Real estate agents are getting a bad rap lately – accused of being pushy, greedy and impatient to get a sale. Many sellers are turning to online agencies or even private sales in the hopes of getting a better price for their homes. But where does that leave buyers? Elizabeth Henry investigates
Online seems to be the way of the future. A survey of 1,000 people by online agents Housesimple found 60 per cent of Brits would not use a traditional agent to sell their next property, citing agents’ “extortionate hourly rates as well as fees for credit checks, references and administration” for pushing them away.
Given this, it’s unsurprising that most buyers also now look for property online, on portals like Zoopla, Rightmove and Primelocation. In August a Jeffries report found these portals were the most useful source of information for 74 per cent of people who were buying or selling a property.
By contrast, local estate agents’ sites were only named by 14 per cent of consumers as most useful.
So why are traditional agents so unpopular? Housesimple says reasons included the feeling that they were “desperate for a sale at any cost”, “unscrupulous” and had a “know-it-all attitude” and a suspicion that they’re just there as a middleman to extract fees.
Are agents really that bad?
Research from the National Association of Estate Agents (NAEA) shows 60 per cent of people that have bought or sold a property in the last five years experienced a problem with their estate agent.
Bad communication skills (either not calling back or chasing them too much) were the most common problem. Other complaints included feeling the agent didn’t care about them, hadn’t mentioned known faults in the property, and didn’t keep promises. Others found the agent was overpricing or being dishonest.
But the NAEA points out that 39 per cent of respondents didn’t check if the agent was registered. Unregistered agents aren’t subject to the normal codes of conduct and regulatory bodies have no power over them.
NAEA managing director Mark Hayward told What Mortgage every industry has “rogue elements” that could tarnish the industry’s image. That’s why the association is pushing for better regulation – to eliminate those giving the industry a bad name.
“At present, the industry is unregulated and anyone can set up a sales or letting agency, which can lead to many problems. Better regulation is required to ensure standards are set, agents are qualified, and have the level of knowledge required to deal with customers’ needs.
“All of our NAEA members are regulated, trained, qualified and policed to ensure the customer receives the best standard of advice and practice, and that their legal rights are upheld.”
Buying a house is the single largest financial transaction of most people’s lives, Hayward said. While going online may look easier, buying and selling are not simple transactions.
“[They] require skill, expertise and access to other stakeholders, such as lawyers, surveyors and financial advisers to facilitate the complicated process of house buying and get to the desired end result.”
He adds: “People want reassurance that the process is being managed by qualified and experienced experts, which is why choosing an estate agent, and particularly an NAEA member agent, guarantees the process is managed smoothly and therefore offers peace of mind to the buyer. A low cost provider in this situation may not provide the best route.”
However that doesn’t mean you can’t go online, he says – just look for the logo. “There are online agencies that are NAEA members and they adhere to the same standards, codes of practice and regulations of our traditional agent members.”
Getting the best out of a traditional agent
A report from property search specialists The Buying Agents suggests the market is going to pick up considerably in the New Year, now that stamp duty has become more favourable to buyers. If you have an estate agent searching for a property on your behalf, you should write a list of all the things you want in your new property – and then cross out everything that’s not essential.
“You will get estate agents working much harder for you if it doesn’t take a long time to list your requirements and you can be clear about what you want.”
Contact as many local agents as possible – and don’t just email them. “If you do not pick up the phone to speak to the negotiators, you will always be the last person on their list to contact when a new property becomes available. Always call in the morning when agents are likely to be in the office and not out on viewings.”
Some agents may also charge the buyer a finder’s fee, often on top of the fees charged to sellers. This double charging is legal but they must be clear about how their fees are structured from the outset.
What is an online agent?
The difference between online and traditional agents is getting fuzzier as agents increasingly offer a range of difference services. There is a whole spectrum from traditional estate agents with an online arm through to portals which let the seller market their own home online. Some are based locally while others have a broad geographical reach. Most importantly the amount and structure of the fees they charge varies hugely, as do the services offered.
For example, Housesimple.co.uk markets itself as somewhere in between a traditional agent and a private sales portal – a way for sellers to sell privately without all the hassle. They can pay extra for “booster” services such as someone to deal with viewings and professional photography.
Online agent Hatched.co.uk also calls itself a hybrid estate agent. Director Adam Day believes estate agents now come in all shapes and sizes and an official definition of “online estate agency” doesn’t exist. Day says Hatched has “honourable estate agency values” but offers vastly reduced fees thanks to cost-cutting online technology. He believes the Hatched way of doing things will become the norm within five years.
The way of the future?
Online agents are generally more innovative. For example, while many agents let you book by text, Hatched lets buyers and sellers book viewings automatically by text without disclosing their information to each other, making the process cheaper and more efficient.
Hatched also offers sellers a Google Adwords and Facebook ad campaign for an extra £99. This actively targets buyers who have Googled specific property features and targets Facebook users based on their age, location and stage of life. The service can figure out you’ve recently had a baby or got married and thus are likely to move house, advertising properties accordingly.
Is online any better for buyers?
Online agencies claim they can get sellers a better price, a big fee saving and a faster sale than traditional agents. For example Housesimple says on average it sells houses at an average 98 per cent of asking price compared to the 96 per cent average. This sounds great for the seller but would suggest that buyers end up paying more – and that you could get a better deal through a traditional agent.
But property expert Kate Faulkner says these claims are hard to verify – so there’s really no way to know if you’d be getting a better deal through an online agent. It’s really down to you to research what you think these houses are worth, by comparing as many similar local properties as possible.
To complicate things further, there’s a new portal coming onto the market in January, called OntheMarket.com. It’s been created by a group of traditional High Street agents called Agents Mutual. While currently the typical property is listed on three individual portal sites for three months, Agents Mutual will list houses on their own portal and one other site. As a buyer that means you need to check all the main portals in order to ensure you’re seeing all the best properties.
Hidden online pricing fees
Faulkner says online estate agents often have “extraordinarily complex” fees for sellers. Some are not clear about VAT charges, some still say the (now obsolete) Home Information Packs are required and others don’t make it clear Energy Performance Certificates are a legal requirement.
If you are going to use an online agent, look for an NAEA-registered agent rather than one that’s just marketing privately, she says. They should belong to The Property Ombudsman Service or The Ombudsman Services: Property.
This isn’t a promise that they’ll get it right, but it does give consumers an avenue of complaint if things go downhill. You can check an agent’s registration at www.tpos.co.uk.
Are there other options?
There have always been ways of bypassing agents, usually through private sales. But what’s changing is the new companies popping up online offering to help. For example, BeStreetSmart.co.uk is a new peer-to-peer property marketplace that lets people go online and sell (or let) their home without an agent. The site lets sellers get a valuation online, upload property details, use a calendar to show when they’re free for viewings and then sit back and wait. Potential buyers can book viewing times online.
The founders, Adrian Sutherland and Alex Sullivan, reckon sellers could save about £12,000 on average by cutting out estate agent fees. They also cite the ability to sell or buy a house outside of work hours, rather than being subject to the office hours of an agent.
While the private sales market is evolving, Faulkner says these sites aren’t new. Around the turn of the millennium there were hundreds of private sales websites, many of which crashed and burned. Most of the survivors have now become full service estate agencies, she says.
What’s best for buyers?
While private or direct sales may work for sellers, Faulkner believes a buyer will see little benefit. Such properties are harder to find, it will take more effort to get to completion and there’s every chance the price will be unrealistic, she says.
Many private sellers are wildly optimistic when they price their homes, Faulkner says. Prices can vary drastically within one street based on things like school catchment areas. Private sellers aren’t trying to be misleading – but they often don’t have the street-by-street knowledge of a local estate agent.
While sellers can benefit by cutting out the estate agents’ fee, that doesn’t mean the buyer will benefit from a cut in price, Faulkner says. It’s really up to the seller.
“The only time this might happen is if a seller and buyer decide to sell to each other and then the seller reduces the price by half the amount they would have paid an agent – but there isn’t really an incentive to do this.”
But most importantly, Faulkner says people don’t understand that real estate agents do a lot of behind-the-scenes work, particularly making sure legal processes are followed. The key reason to use a “real agent” – one affiliated with a property organisation – is that they understand the law and can get buyer and seller from offer to completion. They are also members of the above-mentioned ombudsmen’s property redress schemes, so consumers have a complaints process to use.
By contrast, private sales have no regulation. If you go down this route you are forfeiting many of your rights, unlike with an unscrupulous estate agent. However if you are buying direct from a seller, they must describe their home accurately as set out under the Consumer Protection Regulations. They must include any essential information that people need to make an informed decision. They also must give you the space to take your time and not be rushed into a decision.
There are plenty of pitfalls for the unwary. That’s why, despite all the anti-agent sentiment, Faulkner is expecting to see a resurgence in interest in some form of High Street agent, among both sellers and buyers.
“I think we’re moving away from people wanting to buy by themselves. People like having an agent in between for such a big negotiation – it’s quite useful.”
