/ Home & Energy, Money

Are estate agents getting a bad rap?

Estate agent window

Let’s face it, estate agents are never going to win a popularity contest. But with the housing market heating up, many will have to get used to dealing with estate agents – love them or loathe them.

Having to deal with estate agents is often referenced as one of the main frustrations of buying or selling a house.

It’s fair to say they have a reputation for stretching the truth with their sales patter. But there have also been concerns that some are going further than telling a few white lies and are being downright dishonest.

Estate agent nightmares

For example, when Channel 4’s Dispatches recently went undercover into a number of well-known estate agents they found one agent (incorrectly) claiming that they had the exclusive right to promote the government’s Help to Buy scheme. Others were found telling buyers that they would get priority viewing, or that a property would be removed from the market if they agreed to use the in-house mortgage broker. This runs completely contrary to the law which dictates estate agents cannot discriminate, or threaten to discriminate, against buyers who don’t use services they offer.

And then there are the fees – typically 1.5% of the value of the property being sold, plus VAT. That’s more than £4,000 on the average UK property (£225,000 in December 2013). Are they worth the cost? In the context of a transaction worth £100,000s, a couple of thousand pounds may not sound like much, but in almost any other situation a bill of this size would probably seem pretty extreme.

Getting a bad rap

Are these grumbles justified? After all estate agents are performing a valuable service: offering an understanding of the local property market; helping you make the most of the property; selling its best features; and dealing with all the queries from potential buyers, to name just a few things. It’s also worth mentioning that when the Office of Fair Trading investigated the estate agent market a few years ago they found that only 12% of people were dissatisfied with the service they received.

But we’re interested in hearing your experiences of using an estate agent – either as a buyer or a seller. Have you felt pressured into using their in-house services? Have you felt the sharp end of other poor practice from estate agents?

Comments
Member

I don’t see why estate agents fees should be linked to the value of the house. They could offer packages based on what you want them to do – for example, extent of advertising, brochure type, whether you want accompanied viewings, whether they are part of a group that can promote more widely, advice on how to make your house more appealing – in other words for how much work you want them to do on your behalf. If you then choose to use more than one agent you simply pay that one another fee. Your contract with them could include a bonus if they sell the house at an agreed price. Many solicitors charge a fixed fee – why not agents.

Member

I agree with you entirely Malcolm. When I think of the care and expertise that the solicitor or conveyancer has to exercise compared with the efforts of many estate agents it is staggering that the agent might end up with four or five times the payment received by the legal representative. If estate agents’ clients had to make their payments directly by writing out a cheque I think they would be unable to get away with it. As it is, the agent’s fee is incorporated in the completion statement and deducted [together with other expenses] from the proceeds of the sale. They even get the solicitor to do this for them so they have no bouncing cheques or other defaults to cope with!

Member
ekc = emma says:
2 March 2014

Yes they should exercise care and expertise John but unfortunately do not always do so. Solicitors do however have a habit to overcharge their clients just as much as the estate agents do. Although on purely conveyancing the estate agent wins hands down over the solicitor on charges.

Member

Someone, possibly an estate agent, has given Malcolm’s initial comment the thumbs-down. It would interesting if they could give the reason for their rejection of Malcolm’s suggestion about packaged service fees for selling properties. I can imagine some of the arguments against it but none of them seem to me to be in the interests of sellers [or buyers for that matter].

Member

Seems the agents might be reading this John? It would be interesting to hear arguments in favour of commission-based fees; I am sure there are sound arguments for and against different methods.

Member
Victoria from VMOVE Estate agents says:
25 February 2014

Hello Malcom,

I’m an estate agent, and I agree. We do not penalise those with more expensive houses by using a percentage. We have fixed fees which are low. Let’s face it, those more expensive properties don’t have the volume of traffic etc that the small ones do.

I like your idea of a pick and mix, but it just gets complicated. We do everything for our fixed fees, if you would like extras we are always happy to accommodate.

Thank you. We do not profiteer. There is no need. Our service levels are high too. Never compromise.

Member
PeterM says:
26 February 2014

Just another ‘aside’ – wondering if the bigger property web sites base their charges on the asking price for a house ?

I can imagine the charges mount up, if a property is listed for many months, but surely on the other side, an agent with 500 properties listed probably pays less per property than an agent with 200 properties, so can anyone give a rough figure per month, for a house costing, say, £150,000 ?

Given there are 3 or maybe more web sites, anyone able to suggest the range (eg site A charges £10/ per £100,000 property, per month, site B charges £12.50, etc) Strikes me that while an agent may have to leave a property online for a few extra months if they ever artificially gave a higher price recommendation, the benefit for them could be tens of times more than the cost for promoting it, even if it took 3-6 months longer to sell…

Vendor knows nothing about the actual costs, and while a vendor could place their own adverts, they’d have fewer viewings than a similar property listed on one of the widely used ‘major’ sites (compared with them using their local paper, Gumtree, Friday Ad site, etc).

This is not a general or individual criticism, but an area where the consumer knows little about the profit levels of estate agents. Services charging a fixed fee seem far fairer to me, but even so, A may charge a fixed fee of £750 and B may charge £2,000 and it will depend on local house prices in general as to whether they are considered acceptable to vendor – yet the actual costs for salaries and promotion may be very similar between two different parts of the country, so firm B could be making more profit than the energy firms, as a proportion of turnover, simply ‘because house prices are generally higher’ in their area, and yet be putting in no more effort than firm A did.

So even with fixed fees, some might be playing fair and others could be cowboys !
(not suggesting any cowboys would dream of posting here though!)

Member
Victoria from VMOVE Estate agents says:
25 February 2014

I’m sure it was the 2009 OFT report you are rendering too. I studied it closely. I’m sure it wS as high as 36% that said that estate agents represented poor value for money.

I must check this, I have it on my desk.

As with all trades there are a plethora of agents off all service levels. Some poor some outstanding. They are dealing with your biggest asset, interview them, only instruct those that you trust and that are proactive. They must earn their fee.