Every town in the UK seems to have a large number of estate agents offices. The British love to buy and sell property and most aspire to own their own home. For centuries there have been land and property agents who work for a commission to match buyers to owners. It has always been seen as a lucrative business and relatively easy to set up and no special qualifications to do so. It is one of the few businesses where there is stock but is not owned by the business.
What does an Estate Agent do?
An estate agent will sell their service on the basis of being able to value, market and get the best price for your property, for which they charge a fee. Over the years the fee structure has changed and most agents now charge a flat rate of commission on the selling price. There are some that charge a fixed fee and some of the more recent Internet-based agents, such as Purple Bricks offer this option. In times past, many would charge a weekly fee for the cost of the advertisements being placed in the local newspapers.
The estate agent will tell you that they are able to offer you the following:
- that they have a list of potential buyers and will send details of your home to those
- that match your property
- they will advertise it
- offer to place a ‘for sale’ board outside or attached to it
- arrange for people to view
- accompany those viewings
- offer an open day
- negotiate the sale, qualify the purchaser i.e. to check that they are in a position to buy
- follow the sale through to the conclusion by dealing with any other agent and solicitor in the sales chain through to completion
- holding the keys at the office to give to the new owners on completion day
There are other services that they will offer which will include recommending a solicitor and helping to arrange a mortgage with an in-house mortgage adviser or a recommended one. Please bear in mind that many estate agents that do this are going to receive a commission for doing so. They will tell you that by arranging the mortgage with them and using the recommended solicitor the sale or purchase will go more smoothly. This, in fact, should not make any difference and it’s just a selling ploy to earn more money. For those buying through an estate agent be very careful if the agent insinuates that you must get the mortgage through them or at least have to see their mortgage adviser to be ‘qualified’ to buy or you won’t be able to buy the property. Proof of purchase can be given without seeing their mortgage adviser.
To each of the points listed above there is a good side, but more often than not there is a potential downside that the estate agent is turning to their advantage and not yours.
Estate Agent For Sale Boards
It is true that a for sale board lets the people in the area know that your home is for sale but perhaps, more importantly, it is advertising the estate agent so that others might use their service. I have worked with estate agents who used to hate it when people refused to have a board at their home for this very reason.
It has not been unknown for some estate agents to arrange for people they know to be viewers to impress a vendor that there is interest at the moment they were thinking of changing estate agents or pulling out of selling for a while.
If an agent offers to be at your home for several hours and advertises your property as an ‘open house’ for anyone to turn up without an appointment these generally do not result in the sale of the property but will give the agent lots of opportunities to see if they can sell the property of those that do visit. Visitors on open days tend to be the curious or those that haven’t yet placed their own property onto the market for sale who are hoping to view without pressure at an agents offices to sell their home.
Negotiate the Sale: Getting the Best Price
If your home doesn’t sell, the loss is not with the agent other than any costs incurred. If the property is sold for less than it’s true value the worst thing the agent experiences is a small drop in the amount he receives in commission. As an example, a reduction of £10,000 even at a fee of 2% would only equate to a reduction of £200 to the agent. Therefore to sell at £200,000 rather than £210,000 would give the agent a fee of £4,000 and not £4,200. You might begin to see an issue here.
The issue is this if you were an estate agent and you are charged to get the best possible price for a client it might be that to sell quickly and take the £4,000 in commission now is better than waiting a while to get an extra £200. Of course, the property owner (vendor) has the last say but is often guided by the agent on accepting an offer.
Qualify the purchaser
As mentioned already this is usually the last opportunity an estate agent has to get the buyer in front of their mortgage adviser and is really for their own benefit.
The solicitors recommended will usually charge higher fees to cover the commission the estate agent will receive.
Follow sales through to completion
This is useful but I have also known agents bring a chain of sales crashing down by saying that their vendor is going to pull out (even when they haven’t) to get the completion date brought forward. Estate agents can either be a small company desperate to receive their fee or a large corporate where the staff need to meet strict sales targets to keep head office off their backs. In either case, the pressure to get the property to a point where they get paid can result in people saying stupid things that backfire.
If you don’t know anything about property sales in the UK, the normal situation is once an offer is accepted the property is ‘sold subject to contract’. A period of time is then required for the solicitor acting for the seller to complete lots of checks before contracts can be exchanged guaranteeing the sale and then the money can be handed over later which is called completion. Only at completion will an estate agent receive their commission.
Buying and selling a property need not be complicated and in a future post, I will show you how you can do this yourself. Please also read my blog post, “Most Estate Agents Don’t Sell Houses”.
What is your experience of buying or selling through an estate agent? Please leave a comment below.