A return to traditional estate agents?

[Leslie Leigh]

Freeing up markets and reducing regulation provided the banks with the opportunity to provide hostile lending to the market, this provided the market with the ability to buy up property without the need to cater substantial, if any, capital to the investment, even mortgages of up to 110% were not rare. This caused huge growth in property prices due to rapid increases in demand and therefore the property market has grown at a rate well above domestic incomes.

So, therefore this economic credit quake came at no surprise to economic theory. So to look at this in a positive light, we are going through a correction in the market bringing prices back to more of a realistic figure in terms of real incomes.

Now, however what I want to look at is the fact that it may be a long time before we move back into a property boom, if at all, but will this cause estate agents to exit the market? will the greedy agents that entered this business just for highly profitable balance sheets and not in the mind of a traditional, quality service be forced to close business? Will this be a return from the negative perception of an estate agent to the honest and respected agents?

I believe that we are going to see a huge change in the way the property market is conducted and this is going to come at a shock to many, but I would like to hear what you believe first....

Andrew P Salter
Leslie Leigh & Co.

[googler]

"I believe that we are going to see a huge change in the way the property market is conducted ..."

..but you're not going to tell us what you think this is until we speak first?

Hmmm..

[googler]

Shouldn't "highly profitable balance sheets" and "traditional, quality service" go hand-in-hand?

You get a good service, and pay a decent amount for it.

You can't get a Rolls-Royce for the price of a Skoda.

[brian]

There's always churn of agencies in a market downturn - as the boom years return eventually, you'll see the same pattern happening again.

What's really interesting to me is how the role of the internet is taking in terms of marketing - if RightMove allowed private sales as a mainstay of their business, agencies could crumble very fast.

[googler]

Isn't it strange how some people will start off a topic, then never seem to return to consider the replies.....?

[Leslie Leigh]

Please excuse the delay in my reply.

Yes I agree, economies/businesses work in cycles - when sectors are allowed to grow and grow and grow, there is something wrong in it's growth function. And haven't we realised this, take Northern Rock for example, a adaquatly functioning building society and then allowed to form as a bank. Late 2007 despite 'warnings' from The FSA of dislocations in funding markets NR continued to grow their mortgage portfolio, overtaking HBOS (at the time UK's largest lender). If regulation was a lot stronger NR would of not been allowed to grow their mortgage base at such a rate, especially with the risk of being dependent on 72% of wholesale deposits. So yes economies work in cycles, however, if regulation like it will be applied to the banking sector is applied to the property market (including estate agents) then we maybe able to safely say that estate agents will not be able to over value properties to get instructions, only be able to operate if obtained subsoil qualifications and anything else that should be put in place. Concluding with a market that grows at a healthier rate, one that is more realistic.


RightMove indeed has had a substantial effect on marketing properties. Any agent that isn't on their is probably losing a high percentage of sales.

I did read some time ago that Tesco were planning to contend with the property portals with their own unified property portal and with the approach Brian is suggesting, to advertise your property for a one off payment and allow the vendor's and buyer's to conduct the transaction themselves. So what would be the result of this; loss of business to agents, yes -- will individuals be able to contend with the stress, conveyancing, negotiations and all the rest that comes with the role of conducting a property deal, unlikely. Aside from these two points, what would happen to property prices, well they would be stretched to the highest level possible with no consideration of what the properties value is, only the thought of a large return on what the vendor initially paid or what next Dick and Tom receives for his home. Because let's face our culture is full of greed, if people are put in charge of their own property sale they will only accept the highest of prices.

So I guess from an Internet point of view, we will never revert back to the traditional value of conducting business. However, the Internet, moving away the Tesco approach (if it were to happen) is only a marketing tool and would not effect the conduct of business in an estate agent.


Andrew P Salter

Leslie Leigh & Co.

[MovingNeverEnds]

I think online agencies will ween out the traditional agents, about time too!

[googler]

Yes, but WHY do you think this? What can an online agency do with their website that a traditional agency can't do with their own website in addition to their standard service?

And WHY do you think it's 'about time' ?

[smartlawyer]

In my experience -most estate agents are a complete waste of space. They all only interested in the commision and are totally ignorant of client needs.

Labour Government is to weak to impose regualtions. Estate Agents should have formal qualifications and subject to a governing body.

You do come cross a rare gem once in a while..but rarely !

[Scott Butcher]

" Aside from these two points, what would happen to property prices, well they would be stretched to the highest level possible with no consideration of what the properties value is, only the thought of a large return on what the vendor initially paid or what next Dick and Tom receives for his home. Because let's face our culture is full of greed, if people are put in charge of their own property sale they will only accept the highest of prices. "

I don't really see what you are saying here.

Firstly, property prices are always stretched to the highest amount possible, when anyone sells anything, they don't think about getting a fair price to ensure value for all parties involved. They sell for as much as they can get, and if it isn't enough, they don't sell. That was, is and always will be how people work when selling stuff. That's not greed, that's normal behavior.

If anything, estate agents would reduce the final agreed sale price, it is in there interest to make a sale, albeit at the highest price possible, but quickly selling properties is more important than getting an extra 10k on the price 6 months down the line. Therefore they are more likely to influence the seller by suggesting that a bid might be worth taking.

As for what effect the internet would have, if it did cut estate agents out of the picture this could be argued as being a good thing, these middlemen just take a chunk of the purchase price without really adding any value. However, if you don't want to be involved in marketing and showing people around your house, or you have no desire to trawl through thousands of properties on the internet, then using an estate agent does have value. It all comes down t your preferences. Perhaps having viable alternatives to estate agents, such as the internet idea discussed, would be healthy for competition, but I think there will always be a role for estate agents.