OFT report on estate agents

You wait for a report into Estate Agents from The Office of Fair Trading and then four come along at once! Today they have published reports as part of their study into home buying and selling process. They looked at estate agents, enquired of Trading Standards experiences as well as both qualitative and quantitative research from buyers and sellers.

The results will not come as a surprise to many in the industry although there are one or two interesting results that stand out.

To no ones great surprise, consumers seem more open to alternative methods of buying and selling property. Online agents are clearly pushing at an open door according to this research and more than a third of individuals actually initially considered selling privately, without an agent.

Consumer satisfaction with the services provided by estate agents has improved compared to the previous survey undertaken by OFT five years ago. 88% of buyers and sellers were happy with the service provided by estate agents. Up from 74% in 2004

Trading Standards found that 24% of estate agents were not complying with the relevant regulations when visited for the first time by their officers. This will have covered all sorts of legislation including the Property Misdescriptions Act.

Perhaps of most interest is that whilst estate agents almost always represent the seller, when asked, 53% of buyers felt that the estate agent was working equally on behalf of both them and the seller. Perhaps this goes a long way to explaining why so many people seem to feel let down by agents. As a buyer, they are helped to find a property and then the agent negotiates against them using all the information they have learned about their circumstances during the search.

19% of buyers said that one of their purchases had fallen through after they had made an offer – often when they were gazzumped by a higher offer. It’s this element of the buying process that the £1bn Home Information Pack solution was partly designed to alleviate by speeding up the process between agreeing a deal and exchanging contracts. Sadly 67% of buyers in this survey in England and Wales felt that the most recent HiP they had seen had had no influence on their decision to make an offer or indeed the amount of that offer.

Average selling fees appear to have increased to around 1.6%. From the survey, over a third of agents said that more than 50% of buyers came via property portals. Most agents who received a fee for introducing a solicitor received on average less than £150 although surprisingly, 47% didn’t inform their client that they were getting this fee.

Across the UK, most agents sold properties within 5 miles of their office. According to the OFT survey, agents were selling around 5 properties a month earlier this year, down from nine in 2007. This accords with the statistics that are now being published by the Land Registry which shows sales volumes down by about 40% on the peak of the market in 2007.