Thu, 31 Mar 11
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.
Source: Estateagentotday.co.uk
See also: Who will sell your home? UK Estate Agent Directory
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