Seller Beware?

Last week I sat in the offices of a central London agent waiting to see the boss. As I waited, the familiar bustle of a busy agency surrounded me and it was encouraging to hear the phones ringing and viewings being arranged.

I couldn’t help overhearing one particular conversation between a junior negotiator and one of the older partners. “Mrs so-and-so is thinking of making an offer on the house behind the Park. What should I tell the vendors?” he said. I smiled as I recalled the patience my first boss had when faced with dozens of inane questions when I started out in the business.

Most negotiators learn the ropes from their older colleagues and in an industry that is pretty unregulated, where only 50% are qualified and belong to a recognised trade body this is the way it will always be. Advice and wisdom is passed down and the juniors learn from experience. It’s a kind of battery farming.

What the Sage had to say was remarkable. Checking that no formal offer had been made he suggested that the vendor should be asked what sort of offer might be acceptable if one were forthcoming and an expectation should be given that an offer from Mrs so-and-so was anticipated but at a lower level. The reason, so the partner explained was so that the vendors’ expectations could be ‘managed’ and when a formal offer was received it was likely to exceed their expectations resulting in a higher chance of acceptance.

Now I can’t think of anything illegal that was being done and indeed the agent I’m sure would have put forward an offer if one had been formally made. He is legally obliged to do so. What I object to is that the agents sole motivation seems to have been to get a deal and he was deliberately setting out to set his client up to be minded to take a formal offer when one came. As I say, I’m sure that he was doing nothing wrong but surely his client was expecting him to negotiate with the buyer and not with him.

I suspect that vendors across the land hope that the agent they are paying a substantial fee to are concentrating on “managing the expectations” of buyers. It hadn’t occurred to me but perhaps some agents actually work for themselves and it just happens that incidentally this is to the benefit of the client?

As the market tumbles and sales volumes fall, agents will be finding that unless they do the deals they will be out of a job. No firm can afford to carry people today. Not only was this a pretty shabby lesson for the junior but it warns us all that the desire to do deals to get paid may mean that agents act more like brokers – beating up both parties to reach an agreement rather than working solely for the party who pays his fee. Perhaps it’s not just a case of Caveat Emptor.