Estate Agents

[oryx]

looks like the buy to let party might be about to end:

http://www.ft.com/cms/s/4f6f4be8-70b0-11db-8e0b-0000779e2340.html

I feel sorry not for the buy-to-let landlords but for their tenants, who could dutifully pay rent, keep the property nicely & still be out on their ear because the greedy fucker landlord has not done their maths.

We are buying a house ATM - been gazumped, had people pull out etc. So far most agents have been pretty helpful, it's the vendors who have been greedy selfish fuckers*. (Not our current ones, so far).

* sorry for overuse of phrase 'greedy fuckers', can't be helped on a thread like this!

 

[Giles]

Dual agency is what 99.9% of UK property transactions are (ie, when the estate agent represents both the vendor and the buyer, although you, Giles, say they only represent the vendor).

Perhaps it can be argued that they only represent the vendor as the vendor foots the bill. But who is representing the buyer? The buyer in the UK doesn't have a representative and so relies on the agent.

There was a program called Whistleblowers on TV a while ago. This showed estate agents saying to prospective buyers if you give us £10K in cash I will persuade Mr Jones at such and such an address that his flat is not worth the £195K he thinks it is and that he should accept your offer of £140K.

I suppose you regard this approach as acting in the vendor's best interests?

The agent gets paid a percentage of the sale price, so his financial incentive is to (a) sell the house, and (b) sell it for as much as possible.

It is possible to employ a "buying agent" to act for you as a buyer, but most people don't want/need this service.

This does not mean that the agent is formally "acting for" the buyer. He is a salesman trying to sell the buyer a house or flat. So he may be helpful and nice to prospective buyers, because they are his potential customers.

But his only interest in them is in persuading them to part with as much money as possible for the property in question.

I don't see how else you could structure things in terms of who pays for an agency to sell a house?

Giles..

 

[Bahnhof Strasse]

The agent gets paid a percentage of the sale price, so his financial incentive is to (a) sell the house, and (b) sell it for as much as possible.

It is possible to employ a "buying agent" to act for you as a buyer, but most people don't want/need this service.

This does not mean that the agent is formally "acting for" the buyer. He is a salesman trying to sell the buyer a house or flat. So he may be helpful and nice to prospective buyers, because they are his potential customers.

But his only interest in them is in persuading them to part with as much money as possible for the property in question.

I don't see how else you could structure things in terms of who pays for an agency to sell a house?

Giles..

Not necissarily as Errol's Son says.

If the vendor wants £195K and that is the market value, the purchaser could offer the agent £10k cash to tell the vendor the true value is £145K.

Purchaser gets a net saving of £40k, agent gets £10k plus comission on £145k and vendor loses £50k.

Foxtons were exposed doing just that.


Sold my last place privately, but bought through and agent.

 

[Ranu]

The agent gets paid a percentage of the sale price, so his financial incentive is to (a) sell the house, and (b) sell it for as much as possible.

It is possible to employ a "buying agent" to act for you as a buyer, but most people don't want/need this service.

This does not mean that the agent is formally "acting for" the buyer. He is a salesman trying to sell the buyer a house or flat. So he may be helpful and nice to prospective buyers, because they are his potential customers.

But his only interest in them is in persuading them to part with as much money as possible for the property in question.

I don't see how else you could structure things in terms of who pays for an agency to sell a house?

Giles..

You've obviously not read Freakonomics.

 

[Giles]

You've obviously not read Freakonomics.

I have read Freakonomics.

Yes, some people are corrupt. But that doesn't mean that the general method of employing and paying an agent is inherently wrong.

Corruption can happen in all sorts of situations: an employee in charge of procurement may corruptly take a backhander from a salesman to put his company forward as offering the best deal, etc.

But this does not mean that you have to assume that everyone is corrupt, all of the time, does it? It just means that you have to have oversight and professional standards.

Giles..

 

[Errol's son]

The agent gets paid a percentage of the sale price, so his financial incentive is to (a) sell the house, and (b) sell it for as much as possible.

Whilst I agree with point a, point b is not true. If the agent sells your house for £150K or £145K he/she doesn't care and he/she is only getting 1 and a bit percent of the selling price. All they want is a deal done quickly so they can put that house sale under their belts. So, the "success" fee clearly doesn't work with estate agents.

It is possible to employ a "buying agent" to act for you as a buyer, but most people don't want/need this service.

Unfortunately it is only the rich who can generally afford this and it adds to the cost as it is another agent that needs to be paid. In countries where buying agents are the norm agents get a bigger cut than 1.25% oor so but have to share it.

This does not mean that the agent is formally "acting for" the buyer. He is a salesman trying to sell the buyer a house or flat. So he may be helpful and nice to prospective buyers, because they are his potential customers.

But his only interest in them is in persuading them to part with as much money as possible for the property in question.

No it is not. As I have pointed out a success fee such as what every agent I have ever come across suggests simply does not work. Not many people who work on success fees work on a fixed percentage. Corporate financiers for example use the Lehman scale to determine their fee. The higher the price they sell a company for the more money they get. Estate agents don't go in for this at all. They just want their fixed fee and that is the onlly thing they care about.

I don't see how else you could structure things in terms of who pays for an agency to sell a house?

Giles..

How about looking at other countries where buyer aggents are the norm. In these countries, estate agents don't tend to be vilified the way they are in the UK - probably because then they really do work for their client.

Have you ever actually sold a house Giles? Or are you an estate agent?

 

[Giles]

Have you ever actually sold a house Giles? Or are you an estate agent?

I am in the business of buying investment properties, fixing them up and renting them out.

I currently own (or jointly own with friends) around 35 properties.

I have bought and sold houses, flats and shops many times.

I am not, and have never been, an estate agent.

Giles..

 

[Errol's son]

I am in the business of buying investment properties, fixing them up and renting them out.

I currently own (or jointly own with friends) around 35 properties.

I have bought and sold houses, flats and shops many times.

I am not, and have never been, an estate agent.

Giles..

So you are a property developer! That occupation is a very popular one on these boards!

Have you always found that estate agents work in your best interests?

 

[Giles]

So you are a property developer! That occupation is a very popular one on these boards!

Have you always found that estate agents work in your best interests?

Not really a "developer" - we have never built anything, or even divided a house up into flats.

I've bought some near-derelict places and had them totally renovated so we could rent them. I've bought a few shops with formerly empty store rooms on the upper floors, and made those store rooms back into living accommodation, and so on. But not really "developed" places, more refurbished them....

Estate agents obviously want their commission and that's all.

One time I was selling somewhere, and I sensed that the agent was underpricing it to get a quick sale, so I got a couple of others to value it, and in the end got quite a bit more than the first guy said was even possible. You have to keep your wits about you, and not trust one agent too much (or even at all!).

Most buyers go to estate agents, so you pretty much have to use an agent if you are selling somewhere (especially if it's not your own home, or even physically close to it, because you need someone to do viewings). And most places for sale are sold via estate agents, so that's where you start looking.

Giles..

 

[lang rabbie]

Estate agents exist to maximise their income, nothing more ..nothing less.

Maximising their income does not mean necessarily maximising property prices, but talking up the market is a good strategy. With the internet etc, the need for estate agents is dissappearing. At least their commisions should be greatly reduced. ...

For ten years, academic economists have been predicting that the web would lead to "financial disintermediation" in various markets i.e. that there would no longer be an intermediary (middle man/agent) between buyer and seller,

But this obviously hasn't happened in the residential property market.

And I think (from observation of friends and neighbours - I've owned the same flat for thirteen years) that the reason is psychological, and contradicts all theories about rational "homo economicus".

When it comes to selling your current home, many (most?) people are willing to pay someone else to be "economical with the truth" about any defects it may have, rather than needing to lie to the face of someone who will have to live there. If you desperately need to flog your current place in order to buy your new dream home, then you need this distancing mechanism to continue to feel like a good person.

 

[Giles]

I think sellers use agents because:

(a) most people, not having really thought about it, just assume that is the way everyone does it, so they should as well.

(b) convenience - most people don't have time to do viewings, put ads in the paper and on-line, negotiate with people, etc.

(c) lack of confidence - most people only buy and sell a house a very small number of times and are somewhat scared of the whole business: better to leave it to an "expert"!

The reason that people feel OK paying a lot of money for what is often not much of a service is because the amount *seems* small compared with the big chunky numbers involved in buying and selling houses. This is why all of the professional services involved in buying and selling property can charge such a lot - people think of it as small relative to the sums involved, and lose sight of what the "service" might actually be worth in terms of time spent, etc.

Giles..

 

[Nickster]

Not necissarily as Errol's Son says.

If the vendor wants £195K and that is the market value, the purchaser could offer the agent £10k cash to tell the vendor the true value is £145K.

Purchaser gets a net saving of £40k, agent gets £10k plus comission on £145k and vendor loses £50k.

Foxtons were exposed doing just that.


Sold my last place privately, but bought through and agent.

IMHO...Foxtons are w*nkers! As are most estate agents - happy to do the least amount of work for the most amount of profit. Jeezus, i went through Balham today - there are like six estate agents within 100 years of each other, all populated by young smarmy rugger buggers in posh suits! Soulless c*nts.

 

[Errol's son]

One time I was selling somewhere, and I sensed that the agent was underpricing it to get a quick sale, so I got a couple of others to value it, and in the end got quite a bit more than the first guy said was even possible. You have to keep your wits about you, and not trust one agent too much (or even at all!).



Giles..

I have less experience than you then. But I have had only bad experiences with agents. Winkworth and KFH are appalling IME, particularly Winkworth. Haart are the best of the small bunch I have encountered when selling, but even with them one wants to keep an eagle eye out for them not working in your best interests.

 

[lintin]

Accepted that it is sometimes difficult for the seller to get involved in the next sale. Thats why I am getting a mate to do it for me, I will pay him a fixed amount, he's quite good - better knowlege of property than an estate agent , all he has to call me with the offer and I either accept or decline. Thats all an estate agent does anyway.

This crowd seem more reasonable

http://hatched.co.uk/

anyway looks like it could all end in tears...

http://business.timesonline.co.uk/article/0,,9063-2455507,00.html