The Office of Fair Trading (OFT) have carried out a survey on the home buying and selling process in the UK. It looked at competition between estate agents and other bodies, the rules and regulations designed to protect consumers, and the relationships of estate agents with other professionals such as solicitors and mortgage brokers.
It found that there was little in the way of competition between estate agents in the UK, with percentage commission rates making a rise when house prices rose ensuring a rise in their fees. Very few sellers haggled the commission rate down, although those who did, paid on average 1.4%, compared to an average of 1.8% for those who didn’t.
In the US, there are Internet “Introducers”, who have a significantly higher market share than here. These websites allow buyers and sellers to negotiate directly between themselves, without going through any third party. The OFT would like to see more of this type of innovation in the housing industry, as it can work out much cheaper for the consumer.
It also saw that estate agents may sometimes get a fee from mortgage advisors or solicitors for introducing a potential buyer, which may bias the agent towards one buyer over another. This might not be to the seller’s advantage, even though the seller is the one paying the agent’s fee!
Amongst its recommendations is that consumers do as much research as they can into the process, ensuring they are well-informed about the roles of the professionals they employ. It also recommends that consumers try to negotiate a lower fee, and/or shop around for the best option for them.
The OFT’s advice website – www.consumerdirect.gov.uk/hometips – offers valuable advice and links to other useful websites.
Editor, Property Surveying Newsletter