Can you put your trust in estate agents?
William Adams, 69, from East Grinstead, learned about some of the tricks estate agents can pull the hard way. He found himself on the receiving end of an estate agent's sharp practice when he tried to sell a family property in Worthing last year.
"I was granted probate after my cousin died intestate in 2009, so was responsible for handling his estate," says William, a retired businessman. "The property had fallen into disrepair a little, but was still a nice 1930s three-bed detached house in a good street."
Despite this, each of the agents that William contacted tried to undervalue it on the grounds that it wasn't in first-class condition; eventually the property went on the market at £250,000.
However, William soon became aware that all was not right. "I had to insist on the agent revising the literature six times, there were no 'for sale' signs, no internet listing, and despite the agent claiming they had many interested potential buyers, we received just one offer of £250,000."
Things then went from bad to worse after solicitors' details were exchanged, with a reduced offer of £220,000. "My agent had gone behind my back and told the solicitor that I should accept a £30,000 reduction on the verbally agreed offer - well below market value," William says.
In the end, he decided to give up on estate agents completely and sell privately instead.
"I produced my own literature and photos, which went onto sites such as Tepilo and Zoopla, and got private 'for sale' boards in place," he says. "We had more than 20 enquiries within a month, and were able to proceed with a quick sale at the original market value of £250,000."
Tricks of the trade
William is not alone in having problems with finding an agent who can be trusted to value property accurately.
While it's true that making a valuation is not a precise science, as the price depends on several factors including supply and demand and wider economic conditions, it is not uncommon that estate agents will chance their hand by employing one of many tricks of the trade.
"Those estate agents who come in with a high valuation are often trying to bowl you over with their confidence in being able to sell your property," says Mark Desvaux, managing director of private sales portal HouseWeb.com.
"But if you go with the agent who promises £50,000 more than the others, you may find that just two weeks into a three-month contract they tell you that the market has slowed and you need to drop the price."
As William discovered, another trick commonly employed by less scrupulous agents is deliberately under-valuing a property to make it easier to sell. This is particularly prevalent where a property falls on the stamp duty threshold, according to David Dalby, director at the Royal Institution of Chartered Surveyors (RICS).
"An agent may undervalue a property at, say, the £250,000 mark, valuing it at £249,999, rather than £255,000, in order to reduce stamp duty," he says.
Desvaux adds: "This means sellers miss out on the true value of their property and the market gets skewed. Also, as agents take on the costs of selling at the outset, they may come in with a very low valuation to secure a speedy sale for their own cashflow reasons."
At the same time, some estate agents have mastered the art of asking seemingly 'innocent' questions to ascertain how desperate you are to sell. "If, for example, they find out you've seen your dream house and need to sell in three to four weeks, they'll base their valuation on this," warns Dalby.
While some claim most dodgy estate agents have been squeezed out by the downturn, not everyone agrees. One estate agent who has worked for both national chains and independent firms for the past eight years, but who wishes to remain anonymous, says there are still many underhand practices.
"I've known people who have taken backhanders for up to £45,000, agents who have deliberately down-valued, and large chains that have over-valued and tied people into long sales contracts," he says.
Lack of regulation
Given that certain sharp practices are still rife in some areas, just what protection is in place to protect consumers from unprofessional agents?
Unlike most European countries, the UK has never required its estate agents to have any kind of licence, although the National Association of Estate Agents has recently launched the first voluntary licence to regulate the industry, and a 'licenced agency' must now have at least one agent within its branch who is qualified in residential property sales - either through a formal qualification, or through length of service.
Nonetheless, despite this - and the requirement for agents to be signed up with the Property Ombudsman - concerns remain over the lack of regulation.
"Redress to the Ombudsman is the ultimate safety net, but this only happens after the event," says Dalby. "Professional standards in the industry need to be raised and greater transparency is needed."
In the meantime, however, what can you do to check you're not getting taken for a ride?
"You can access house price data by postcode on the internet to see what properties have actually sold for," says David Hollingworth, broker at London & Country. Useful sites include the Land Registry (landreg.gov.uk/houseprices), propertypriceadvice.co.uk and nethouseprices.com.
Armed with this information, you then need to choose an agent. Ask neighbours for recommendations and check 'for sale' signs in the area to see which agents get results. Also try websites, such as agent-tracker.co.uk, which include customer reviews.
"Get at least three agents to give their opinion, as this will help give a better feel and open your eyes to any disparity in valuations," says Hollingworth.
Ask them also to explain how they arrived at their valuation. "Get each estate agent to justify their price," says Dalby. "Ask for evidence, such as details of similar properties sold in recent weeks."
And as a seller, don't forget you can also seek independent professional advice from a chartered surveyor. "A private survey and valuation will be carried out at arm's length by a chartered surveyor who has no obligation to any party except you," says Sexton.
Finally, if you don't want to use an agent, you could save yourself thousands of pounds by doing the job yourself through a dedicated private sales website such as propertybroker.co.uk, houseweb.co.uk, or tepilo.com.
But don't forget that going it alone is not all plain sailing, as you will have to do everything yourself, from marketing the property and showing people around to negotiating with potential buyers - as well as ensuring you get the price right.
Information you should never share with your estate agent
• You need to sell quickly
• You have seen the house of your dreams
• You have a price in mind below which you will not go
• You are not in a rush to sell
• You are thinking of moving to another agent
Information you should insist on getting from your estate agent
• Find out how and where it will market the property
• Ask how it arrived at its valuation, and ask to see details of similar properties it's sold recently
• Find out what it will charge. According to the Office of Fair Trading, the average is around 1.6% of the eventual sale price
• Find out how you can get hold of your agent, and how often it will update you
• Check the contract to see how long you are tied in for, and whether you'll be charged withdrawal fees
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
A catch-all phrase that can range from assessing the price of a property or vehicle before offering it for sale or the net worth of assets in an investment portfolio to the prices of shares on a stock exchange.
The process of applying for the right to deal with a deceased person’s estate. If a person has left a will, they will usually have appointed a will executor. The executor then has to apply for a ‘grant of probate’ from the probate registry, which is a legal document that confirms the executor has the authority to deal with the affairs of the deceased. If a person dies without making a will, intestacy law applies (see intestate).
If you die without making a will, your estate will be divided up and distributed according to a set of complicated procedures laid down by the law as set out in the Administration of Estates Act 1925. The more complicated your life, the more complicated the intestacy laws after your death. Given that 60% of registered deaths last year were intestate, according to Title Research, the only way to ensure your estate is divided according to your wishes is to make a will.
If you’ve have a complaint about a financial service product you have bought but the company you bought it from refuses to resolve your problem after eight weeks, the Ombudsman can help. The Ombudsman will investigate and resolve the matter. The Ombudsman is independent and its service is free to consumers. The Ombudsman may find in the company’s favour but consumers don’t have accept its decision and are always free to go to court instead. But if they do accept an Ombudsman’s decision, it is binding both on them and on the business.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.