This question and answer session was a real-life (NOT AI) conversation I had with a local (semi-retired) estate agent last week. He is well-known in Oxfordshire property circles, highly trusted and well-liked, so I hope you get some clarity and peace of mind over some of the things that might be on your mind…
I really wanted some answers, and this estate agent just told the truth!
Q: Why would an estate agent suggest using an in house mortgage adviser or solicitor and say it helps the process go smoother?
A: There can be several reasons an estate agent could suggest using in-house services. You could even consider a combination of these suggestions:
- Monetary incentive (i.e. referral fee or kickback to self-employed or owner-run agencies in the form of commission/bonus for employed agents)
- The service is part of the same company, i.e. mortgage fees go straight to the profit and loss data - i.e. the agency believes it is good marketing to have a one-stop-shop service and markets their offering as such
- Genuine belief that it makes the process go smoother, safer and more efficient when progressing sales
- A simple case of trust in the broker they work with most often
- An even more simple case that they like the broker personally and want to help them in their independent business.
Whatever reason you get if you ask your estate agent this question, you should always feel you have been given the freedom of choice and never feel under pressure to go with who the agent suggests. Look out for being told your house will sell quicker, for more money or you’ll make bigger savings.
Q: Why doesn’t an estate agent know how long the lease term is on a flat?
A: They should know. Agents should find out the lease length before marketing, and not only that, but by law they should now display this information on their marketing materials.
Q: Why don’t they know about the doubling ground rent?
A: Again, they should know. This should be a question they ask in their property fact find/property information questionnaire - however, the existing owners would need to provide the answer. A larger question is why do so many agents not know that it is a standard thing in leasehold properties, and the reason for that is because they are mostly poorly trained. They will often get some basic training but otherwise learn on the job, and the first time they learn about it is when it happens to them.
Q: How do estate agents value a property?
A: That's a tricky question. Technically agents don't value anything, they offer a market appraisal. The most common method in the past would be printing a Rightmove Best Price Guide or similar and comparing similar properties' marketing histories over a 6 month period, within a distance radius - but that radius might be half a mile in a built up area, or 10 miles if in a village location.
They will look at time on the market, price point (either sold or unsold), ideally price achieved if on the land registry by that point, etc. In the past they looked at further land registry data too but usually just for the street, but now tools like Spectre are able to produce a pretty convincing valuation report which will pull wider data and present it rather prettily to agents to pass onto sellers.
I suspect many agents now use this valuation tool, present the report to the vendor as 'we use this amazing tech which offers a valuation in this way', and then says 'but based on my experience, having sold a couple recently for this price and this price, I think it is worth giving it a go at £XXX,000...'. Remember estate agents are sales people, doing a sales job... but the sales job is winning the instruction - and if they do it that way then technically they will have done nothing wrong - the seller hears what they want to hear a lot of the time.
Q: Why do people get different figures if they a second or third opinion?
A: An agent isn’t trying to be the most accurate valuer, they are listers and their job is to list.
Q: Why does the estate agent want the valuation booked in so quickly?
A: Because there is little reason to delay and it avoids a chain that could be waiting for an element of the transaction that was within their ability to try to control. If a vendor or a wider chain feels there is no movement towards attaining the mortgage offer, they may pull out. It can often be a vendor's choice, not the agent's advice - the last thing agents usually want to do is return to market and have to do more work; sadly, vendors see the delay as buyers messing them about'…
Q: Why do they chase so much when it generally takes two to four months for transactions to go through?
A: Because often the delay is waiting for a mortgage offer and everyone wants that to smoothly. It’s a case of making sure all the information is provided at the right time to the right people. Your mortgage advisor can tell you more about that!
A last word from me, Marc Kavanagh…
While estate agents and mortgage advisors don’t always work together as such, we do support the same clients and therefore build relationships in the field of house selling and buying and go on to form a trusted network of colleagues. The people I keep within my trusted network all have a proven track record of honest, open advice on topics on buying and selling, legal matters and protection.
While my own area of expertise is mortgages, I am happy to recommend other professionals that will give you unbiased advice.
Let’s have a conversation and make sure you have peace of mind.
