17 August 2018, The Times
We trust bankers, weather forecasters and television newsreaders more than estate agents, according to the latest Ipsos Mori Veracity Index, but if you’re selling or buying a home it’s difficult to avoid dealing with one.
While there are trustworthy agents, a dastardly few spoil it for the others. This is despite a raft of measures, announced by the government in April, aimed at cracking down on rogue agents by making qualifications mandatory and promoting professional standards.
There is no overall governing body for estate agents. Instead, there is a hierarchy of legislation, mandatory redress schemes and professional trade bodies, including the National Association of Estate Agents (NAEA) and the surveyors’ organisation RICS.
Paula Higgins, the chief executive of the HomeOwners Alliance, an advice and campaign group, says all estate agents need to be a member of a consumer redress scheme. However, one of the schemes, the Ombudsman Services: Property, no longer works in the property sector, so any agency still registered with the scheme may be trading illegally. Make sure your agent is a member of the Property Ombudsman or Property Redress scheme.
Here’s what else sellers and buyers should watch out for:
It’s reported that 86 per cent of properties are selling for less than their asking price, so a realistic valuation is critical. “Estate agents want your business and can sometimes give overly generous valuations so you pick them,” Higgins says. “Once you’re on the market at an inflated price the only option after a lack of interest from buyers is to suggest you lower it.”
There can be an element of vendor vanity in this too. However, a good agent will offer brutal guidance, and a good seller will get at least three valuations from different agents.
When you do manage to find a committed buyer, along comes a valuer for the buyer’s mortgage company to say that your beloved home is worth less. While lender nervousness can be a factor in this, agents inflating prices don’t help. However, Higgins says: “If you genuinely believe a valuation is incorrect, don’t be afraid to challenge it. If you think the figure is wrong or have evidence of local sale prices to the contrary, question it.”
Claiming to have buyers waiting
Few agents have legions of ready-made buyers clamouring to view your home, whatever they may claim. If you are buying, do your due diligence. It has been known that those who register with certain agents and sign up to their mortgage and conveyancing services receive preferential treatment. If you suspect it’s happening, contact the relevant ombudsman.
Keeping it in-house
Camilla Dell of Black Brick, a property consultant, says there is nothing wrong with agents earning referral fees for persuading you to sign up with their recommended conveyancer, mortgage provider, energy performance assessor or plumber, but they must be clear about this in writing. However, she does advise against it. “Always use an independent lawyer and surveyor. While all parties should be neutral and act professionally, this isn’t always the case. There is a risk they may not be forthright if there is a legal or structural issue.”
This is a murky area where buyers, sellers and reputable estate agents unite. It has been known that properties taking a long time to sell will be removed from portals such as Rightmove or Zoopla by a duplicitous agent. They relist it shortly afterwards, which reduces the portals’ “how long on the market” statistic, making the agent and house look better. It’s an offence under the Consumer Protection from Unfair Trading Regulations Act and industry codes of conduct, but that doesn’t stop it happening.
The average high-street estate agency fee is about 1.42 per cent, including VAT, of the sold price of a property, says Gavin Brazg of the The Advisory, an online property advice service. “It is worth being very clear with agents about what you are paying for, especially any add-ons,” says Kate Faulkner, a property expert. As a rule, most marketing expenses should be included in the commission fee and not billed as extra costs. And check that you are not liable for any payments if you withdraw from the contract.
Failing to pass on offers
Sellers, after you’ve accepted an offer and up to the point of exchanging contracts, your agent is obliged to pass on any other offers, including higher ones. However, your agent may elect not to because they have the first buyer “verified” in-house, or they simply want to shift your property off their books without distractions. If you find out this has happened, raise it with the agent, and seek redress. It is also said that some agents pressure dithering buyers into making an offer by inventing phantom bids.
If you suspect a false bid, ask to see written proof that the third party exists and their offer status.
This is when a seller sacks one estate agency, working on a commission basis, and puts their house on sale with another, but the original agent claims they “introduced” a buyer and attempts to claim commission on the sale. The hapless homeowner can be faced with requests for double commission.
The problem lies in confusion over what constitutes an introduction. Look up the 2008 case of Foxtons v Bicknell & Anr in which the Court of Appeal ruled that to claim a commission the estate agency had to do more than introduce the buyer to the property; they must be directly involved in the selling of the house. Avoid any agent who attempts to persuade you to sign up for “sole selling rights”, which allows them free rein on any sale. They could claim their commission even if your cousin from Australia turns up on your doorstep and buys your home for cash.
Lots of estate agencies include a tie-in period in their contracts, meaning you may struggle to escape if you’re not happy with the service you’re receiving. “Make sure your contract gives you the flexibility to terminate and go elsewhere, without incurring a penalty,” Higgins says. “You should never tie in for more than 12 weeks and be careful of long notice periods too.”
A desperate estate agent may go to any lengths to convince a doubting buyer. This includes telling them a spine wall can be easily removed to create a lovely open-plan kitchen and that air conditioning might be popped into place in a leasehold flat as easily as changing a lightbulb. “Never take an estate agent’s estimate on any cost as written,” Dell says. “Always seek a second opinion and independent advice on any additional costs you may have to incur post-sale.”