Estate Agents: A Necessary Evil in London
I read an article a while ago about why the BBC felt that, due to social media and Government regulation, estate agents would soon become a thing of the past. Having initially fallen into it via a friend of a friend, I worked as an estate agent in and around central London between 2002 and 2009. It was a fairly painless way for a non-graduate with a ‘posh’ accent to make a decent salary, get a decent car (without any garish branding), and meet some varied people for a minimal amount of effort. I was certainly not ‘passionate about property’, nor particularly ‘sales focused’, to use some of the clichés that you will find within the industry, I just wanted an easy life.
The principal misconception that people have when dealing with estate agents is that by choosing to sell your property, or announcing your intention to buy one, you are actually doing them a personal favour. You are not. Regardless of the shrill shrieks from experts at any given time about how ‘high’ or ‘low’ the market is, there are always other people moving house. Even if we are heading into an economic abyss, life goes on. People will still get promoted, married, sacked, have children or whatever else it is that makes them need to move house. Just because you want to do a viewing at 9PM on a Friday night, and you think you’re special, any half decent estate agent won’t.
At any given time a ‘sales negotiator’ (to use the industry term for the guy, often with gelled hair, purple shirt and matching tie, who registers your details, and shows you around a couple of flats) will have a ‘pipeline’ of total fees that he has generated in agreed sales, but are waiting to exchange contracts. The result of this is that, by and large, any 1 particular sale is not nearly as important to him as it is to the buyer and seller.
Of course it is now incredibly easy to advertise a property you wish to sell via the internet. Just take some flattering photos and then put it all over Facebook, Twitter etc. and you will generate some interest, and in terms of that particular role it is possible to argue that estate agents are becoming more and more unnecessary. The problem however is what happens next in the sales process.
I obviously had minimum contact with people, who had successfully bought or sold privately, but I did hear a multitude of horror stories from people who had tried to, and then when it had not worked out they came running. All estate agents will have registered a new client whose opening sentence began “I was buying/ selling privately, but…”, and then heard about ruined friendships, wasted legal fees etc., without the comfort blanket of just being able to blame the estate agent.
Conversely, I smiled after a colleague spotted that one of the most unpleasant buyers I ever encountered (and there has been some ferocious competition) had advertised himself in the property section of a national newspaper as looking to buy a flat. After the vitriol, threats of litigation, and general hysteria directed at me from that particular individual and his wife, I would be fascinated to know what became of their private search. My suspicion is that anybody they did get into initial negotiation with would now be the biggest supporter of using estate agents.
A good negotiator should become an expert in people-watching and be able to quickly spot who are serious ‘hot buyers’ worth staying in contact with, and who the ‘wasters’ are. This is the standard term for those who like a chat with a nice estate agent, enjoy looking around other peoples’ houses, but will never buy any property this millennium. In order to waste the least time, the trick is to be able to accurately qualify your buyers and work out what they want (and don’t want) at the point when they approach you. You then work on marrying up the right people with the right properties, as soon as each becomes available. The absolute ideal was what I called “Sniper: One shot, One kill”, which did happen sometimes and was when you showed one person, one property and they made an offer on it.
In terms of actually agreeing a sale of a flat or house, it is usually fairly obvious for both sides to see what the property is worth (even if they don’t want to admit it to themselves), just by looking at comparable properties on competitors’ websites or the Land Registry etc. and hence what would constitute a reasonable offer. As a negotiator, a difference of £10,000 on an agreed sales price would typically work out as about £20-30 for me, before tax. Contrary to myth, this meant that I wasn’t particularly interested in squeezing every last penny out of a buyer, in order to get maybe 3 extra pints and my entry to Inferno’s on a Friday night.
However, that said, the client who pays my fee is the owner of the property, and there is a responsibility to get them as much as is reasonable, from the most credible buyer. I remember, more than once having the law quoted at me by people wanting to put forward outrageously low offers, of £50-100k below a realistic asking price. The law does state that all offers need to be put to the vendor, which is quite right. I pointed out to them, though, that I also had a duty to advise the owner not to take an offer, if I thought it meant he was going to seriously undersell his property. This would no doubt be translated to the prospective buyer’s little friends as: “I was going to buy this awesome flat, but the estate agent screwed me over”.
Thus estate agents provide a shield that enables otherwise decent and rational people to behave appallingly while buying or selling a flat. Whatever outrageous demands, impossible deadlines etc. can be conveyed shamelessly via the estate agent, because everybody hates estate agents.
The estate agent however is actually in the position of not being so emotionally involved in the transaction, and can often offer some clarity, as the buyer and/ or seller go through the seven stages of grief down the phone at him. They can then often resuscitate a deal which would otherwise have died, merely by clarifying a basic misunderstanding, or talking to a solicitor. However, if a sale does actually fall through, as they sometimes do, the estate agent can then let everybody know, as quickly as possible. Without the estate agent, a private fall through is most likely to be communicated via one of the parties just turning their mobile phone off for a period of weeks. Obviously once the estate agent knows that a sale has finally fallen though, he can just get on with finding another buyer.
To conclude, while estate agents may often be unpleasant weasels, they can provide a vital service in identifying suitable buyers for a property, and then being the mid-wife for the actual transaction. As technology increasingly makes the marketing side of the individual estate agent’s role redundant, the industry would be wise to focus on the more cerebral aspects of the property buying process, and focus on that when recruiting negotiators. This will enable them to justify their fees and their existence by ensuring that the process for buyer and seller is far less painful than it would be privately.
Written by George Anderson of http://www.strongholdadvisor.co.uk
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