by Mark Johnston
Many believe that estate agents are partly to blame for the low activity in the property market. With their listings at the lowest levels for decades, many have pitched prices to prospective vendors that are far too high in the current climate. However vendors are not totally blameless.
Estate agents have now come unstuck, their transaction levels are through the floor as they have not been able to sell their over priced stock and each one of the unsold properties costs them money.
The office of fair trading (OFT) are looking in to the ‘murky’ world of house purchasing, which it seems may be a good idea at the moment, as nobody seems to actually be buying or selling that many houses at the moment.
The office of fair trading (OFT) promises to look in to the cost of estate agency fees and what vendors actually get for their money.
This all comes at a time when the number of properties sold in the UK is running at less than half the peak level in 2007; when properties are taking longer to sell and when first time buyers are being squeezed out of the market by landlords.
Estate agency fees are probably the murkiest part of buying or selling a property. The national association of estate agents (NAEA) does not collate data on fees. However which? Magazine recently researched the market and found huge variations in fees, from 0.75% to 2.5%, with the national average being approximately 1.8%.
Some agents in the in the capitals property market have been raising their fees since the onset of the financial crisis, whilst others outside of London have dropped their fees substantially. David Newnes of LSL property services states that “residential estate agency fees are under downward pressure as agents fight for market share in a difficult market”.
Experts believe that the internet should have been the perfect tool for property buyers and sellers to eliminate expensive intermediaries such as estate agents, as sellers no longer require them to put up pictures in their windows or stick an advert in the local paper, all they really want is to make sure that their property appears on websites such as Rightmove or FindaProperty.
This in turn should have driven down estate agency charges, but with most of the big property portals refusing to carry your property if you decide to go it alone this is not the case. There are some internet sites that will show the property, but with fewer than 5% of the public using these so called ‘for-sale-by-owner’ websites they do not cover enough of the potential buyer market.
Therefore estate agents are still employed as there is no other effective way of selling a property.
Although with the office of fair trade looking in to the estate agency business hopefully their will be a change in the law and their for an ease in the house buying process, but many believe this may not happen till at least 2020 which does not help the property market at the moment.
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