Estate agents are under threat. Not only do they have precious little stock on their books, but there is a growing trend for selling homes online, with Tesco and Google preparing to enter the British market.
Last month’s Office of Fair Trading (OFT) proposal for a shake-up in the way we buy and sell homes is bound to increase the pressure.
THE OLD-FASHIONED WAY TO BUY
Peter Bolton-King, chief executive of the National Association of Estate Agents, demands agents offer a quality service.
‘And if consumers don’t get that, why should they pay for it?’ he says. But he is quick to point out how agents have to strive to earn their generous commission.
Valuing the property is the first minefield. Set the bar too low and you will throw away thousands of pounds; go too high and your home will sit on the market for months.
‘Only agents know exactly what a property in a certain street is worth and what’s in demand and will carry a premium,’ says Bolton-King.
Ed Mead, of Douglas & Gordon estate agents in London, highlights the difficulties of pricing properties in a multitude of micro-markets. ‘Just try using a blunt tool such as zoopla.co.uk. Sellers will use historical data and gauge backwards-looking prices,’ says Mead. ‘Private sales have, in the past, been the preserve of the bargain hunter.
Non-traditional agents get attention when the market is poor, but as soon as things get hot – as they are in London – sellers can’t get enough of agents, as they’ll push buyers to pay as much as possible.’
Agents will sort keen buyers from time-wasters. ‘There’s a skill to showing people round a property,’ says Bolton-King. ‘It’s not easy telling someone you want an extra £50,000. You need a middle man.’
With one in three sales falling through after an offer is accepted, an agent can help to hold the sale together. ‘They can speak to the mortgage broker, lender and solicitor. You can’t do that as a member of the public,’ says Bolton-King. Security is the other issue, with agents arguing the OFT is prioritising saving money over consumer protection. And don’t forget the stress that comes with selling a property – it’s on a par with bereavement and divorce.
‘People can get angry and irrational,’ says Spencer Cushing, of John D. Wood. ‘The agent acts as a buffer.’
Kate Faulkner, of advisers Designs on Property, wonders how online traders will deal with the Property Misdescriptions Act, which can see agents fined for inaccurate property details.
‘I find it odd the OFT has spent so much time on money-laundering rules and a redress scheme for agents, yet it says it’s a better idea to go with websites that aren’t regulated to sell your home,’ she says.
‘It’s contradictory and overlooks the fact that for private websites to grow, they need to take responsibility for property descriptions, which will increase their costs anyway. I’d trust an agent over Tesco.
‘It’ll take another ten years for private sales websites to take off, when the generation comes along who bought online and are happy to sell that way, too.’
ON THE WEB AND COMMISSION FREE
No Commission and no commitment to an estate agent’s contract are the biggest incentives for DIY house sales. We are used to shopping around on the internet for bargains, so why wouldn’t we do the same for properties and buyers?
After describing estate agents’ work as ‘money for old rope’, Sarah Beeny isn’t popular. She leads the charge for private seller websites. ‘Estate agents have had the monopoly for too long, which never benefits the customer,’ says Beeny, whose tepilo.com is free for listings and charges no commission fee. ‘Their business model is old-fashioned and the system needs modernising.
‘Ninety per cent of property buyers go to the internet, so why can’t sellers do the same? There’s something immoral about paying solicitors, who have trained for years, £900 for conveyancing, but giving £10,000 to an agent for taking photos and sticking your home on a website.’
Estate agents have their place, such as for sellers with little time or unusual properties, says Beeny, but she feels objections over internet security and misrepresentation of properties are unfounded. ‘A homeowner has a vested interest in selling their property and knows it better than an agent who has whizzed around in five minutes,’ she says. ‘And there’s always a disclaimer on agents’ details saying they may be inaccurate. ‘I’m not saying we should get rid of estate agents. We need healthy competition and property portals to give consumers more control.’
Private seller websites may have an image of attracting young sellers with low-value properties, but Nick Marr, of The Little House Company, is surprised by the number of high-value listings on his ten-year-old website, which charges from £49 to list a property for sale.
‘If you can save £45,000 in agent’s fees by selling a £1.5million property online, you will,’ says Marr, who recommends uploading as many photos as possible.
‘Many people use a website like ours in tandem with an estate agent, to give the agent a kick if they feel they aren’t doing enough.’ Be careful if you opt for the dual approach of agent and website, as you may still be liable to pay the agent’s fee, despite having sold the property to a buyer online. ‘Get it written into your agent’s contract that in the event of a private sale, no charges will be made,’ says Marr.
Danny Williams, a former estate agent who runsOnelondonproperty.co.uk, believes the two sides can work together. He claims to be the only website offering the choice of a portal for private sellers or a more expensive estate agency service.
‘We’re not at all anti-agent. Some properties will always be better off sold through an agent and some people will always prefer to deal with agents,’ he says. ‘But online alternatives cut out unnecessary overheads, such as offices and cars. Cost savings and flexibility is what we are all after.’
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