ASA Adjudication on RE/MAX Scotland

Ad

a. A leaflet for REMAX estate agent was headed “THINKING OF SELLING?” Under the heading “THE REAL DEAL” it listed the expenses associated with selling a property as follows:

Marketing Fee £Zero
Mortgage Fee £Zero
Survey Fee £Zero
Conveyancing Fee £Fixed
Sales Fee £Fixed
Typical Savings £1,408 including VAT

Underneath the list of expenses, it stated “Conditions Apply: Typical Savings based on selling £100,000 house and arranging your new mortgage with us. Savings Example: marketing Fee £234, Mortgage Arrangement Fee £299, Survey Fee £170, Conveyancing Fee £117.50, Sale Fee £587.50, all fees shown include VAT @ 17.5%”

b. A leaflet for the same estate agent was headed “RE/MAX Central”. Underneath this were printed the estate agent’s name and contact telephone number, followed by the description “Licensed Estate Agent” and the line “CALL OUR FREE VALUATION HOT LINE …” The reverse of the leaflet was headed “RE/MAX - Central - The Market Leaders.” A list of reasons why RE/MAX believed they were market leaders followed, including “Fully Licensed Estate Agent.”

Issue

1.  McGoogan Property Lawyers challenged whether ad (a) was misleading because it failed to take into account additional conveyancing fees.

2.  The ASA challenged whether the savings claim of £1,408 in ad (a) was misleading.

3.  McGoogan Property Lawyers challenged whether the claims "Licensed Estate Agent" and "Fully Licensed Estate Agent" in ad (b) were misleading.

CAP Code (Edition 11)

Response

1.  RE/MAX said they charged a sale fee that was fixed at 1% of the final selling price of the property; that the solicitor they introduced their clients to charged a conveyancing fee of £495 which was a fixed price regardless of the property valuation; that it included VAT and that no further costs or fees (such as for advertising or accompanying viewers) were payable.

2.  RE/MAX supplied a breakdown of the fees they would typically charge for marketing; the standard charge the mortgage adviser they introduced their clients to normally charged for arranging a mortgage and the survey cost that normally applied as part of the process of arranging a mortgage.  The said the total of those fees, added to the savings difference between the conveyancing fee of £495 described in point 1 above and the conveyancing fee that commonly applied in their area to the sale of, for instance, a £100,000 property, resulted in the savings claim they made.  They said they would make any necessary amendments to ensure future ads complied with the CAP Code.

3.  RE/MAX said every new estate agent they recruited attended an induction course to train them in the companys own code of ethics and the legislation and procedures relevant to the marketing and sale of residential property in Scotland.  They had to pass a written examination before they were released to work in a branch.  They said each estate agent was assigned a mentor for an introductory period and needed to demonstrate they could deal successfully with the various aspects of estate agent work before they could work unsupervised.  RE/MAX acknowledged there was no nationally recognised licensing procedure for estate agents but believed their training procedure was sufficiently in the interests of the public to justify the use of the term.  They said they had withdrawn the ad.

Assessment

1.  Not upheld

The ASA noted that additional outlays, such as stamp duty, applied when purchasing a property, but not when selling.  We considered it was sufficiently clear that the claims related to selling property.  We considered RE/MAX had demonstrated that no fees other than those they had already taken account applied when selling a property through them.

On this point, we investigated ad (a) under CAP Code clauses 3.1 (Substantiation) and 7.1 (Truthfulness) but did not find it in breach.

2.  Upheld

We noted that the savings claim took into account charges that RE/MAX waived and the difference between the conveyancing and sales fees they charged and those that they believed commonly applied in their area.  We noted that RE/MAX had not, however, provided comparative evidence to show the conveyancing fees charged by other agents in their area.  We considered RE/MAX had not provided evidence to justify the savings claim.

On this point, ad (a) breached CAP Code clauses 3.1 (Substantiation) and 7.1 (Truthfulness).

3.  Upheld

We noted the training procedure RE/MAX provided.  We considered, however, that the use of the term "licensed" suggested there was a formal, independent procedure for awarding and in turn potentially revoking an estate agents licence, when that was not the case.

On this point, ad (b) breached CAP Code 7.1 (Truthfulness).

Action

We welcomed RE/MAX's assurance that they had withdrawn ad (b) and that they would make any necessary amendments to ad (a).  We told them to remove the claim "Typical Savings £1,408 including VAT" in ad (a) and the claims "Licensed Estate Agent" and "Fully Licensed Estate Agent" from ad (b).

Adjudication of the ASA Council (Non-broadcast)