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A catalogue for Cottons property auction, which took place on 25 May 2017, contained a number of lots for sale that were presented with price information in the form “*Guide Price: £x - £y (+Fees)”. The asterisk linked to small print text at the foot of each page that stated “*Refer to Guide and Reserve Price Definitions on Inside Cover”. The inside cover contained extensive information regarding the auction, including sections headed “Condition of Sale” and “Auctioneers Advice”, a section in red text headed “IMPORTANT NOTICE” that related to money laundering regulations, and in the bottom right-hand corner two boxes, one headed “Misrepresentation Act” and, immediately below that, another headed “Definition”. That box contained text that said “Definition of Guide Prices … The guide price is an indication of the seller’s current minimum price expectation at auction and the guide price, or range of guide prices, is given to assist prospective purchasers. The guide price can be adjusted by the seller at any time up to the day of the auction in light of the interest shown during the marketing period and bidders will be notified of this change on our website and by the auctioneer prior to the lot being offered” and “Definition of Reserve Price … The reserve price is the seller’s minimum acceptable price at auction and the figure below which the auctioneer cannot sell. It is usual, but not always the case that a provisional reserve is agreed between the seller and the auctioneer at the start of marketing and the Final Reserve Price will be agreed between the auctioneer and the seller prior to the auction sale. Whilst the reserve price is confidential it will usually be set within the quoted guide range and in any event will not exceed the highest quoted guide price”.


The complainant, who believed that on average properties sold for more than 25% more than the minimum of the guide price ranges, challenged whether the listed guide prices were misleading.


Cottons Property Consultants LLP t/a Cottons Chartered Surveyors (Cottons) said their auction catalogues contained clear definitions of both their guide and reserve prices. This was situated in a blue box on the inside cover of the printed catalogue and referenced for each property by an asterisk situated adjacent to the guide price and linking the guide price to a bold black directional note located at the bottom of each page. Each property being offered was displayed separately on their website and carried the full guide price and reserve price definitions at the bottom of the property details. In newspaper advertising, whenever a sample of properties was shown, the guide and reserve prices were clearly displayed within the content of the ad.

They said that in one instance when the guide price was increased from £62,000 to £68,000, this was due to the mortgage redemption figure being higher than their client had originally thought. Cottons provided an extract from their system audit with notes to that effect. They added that it was amended immediately on their website for this lot and was highlighted by way of an addendum document appearing on the web details for this property and on a separate Addendum document, a copy of which was provided and which was uploaded onto the website. The document was displayed and handed out in the auction room and read prior to the auction commencing and again prior to the lot being offered for sale.

Cottons said that every time a guide price was shown, explanatory text appeared prominently within the marketing communication and was linked to each guide price by an asterisk or similar. That text included a definition of a guide price, its distinction from a reserve price, text advising that the guide price could be adjusted by the seller at any time up to the day of the auction and text advising that the reserve price would usually be set within a guide price range and would not exceed the highest quoted guide price. Cottons said that this was particularly applicable when marketing a property with a single guide price; they did not opt to have a reserve price of 10% above the single guide price which they believed could be construed as misleading. They provided an example that if a guide price was £450,000, that could mean that an auctioneer could withdraw a property as unsold because it did not meet a reserve price of £495,000, which was 10% above the guide price.

They said that the inside cover of their catalogue under a section headed “Auctioneers Advice” provided information for the consumer emphasising and explaining that they should undertake sufficient due diligence in order to satisfy themselves of all matters relating to the property and which stated that by bidding for the property it was assumed that all appropriate enquiries had been made. That was reiterated in the addendum which was made available on the website and handed out to all parties attending the auction room. They said that the relevance of that advice might directly relate to the setting of a guide price for a property.

Cottons said that when they inspected a property to appraise it for inclusion in their auction, they would make a recommendation to the seller on setting a guide price. They would take into account factors such as the relatively short time scale for purchasing a property by auction, the condition of the property, the cost of any needed repair or refurbishment, any hypothetical developers’ profit for funding the property and undertaking repairs and any detrimental factors. They said that by adhering to the auctioneers’ advice, conducting viewings of a property, inspecting the legal pack and obtaining professional advice prior to bidding, a buyer was able to relate to the guide price based on all factors affecting each property and could bid on that basis.

Cottons said that while they did their utmost to provide an accurate guide price based on all factors affecting a property and based upon a seller’s genuine minimum price expectation, they could not predict the effect of various factors on the eventual sale price achieved. Such factors included, for example, competitive bidding on the auction day, lack of due diligence or interested parties with a special interest, such as those who owned a neighbouring property or who were tenants in occupation (known as special purchasers) and human nature whereby a person’s bidding may be the result of purely wanting to purchase a property or not wishing another bidder to purchase it.

Cottons also said that many properties were offered for sale by auction to achieve a certain and guaranteed sale. Examples of occasions when that might occur could be when an auctioneer acted for a Local Authority who would have a value for the property on an Asset Register; those documented values would be their minimum price expectations. Other examples included when selling on behalf of mortgagees, Administrators or LPA Receivers, who were in receipt of independent valuation advice prior to the auction house’s appointment, when selling property in deceased estates where they would be required to adopt guide or reserve prices in line with probate valuations for the purposes of inheritance tax, or when acting for sellers who might need to realise capital from an asset quickly to meet a financial commitment. Cottons said that they could never predict the sale price achieved under auction conditions when so many variables affected the eventual outcome and where their primary relationship was with the seller, to whom they were duty bound to sell their property at the best price to the highest bidder.

Royal Institute of Chartered Surveyors (RICS) provided copies of current industry guidance for Auctioneers selling real estate along with the common auction conditions, which they said were currently under review, and said they were looking to publish revised guidance to reflect case law from 2016.

National Auctioneers and Valuers Association (NAVA) said their members were fully aware of the regulations and guidance subsequent to a previous ASA ruling through emails, magazines and at their annual auctioneers conferences. They said that issues arose over the estimate on a guide price of a property where it would attract interest from various types of prospective purchasers. In addition, a property may have a number of final uses whether it was development, conversion, access to another site or the marriage value to nearby properties.


Not upheld

The ASA noted the definition of guide prices that Cottons provided on their website stated that a guide price was provided as an indication of the seller’s minimum expectation, that they were not necessarily figures a property would sell at and that it could change at any time prior to the auction. They also stated almost all properties would have a reserve which was the figure below which the auctioneer could not sell. We therefore considered that consumers would understand the guide price was not an indication of the value of the property or its likely sale price and that it was subject to change up until the auction. We also considered that consumers would understand that the nature of an auction was such that the price eventually achieved on a sale might well exceed the stated guide price.

We considered that guide price claims should be accompanied by clear and prominent information explaining the basis upon which the guide price was offered. That included its distinction from a reserve price; that it was an indication of the range within which the minimum acceptable sale price would fall or, in the case of single figure guide prices, it would be within 10% of the minimum acceptable sale price; and that both prices may be subject to change at a later date. We considered that, in order to ensure sufficient prominence, the qualification should either accompany each guide price figure or be clearly positioned within the marketing communication and linked to each one through the use of an asterisk or similar marker.

We noted that where a guide price was shown on lots in the catalogue, it was linked by an asterisk to a qualification at the foot of the page referring to the definition of the guide and reserve prices on the inside cover. We considered that would ensure that there was sufficient prominence given to the significance of the guide price so that prospective buyers were not misled.

We also noted from a 'marketing interest summary' that Cottons provided for a selection of lots, in each case, where a guide price range was given, the reserve price fell within the lower and upper ranges of the stated guide price and the reserve price did not exceed the highest quoted guide price range. From the examples provided we noted that the guide price ranges generally varied from £1,000 to £15,000 between the bottom and the top of the range, but because the reserve price always fell within this bracket, we did not consider that the range was too wide so as to be misleading to consumers deciding whether to purchase a property.

Because we noted that Cottons defined guide prices and reserve prices prominently in their catalogues, that reserve prices always fell within the range of the stated guide prices and that they provided evidence to substantiate their procedures, we concluded that the guide prices were not misleading.

We investigated the ad under CAP Code (Edition 12) rules  3.1 3.1 Marketing communications must not materially mislead or be likely to do so.  (Misleading advertising),  3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation.  (Substantiation) and  3.17 3.17 Price statements must not mislead by omission, undue emphasis or distortion. They must relate to the product featured in the marketing communication.  Prices), but did not find it in breach.


No further action necessary.

CAP Code (Edition 12)

3.1     3.17     3.7    

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