Huge discrepancies in estate agents’ fees and valuations, and routine over-valuations to win instructions, have been uncovered by consumer organisation Which?
Agents are criticised for over-valuing in order to win business in a report published today by the organisation, which launched its anti-estate agent campaign, Move It, seven years ago.
Although Which? concedes that ‘things have improved’, and said that poor behaviour was the exception rather than the rule, it says there are still problems.
The consumer group got 48 estate agents to visit homes around England between November and January.
As a result, it has reported two agents to The Property Ombudsman for making misleading statements, saying Which? was told it “should choose them because they were voluntary members of an ombudsman scheme – when they’re actually legally required to be”.
The report adds: “One of the estate agents we looked at wasn’t signed up to an ombudsman scheme at all – we reported it to trading standards officers.”
The agent, Bridgfords, told Which? it would be investigating.
Two agents also said that they had to quote a fixed price fee because that was what the Property Ombudsman required – which is untrue.
Which? said it found “massive variations in fees”.
The report, published in the April edition of Which? magazine, goes on: “We could have paid between £5,481 (independent) and £13,703 (Connells) for someone to sell the same house. We also discovered that valuations could vary by tens of thousands of pounds for the same property.
“And while valuations are an art, not a science, some of them were too far out, which would inevitably make it harder to sell your home.”
The fees varied from 0.75% from an independent, rising to 2.5% for three Foxtons branches and one Connells branch. According to Which?, both agents said in their visits that the fees are justified by the better job they do.
Which? also found that some fixed fees were high. For example, it said that Bridgfords’ minimum fee of £2,250 meant that for a £60,000 house, the fee would be around 3.5%.
Which? advises consumers to haggle for better deals. It singled out Your Move as being willing to negotiate, but said others would not countenance it.
When it came to valuations, Which? found significant evidence of over-valuing by agents in order to get the instruction.
The organisation sent out 12 surveyors to value the 48 properties that had also been valued by the agents. On 40 occasions, the surveyors valued the properties at a lower price.
On average, there was a 9% difference between the surveyors’ valuations and those of the agent. Around one-third of the agents suggested marketing the property at a higher asking price than they thought it was worth.
Some of the differences in agents’ valuations are quite striking, according to the Which? data. For example, a four-bed house in Surrey was valued at £550,000 by Your Move but at £477,500 by Bairstow Eves.
Another property, in Essex, was valued at £650,000 by Spicer McColl but at £500,000 by Connells.
Kate Faulkner, author of a Which? guide, ‘Buy, Sell and Move House’, said: “We found in some areas, all the agents valued at a similar level, but in others it differed a lot. In these cases, it looked like some of the agents hadn’t done their homework.
“We also found that if there weren’t enough similar properties that had sold nearby, the estate agents came up with very different figures.”
Commenting on today’s report, Property Ombudsman Christopher Hamer said he broadly endorsed the advice to the public: to shop around, and to get agents to justify their valuations.
He said: “All consumers should be aware of the terms and conditions, particularly the fees to be paid, when they engage an estate agent to sell their property.
“I do not make rules about how agents should set their commission fees and they are free to use either a set fee for their service or a stated percentage of the selling price.
“Agents need to make sure the fee method chosen is made plain in their contract terms and that there are no small-print clauses that could give rise to confusion. Where consumers have brought complaints to me about confusing or unexplained terms and conditions which I then agree to be so, I have made an award in consumers’ favour.”
Hamer said there was also an important difference between agents signed up to the Ombudsman scheme as a legal requirement under the terms of the Consumers, Estate Agents, and Redress Act (CEARA) and those who have voluntarily signed up for TPO membership that makes them subject to the terms of the TPO Sales Code of Conduct. This had perhaps given rise to the confusion mentioned in the Which? report.
He said: “The Code of Conduct is a rigorous set of conditions that have been approved by the Office of Fair Trading under its Consumer Codes Approval Scheme and goes far beyond the minimum standards for redress registration brought about by CEARA.
“Full sales members of TPO, for instance, are subject to random monitoring via consumer surveys which flag up potential problems that can then be addressed.
“I also meet regularly with member agents to discuss industry issues and I believe the dialogue, combined with adherence to the Code of Practice, demonstrably leads to higher standards.
“In my recent 2010 annual report, I indicated that the average amount paid to settle complaints had roughly halved for each case in which I made an award since 2007, an indication, I believe, that standards are improving.”
At present, TPO has 8,095 member firms. Of these, only firms operating a total of 330 branches are registered for the minimum requirements of CEARA while 11,073 branches are registered with firms voluntarily subject to the TPO Sales Code of Practice.
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Comments
Hardly the sort of consumer independence that the Which organisation should condone. It’s a bit like Hoover slagging off Dyson.
PeeBee,
I do hope you’re not suggesting that the media is full of a lot of witless bints and idiots that talk cobblers about something they have little understanding of, will publish / print the drivel they talk without it having any real credibility and who regularly expose their lack of anything worthy of consideration by regularly contradicting them selves and whoring themselves to whatever publication / medium is paying them that week?.....................
………………Next you will be suggesting that Which is really just a dull little rag for Daily Mail readers that like to do a lot of research before buying a toaster and the publishers need / have to put out snot like the above on a revolving year cycle as they very much want to be recognised outside the over 50 age group but cant get the credibility they crave
Shame on you.
Jonnie
Another Guardianesque pious bint exposed by Peebee and 300!
Good work matey!
Hmmm... I've been doing some digging (now THERE'S a surprise... ;o) ) and have come up with the following couple of gems from Ms Faulkner on a housing forum. The first, on a thread from three months ago entitled "Are property asking prices too high?':
"Everyone gets too hang up on 'one' property price. There isn't one, I work on up to six. The first being the marketing price, the next the offer price, then an accepted price, followed by mortgage valuation, surveyor valuation and final agreed price. However in my experience it is mostly consumers, not agents that over value their property. Most of the agents that 'overvalued' property to secure the listing in this day and age should have or will go out of business!"
Or what about this one from another thread: "Supply and demand is the critical driver in property/rental prices and this can vary from property to property and month to month, which is why regional data and agents information is vital to knowing what's happening in the market. Of course confidence in the market is important, but that just affects supply/demand."
NOW... for Ms Faulkner's website:
"This is the amount that you will owe an estate agent if you used them to sell your home. It is normally 1-2% of the amount you sell your home for. In some cases, if it is an expensive home, it can be up to 4%." So the survey results came as NO surprise at all, did they?
You'll like this (please note that this is NOT the whole report, I have simply cut and pasted the really relevant bits based upon the first sentence...):
"Here's Kate's roundup of YOUR local property market.
London continues to be subdued following some cracking sales over the last couple of years, mostly to the international buying community....
In the rest of England and Wales..." WTF???
From FAQs: "What is a Home Information Pack (HIP)?
This is a pack that you legally must have to market your home for sale." Relevant. Up to date. Finger on the pulse. This woman is every bit the expert...
LOVE this one...: "What do I do if I get different prices from estate agents?
It is not unusual for agents to value your home differently. Sometimes it is because there have different experiences of selling homes like yours or it could be because they have few comparisons to other properties they have sold. In this case it is really difficult to price a property accurately. Other reasons are that some agents may value your property higher than others because they see some development potential..." She then goes on to say "...However watch for agents who over value your property - with no justification - as they may be doing it to secure your instruction, intending to drop the price later when you have no viewings!" HOW CAN an owner "watch Agents" in this way? Pure unadulterated BS can be very convincing even to one who should know better, when spun by an expert Bull!
Lastly, can anyone tell me how yer average seller would find this little gem out: "Finally, you need to make sure that the agent is financially secure, as many still have cashflow problems due to the lack of sales and property price falls." ... other than asking to see the company accounts and last bank ststement?
Sorry for taking so much of your time to get through this lot. Knowledge is King, n'est pas? ;o)
Who here knew she was a self proclaimed property expert? Next thing she'll be likening herself to Henry Pryor.
And for some reason she dresses like a Foxton's negotiator in all of her PR photos!
No conflict of interest here then Ms Faulkner
http://www.designsonproperty.co.uk/store/products/150
She is another Hendry!
Which, an organisation which exists purely to stir up trouble in the commercial world. If 'which' said the way estate agents work is fine, would they sell copies of their mag?
That is all part of Christopher Hamer's attempt to boost his pension. That story is a rehash of his R4 interview 3 weeks ago.
He is working with Chickin Lickin PR and Marketing trying to lobby everyone to get him more money
Anyone who doesn't believe the above article, please read the following:
"Complaints about estate agents reach record high"
http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/8383717/Complaints-about-estate-agents-reach-record-high.html
And then, please answer all these points with extra hindsight.
hmm
well as we can see clearly WITCH were wrong about TPOS, all these false complaints cost money and they suppose to be saving people money hehe
and fees WTF!
Beans - Tesco - Value - 18p
ASDA - Smartprice - 9p
Waitrose - 87p
same product so why charge more?
Major Issue/PropertyMatch/RealisingReality/Peter Hendry:
Behaviour like yours (hiding behind multiple isdentities) is frowned upon in forum circles. You display the total disregard for truth that I have argued from day one is your one constant.
Note to ALL agents and Sell-by-Owner websites - point to remember when buttering yourself up under aliases - it is AGAINST THE LAW to do so on your own website!
Just a gentle warning - I'm not suggesting for one second that the sole satisfied customer on your website is a mirage, Mr Hendry - I just happen to know that TSO do like to check these things from time to time... in the interests of Consumer Protection, you understand.
And YOU want to be a consumer champion, do you not?
Firstly, Agents do not VALUE we give an opinion of price between X and Y . THE BUYER WHO WRITES THE CHEQUE AND THEIR SURVEYOR VALUES IT. Fee is between the agent and vendor the Corporates usually are more expensive TO PAY FOR THEIR INFRASTRUCTURE they are usually run by robotic staff and area managers with no entrepenerial skills to diversify on fee they are more keen to sell add ons than sell the clients property................and no they dont offer a better service.Independent agents offer a far better service and value for money.
Sorry but there is caution and then there is covering one's back incase prices drop by 10%. The value of the house on the day the surveyor visits is not what they are basing their recomendation on and that is where you will find the real issue.
Valuing?
Agents do not really 'value' they give an 'opinion' based on their local knowledge and experience.
'Value' is what it is to a particular seller/purchaser. Surveyors give their opinion to a money lender as to the 'value' of an asset offered in return for a loan, therefor suveyors tend to be more objective and causious.
I've always been told that the value of anything is dependent on what someone's willing to pay for it, and have never been proved wrong! Therefore if I have people willing to pay X for a house and the surveyor advises its worth 9% less, where is the logic that says the surveyor is right? Maybe the next article should be on how surveyors are paid to advise but have no idea of true values!!!
As for different fees the transparency is there and costs are clear, so whats the problem?
Here we go again with the same old story that has been spouted about since the beginning of time. Interestingly nothing thats new news. Any junior neg could have written that report.
I would love to see these so called surveyors try and advise a vendor that they want busines from. They are normally dealing with lenders and buyers who are on the other side of the fence ... and .... just before they do, they speak to the agents for comparables as they haven't got a clue on property prices! Sound familiar.
Vauling is an art if done correctly, but the market ie Joe Public the Seller and Buyer won't have it, they want their value. The poor agent has a tough time which ever way you look at it. Those that over value deliberately ... that will never go away, even though it is wrong.
The public do have choice, as pointed out by fellow scibes and Which? if you step back and look at their findings. Nothing new.
'Peter Hendry has a brother in the military!'
trust me its him. he wouldnt be able to resist this one
Yes o agree, i got the values wrong on 5 houses last week. I said 20k to much on all of them. Luckily though all the owners advised me they wanted to sell for a lot less because they werent greedy.
Yours sincerely
Cookoo dumb ass which land.
Peter Hendry has a brother in the military!
Agents should buy the houses that don't sell? What a ridiculous idea. Estate Agents are a business, businesses are created to make money. How would an agent make any money buy buying a house at the market price and then spend money on advertising it to sell it at the same price again.
Which? was told it “should choose them because they were voluntary members of an ombudsman scheme – when they’re actually legally required to be”.
What’s wrong with that? You have to be a member of a redress scheme, not necessarily the ombudsman.
Re. Major Issue.
Excellent idea, I will be happy to sign up to buying any unsold houses. I will then get them put on the market at 'MY' valuation, be unsuccesssful at finding a buyer and then buy them myself.
I will then remarket at at a higher price having done some cosmetic work and walk away with a fortune!!!! At that point Which? may have something to complain about.
Plonker.....
In the past month or so, surveyors have been down valuing very hard!!
Even with comparables - in my area in London they are knocking £20k off property values, whilst the same property valued up back in feb this year!
As our comrade so eloquently put it, all clients want to know is how much will I get, how quickly will I get it and what will it cost me. Fine.
But if, against that, some agents do exaggerate asking prices just to get the instruction, it ALL collapses in a big heap.
Remember, Market price is the sum being paid when supply and demand balance perfectly. It's not market price, currently, if a load of houses remain unsold or unlit; or for that matter if there are many unsatisfied buyers or tenants left without after a reasonable time for proper marketing.
The conclusion I come to is simply this.
If no agents exaggerate the asking price, over and above what they really believe they can get (just in order to gain initial instruction) then all agents would accept the principle of buying houses which they fail to sell within a previously agreed length of time.
If they genuinely believed they could sell at 'this price', they would offer to buy as well, and would not loose by offering that.
Those that are not prepared to affair this, are the bad guys. They need to be excluded from practicing.
To overcome the other argument that agents 'may' be able to get more by asking more, agents should merely invite "offers over", rather than naming the highest price right at the beginning, on the particulars as now. When successively higher offers are received, well we all know exactly what to do then.
I cannot see why Which? complains about the property value differences between agents and surveyors. It just shows how poor knowledge they have of the market. It is pretty simple: The agent works for the sellers and their job is to get the best price for them. The surveyor works for the lender and look to protect their interest. For example, it is not unheard of that a lender gives intruction to the valuer that they need to reduce the valuation by 10%.
Please can we have some news, Which? Instead of 'Shock, horror - consumers have wide choice of both agents and fees, corporate or independent styles, and if they are not happy with the service they are getting, can exit the contract at no cost to them, even if the agent has done a lot of work for them.' Try applying THAT business model to your solicitor, accountant, dentist, chiropractor, optician ....etc.
Professional, false outrage from a total busted flush of an organisation.
It takes about 5 seconds thought to realise that most of the things they complain about (bar the Ombudsman issue - there's no excuse for that) have a perfectly sensible rationale.
Overvaluing will always be with us, sadly for some amongst us it's a common way of winning instructions, but ultimately there will be a commercial impact on those who over-use this tactic, so it's swings and roundabouts.
Overall though a waste of the ink it's printed on.
WHICH? sales dropping off as well then are they? When their subs are low and their publicity thin, "another go at estate agents" is their normal modus operandi, and has been since Adam was a junior Neg. Actually, was their press release miss-timed, surely it was planned to go out before noon tomorrow? Are you following Big T on Twitter - TrevorKentAgent will find me!
Which charges for their magazines which, if this basic common sense diatribe is all they peddle, is outrageous as the man next to you in the pub could tell you this!
That is basically their arguement well as noted consumer people no one holds a gun to anyones head and as you found the were low percentages as being misleading. Why no actually look at crooked schemes like punting of boiler rooms shares - hardly any inroads into shutting them down or raising awareness, or the latest trend of selling wine options which is the same thing but unregulated. These are two basic direct cons, not a free market business with varied business models.
Different fees - What's wrong with that!
Over/under valuing - Outrageous overvaluing is wrong, but a vendor cannot simply rely on the word of any agent as they should also be able to make their own decisions, based on their won research and by having enough agents round.
How will/can this ever be regulated?
Surveyors downvaluing - And the point is?!
This girl should really have done more homework on this.Is Kate Faulkner really Mary Portas in disguise?!
When will the public learn that a good agent who markets a property at a competitive price and gets competing buyers WILL get more for a house than a poor agent who manages to scrape one buyer from somewhere.
Buying a home is, for most people, an emotional choice and therefore they will pay whatever they can afford to secure it. Good agents understand this and build a reputation for consistently achieving higher sale prices than others.
If Which? wants to help consumers, it cannot be taken seriously unless it gives objective advice. Fueling the fires of consumer misunderstanding towards agents doesn't help anyone.
And, although over-valuing to get an instruction is common place, some agents really can and do get more, and its hard for the consumer to know which agents to believe and which are the chancers.
Fees vary between 0.75% and 2.5%? Sounds like a perfectly sensible and transparent market that serves the consumer well. It must be galling for the consumer body who claim to be "working for me" to be unable to call for tighter regulation of the industry which is clearly working just fine without the cold hand of Government to steer it. Amazing that people can actually look after themselves without being nannied!
Competition seems to provide the consumer with choice witness the fact that Foxtons clients are prepared to pay 2.5% despite there being cheaper alternatives to be found.
As for there being a variety of views on suggested asking price (not valuations 'Which?') where is the surprise in this? Sure, there will always be some agents who think an optimistic price will help them to get the job but if all agents were guilty of this then it's good news to know that there are different levels of optimism!
Perhaps 'Which?' should return to testing electric kettles.
Dear Comrades from Which...welcome to a democracy and a free market. This allows the consumer choice...something which our comrades @ Which seem puzzled about! With choice comes different views and opinions, one agent will say one price and quote a fee and another will quote either the same or different. In this day and age of I.T nearly everyone can access the prices of property whcih ahs actually sold and therefore can use the comparable method when valuing their own home. Also when choosing an Agent, they can go for the cheap and chirpy or the all singing exclusive...its up to them!
Which fail to understand basic human nature...all clients want to know is how much will I get, how quickly will I get it and what will it cost me! Understand this and gaining instructions will become easier. The question of overvaluing in order to gain instructions is as old as the ark and is worsened by the increase in agenst and the lack of stock available (competition for instructions). This is just basic market forces whic effect EVERY business across the globe and not just our industry. Happy selling/Renting.
Sounds right to me with no problems whatsoever, surveyors valuing 9% less than the agents, spot on - as agents quote asking prices - surveyors quote sale prices. Fees - fine, up to the agent what they charge, if they can get 2.5% good luck to them, if they can successfully sell a house for £500 and save the consumer money -good luck to them too. in all business/services you get huge variations, double glazing a 3 bed semi can range from £1500 to £12,000!! last time i looked into it, solicitors range from £75per hour to £000's.
Not at all like a girl with cropped hair and dungarees being asked to critique Nuts and FHM is it?!