Estate agents are paid by and therefore only act on behalf of the seller. Anyone wanting to view a specific property has to go via the agent that listed it, who will arrange a viewing.
Representation via a buying agent is fairly rare and whilst its popularity is growing, in anything but a very buoyant market it’s largely considered the preserve of the wealthy.
I’m often asked if I think buyer representation will become more prevalent in the UK and whilst I can see it growing as the economy improves, I think the majority of UK house hunters actually enjoy the process of doing their own searching – they enjoy the hunt before the kill.
In fact over recent years estate agents are finding that buyers are having even less contact with them in their home search, simply calling them to arrange viewings on properties they have sourced themselves. Estate agents have to work much harder to build relationships with buyers because they are having more limited contact.
How do Buyers Search?
The Home Moving Trends Survey we recently carried out at the Property Academy, revealed that less than a quarter of buyers repeatedly rely on an agent, preferring to do their own searching via property portals and agents own web sites.
Buyers spend the majority of their search on one of the five main property portals, which are owned by three different companies. The leader by some considerable distance in terms of the number of available properties and visitor traffic is Rightmove.
Once a buyer has found a property they want to buy it is down to them to negotiate directly with the estate agent that is representing the seller in order to secure the property.
Once the deal is agreed the purchaser and seller engage solicitors to complete the legal work on their behalf and the buyer will also have to arrange finance and, if they choose, instruct a surveyor to inspect the property on their behalf.
Until contracts are exchanged, which as I said yesterday takes on average between 10-12 weeks, either party can withdraw from the sale without any consequences other than their own incurred costs. This has led to the rise of two practices which I’m not sure if you use these same terms, but you may experience similar practices.
Gazumping and Gazundering
In a sellers market, Gazumping takes place when a second buyer comes in with a higher offer than the first, during the period between sale agreed and exchange of contracts, and the seller accepts the new offer and pushes the first buyer out of the picture.
The challenge for estate agents is that they are legally obliged to put forward every offer made on a property, so regardless of any existing deals ongoing they have no choice but to communicate these offers to the seller and are often viewed as the villains in the process.
Gazundering is possibly an even worse tactic and takes place in a buyers market. This is when the buyer waits until the sale has progressed almost to the point of completion and all parties in the other connected purchases have incurred costs. They then lower their offer on the property with the threat that a chain of sales may collapse.
In both cases, the estate agent works hard to hold the deals together, but their obligation is always to act on behalf of the seller and in their best interests.
The decreasing reliance of home buyers on using an estate agent to assist them in finding the right estate agent, coupled with a long standing negative perception by the general public are two factors which are contributing to a change in the dynamics in our market.
Next I’ll complete this series by outlining my thoughts on the strengths and weaknesses of this model, our ability to change with the times and areas where I think the UK and US models might be converging.
