor in the general mis-trust of traditional estate agents.
    One thing big hybrid agents have made clear is the fixed fee that they charge for their services. It’s made very obvious on their websites and in other marketing material, although more prevalent on the T.V. adverts at launch than at maturity of the businesses as previously mentioned."
    for further observations on agent pricing and advertising thereof check out the book "No.1 Hybrid Estate Agent. How to Evolve in Property Selling"

  • Charlie Lamdin

    "My fee varies between 1% and 2% depending on your individual circumstances."
    eg things you perhaps cannot say but include:
    Motivation level
    Pricing realism
    Chain situation
    Paperwork status
    Cooperation level.

    I know so many agents who take this approach (whether or not they say so) because each instruction comes with hugely varying amounts of work, risk and uncertainty.

    Being forced to quote fees in advance and stick to them, before knowing the vendor's true circumstances can only lead to increased risk of wasted time and money, to say nothing of unfair brand damage.

    An experienced seller with a saleable property (free of legal or physical defects), no chain and a pragmatic approach would perhaps be more profitable business at 1%. But you could still lose money on a 2% free if it's a nightmare, wrangling, divorcing couple whose plans change monthly, who can't agree on anything, whose paperwork is a mess, and who won't sell before they have found somewhere to buy that they can do a simultaneous exchange on.

    Which is another reason why fixed fee agency just doesn't make commercial sense. Some sales are infinitely more work than others.

  • icon

    And while you are at it, pleas inform Buyers and Sellers of the scandalous “referral” fees which you use to let bigger conveyancers BUY Legal work. And about the fiction of your statement to the parties “you should use our recommended solicitors.....”

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