In my last blog I discussed the increasing gulf between the fee of the solicitor and the commission charged by the estate agent, and posed the question whether at a time when the property market remains in turmoil this could be justified.
At about the same time news broke of an announcement by the Department for Business, Innovations and Skills (BIS) of proposed amendments to the Estate Agents Act relating to web-based 'intermediaries'. The changes if implemented will mean the intermediary will no longer be treated in the same way as an agent and will make it easier for sellers to advertise their home online direct to buyers.
The intermediaries, such as Tepilo, run by TV property guru Sarah Beeny,Sellmyhome.co.uk and HouseSimple allow property sellers to advertise their homes online for a fixed fee far below the commission charged by estate agents. The providers of these services do not perform any other role during the sales process yet the Estate Agents Act treats them as agents and requires them to perform the same checks on properties as agents. This has made it difficult for them to compete with the likes of Rightmove through which the majority of estate agents advertise property.
If the restrictions on these businesses are relaxed it is clear that the consumer will be presented with a wider choice and fees charged by agents may begin to tumble as competition increases. The typical fee charged by an intermediary is around £450 ( Tepilo is free). Compare this to the commission charged by agents where commission can run to many thousands of pounds. A recent Which? report found estate agent fees range from 0.75 per cent to 2.5 per cent, with 1.8 per cent the average fee. Selling a £300,000 property on this basis would cost £5,400.
It is fair to say Estate agents clearly provide a more comprehensive service than intermediaries, including offering complaint processes and redress if needed. However any change that will help to put pressure on agents to charge a fee that is more proportionate to their input will be welcomed.
Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at firstname.lastname@example.org