National Trading Standards has deemed the use of the term “price on application” (POA) in relation to the sale of houses misleading, as it hides or withholds the asking price from potential home buyers. It also said that failing to disclose up front the asking price of a property “may also be a breach of the Property Ombudsman Code of Practice for residential estate agents”.
The consumer body has banned the sale of property under the listing POA. So how common is the use of POA in property sales, and why is it used?
There is a saying among those buying or selling high end, luxury goods that “if you have to ask, you can’t afford it” and, for the lucky few, that extends to buying homes as well as handbags or sports cars.
At the beginning of May, Rightmove was listing 3,000 homes for sale under the price tag POA.
Home sellers may be deterred from selling their property if the full details have to be openly advertised citing privacy issues – instead preferring that these are shared only with buyers who show some commitment by registering with an estate agent. In some cases, this can cause sellers to market their home privately rather than using the open market.
There is certainly something questionable about forcing potential buyers to engage with an estate agent simply to find out if they can afford a property. Once in the hands of a clever sales professional, it is entirely possible for desperate home buyers to be encouraged to look at properties they wouldn’t otherwise have considered or to be “played off” against other buyers.
Even in the type of house buying frenzy we have recently been accustomed to, there are things that put buyers off a property. One such deterrent is the amount of information held online by property portals, which include previous prices when a price has been reduced, and the length of time a property has been on the market. These details can lead buyers to question whether there’s something wrong with the property or contribute to the basic psychology of not wanting something that others don’t want.
There are plenty of other reasons for wanting to sell discreetly, including where the property is situated where second home ownership has become endemic and the local community can no longer afford to live there. Selling off-market can help to avoid local pressure.
Estate agents have called the practice of selling property POA as “ludicrous”, with one describing it as the habit of “fanciful vendors who feel they are a little too special” to mention money. Estate agents themselves have been accused of using the tactic when they believe the property is priced too high.