An online agent’s claim on social media that its average vendor saves £5,594 has been publicly disputed – but robustly defended by HouseSimple.
HouseSimple made the claim in an advert on Facebook – but two people queried it, with one asking how the sum was calculated.
HouseSimple replied by posting a link saying: “It’s all explained here and has had independent verification.”
The link gives the explanation that the calculation is based on its current average asking price of £305,648; a High Street average commission of 1.64% plus VAT; and HouseSimple’s own average client fee of £420.76.
The average fee of £420.76 is what it says its own customers paid between June 2015 and April 2016.
It says the average High Street commission fee was from Zoopla in April 2016, and from a survey of 533 HouseSimple customers who listed in 2014/2015, and who said they had been previously quoted agency fees.
It says that based on these figures, the average saving with HouseSimple is £5,594.
One person, Milly Molly Mandy, posted on Facebook: “What seemingly false advertising.”
Another, Warren Hastings, said the average high street agent’s fee is 1.3% including VAT.
He said: “High street agents wouldn’t get away with false advertising, so why should these online companies?”
Milly Molly Mandy replied that she had been looking to sell her property and looked at some online agents: “All the same . . . stating they can save me thousands. Absolute rubbish!”
EYE asked HouseSimple about the “independent verification” of its claims.
A spokesperson told us: “The claim is the same one used in the current HouseSimple TV ad. It was independently verified by Clearcast, who have to clear all claims before they appear in TV ads.
“HouseSimple provided supportive data in January 2017 to Clearcast in order to verify the claim.”
The exchange on Facebook is here:
https://www.facebook.com/housesimple.online.estate.agents/posts/1208185912618570
Since when did agents earn commission on asking price? The clean transaction average of completions at land registry is currently about £282,000, that seems like a sensible place to start the calculations.
The Hayter average is not 1.64% plus vat
Being reliant on internet AVM random number generators for valuation throws a valuation error of 3.5% into the mix.
So £282,000 x 0.0144 = £4060.80 less £1000 = £3060.80 saving, less £9870 (282,000 x 0.035) = net saving of -£6809.20
err sorry but isn’t a negative saving a cost?
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>Warren Hastings, said the average high street agent’s fee is 1.3% including VAT
This seems very unlikely.
Agents could easily end this constant issue if they would publish their normal commission rates. If they think their service offers something extra then it’s very easy to say this. If the fee varies for any reason then it’s very easy to say this too.
Why the big secret about commission? It seems to me that it can’t be in the best interest of the consumer.
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There isn’t a big secret about commission other than an estimated 21,000 unsuccessful vendors of one internet listing firm must be shelling out about £21.7m to not sell their homes
(Please note it could be 2863 unsuccessful vendors are only shelling out £2.96m to not sell their homes; the numbers from the firm concerned have been a little confused by contradictory claims made about their performance and a reluctance to clarify the contradiction)
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>There isn’t a big secret about commission
So what is the average commission for all UK Agents? Can it be substantiated?
Foxtons are the only Agent I’ve found who publish their commission rates and they charge 3% including VAT. For multiple Agency 3.6%. Guildford & Woking 2.7% for sole agency.
Out of the 3 Estate Agents I’ve had around to value my house (apart from PurpleBricks) there was no mention of commission apart from one and that was only after I asked which was 1.8% including VAT. I can also recall 1.5% + VAT from an Agent I used a while back.
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“Out of the 3 Estate Agents I’ve had around to value my house (apart from PurpleBricks) there was no mention of commission apart from one and that was only after I asked which was 1.8% including VAT.”
If that be the case then I would suggest that the Agents – who from memory you told me that at least one of those appraisals was over eighteen months ago – and a good year before you finally committed to market in January – had a very good reason for not giving you a complete ‘pitch’ for your business, which would have included their Fees and what they do for your money.
Maybe you should be asking yourself what that reason was… because a good few here, without doubt, already have their own opinions of the answer.
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>at least one of those appraisals was over eighteen months ago
True but they came out again more recently (but not as recent as the other 2) and neither time did they mention their fees.
>Maybe you should be asking yourself what that reason was… because a good few here, without doubt, already have their own opinions of the answer.
So just speculation then?
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“True but they came out again more recently…”
You are now materially changing what you said to me on 9 March. At no point did you state that the Agent you had out in 2016 had made a return visit which, I would reasonably expect have been something that you would have clearly stated – as appears your nature to be fairly precise.
“So just speculation then?”
I dare say it is in some instances. But as far as others are concerned I would say they have made their opinions quite clear of your less-than-complimentary comments in relation to our industry (with one Purple-tinted exception that you may or may not own shares in dependent upon the time of day and which way the wind is blowing, that is…)
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Mr Cyberduck,
The 1.3% figure comes from research by MyHomeMove quoted in this Which article…
http://www.which.co.uk/money/mortgages-and-property/home-movers/guides/selling-a-house/estate-agent-fees-and-contracts
MyHomeMove have gone on record & substantiated their research by stating that ‘We operate in every postcode area in England and Wales, and helped nearly 50,000 people to buy and sell last year, so you can say our results are reflective of the national picture’.
You will find that the 1.3% fee comparison figure has been accepted by eMoov and is now quoted on their website as the source for their comparison data.
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Boom!
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And MyHomeMove are the conveyancing partner for which internet listing passive intermediary?
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>And MyHomeMove are the conveyancing partner for which internet listing passive intermediary?
In that case their data would most likely be skewed towards the lower priced Agents in my opinion. Would you not agree?
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“In that case their data would most likely be skewed towards the lower priced Agents in my opinion. Would you not agree?”
From the Which? article:
“The average high-street estate agent fee is 1.3% including VAT, according to conveyancing firm MyHomeMove.”
Maybe reading before commenting would have been the order of the day, ducky?
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Thanks Malcolm,
I can remember reading something by MyHomeMove. See http://www.propertyindustryeye.com/average-fees-estate-agents-are-charging-less-and-less/ . They state “All figures exclude VAT.” and “it does not include many transactions in central London”. If you look at Chart 3, something like 57% of the charges were 1.2% and above for the time period (excluding VAT).
MyHomeMove’s data was based on 20000 transactions. I don’t know much about them but I would be suspicious of the demographic. For example, are they cheap and would be more likely used by those who shop around. The implication being that their data is more likely to represent the transactions of the lower price Agents.
Traditional Estate Agents quite often point out the Which Article but in addition to my questions about MyHome Move’s data being representative I also question whether the 1.3% figure should be excluding VAT and also whether it includes data from many Central London properties.
In the recent ASA decision PurpleBricks’ evidence included pointing at the Citizens Advice & YourMoney.com websites but the ASA said “that because we had not seen the source of the figures stated by Citizens Advice and YourMoney.com, they were not adequate evidence in support”.
So whilst it is convenient for Agents (online & traditional) to point to their favourite web site it’s not enough, in my opinion, to substantiate the claims. Fair’s fair. If PurpleBricks aren’t allowed to do it then nor should Warren Hastings.
In my opinion Agents should be made to publish their normal commission rates.
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Mr Cyberduck,
Thanks for highlighting the Stephen Chayter article from 2015.
Unless I have missed it I can see no actual reference to an average fee either including or excluding vat. Mr Chayter offers a comparison of fees in revenue terms but no direct reference to an average fee in %age terms.
It is also worth noting in the article that he states ‘By the nature of their business model, we do not settle online or hybrid agents’ invoices, so you can conclude that these figures only include invoices from high street agents – big, small, corporate and independent.’
Your point about Central London is valid but doesn’t that make the figures more representative of the Estate Agency world outside London?
For example the savings (against Purplebricks) on an £96,000 property in Cleethorpes sold at 1.2% inc vat are nil. (Figures based on a Purplebricks fee of £849 + £300 for accompanied viewings against an Agents fee of 1.2% inc vat, on a no sale no fee basis and including accompanied viewings amongst other things).
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>I can see no actual reference to an average fee either including or excluding vat.
No, I couldn’t see an average either. But the data represented by table 3 would indicate 1.2% plus for something like 57% of the transactions. I don’t see the national average for that time period being as low as 1.08% + VAT which is approx. 1.3%
My point about MyHomeMove’s data was that if they offer low cost conveyancing then they are more likely to represent the person who shops around so they would probably have shopped around and bartered with the Estate Agent they used. So if those assumptions are correct then unlikely to represent the true picture of national data which would include a greater weighting of those who don’t shop around and who don’t barter.
Online Agents will present the data in a way that favours them and Traditional Agents in a way that favours them. Yet Traditional Agents make a big fuss about this which in my eyes is a bit rich when they won’t publish their own typical commission rates.
To throw some more data into the far from satisfactory position, here’s a recent survey from Post Office Money & the Centre for Economics and Business Research
https://www.estateagenttoday.co.uk/breaking-news/2017/5/agents-fees-up-31-in-a-decade-surveyors-and-conveyancers-up-much-more
They are saying the average commission in 2016 was £4,310.
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And they are wrong.
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I think the main reason for not publishing is that certain agents both big and small do not stick rigidly to the price they quote initially and will bend and flex to win the instruction so the vendor that plays hard ball will get a better deal than the one that just says ok. If agents started to publish fees the ones that just said ok might feel a little disgruntled.
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It seems that their marketing department can’t decide what the saving is. I’ve just seen a PPC advert for them quoting a saving of £5,549 not £5,594!
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