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"estate Agents Are Bad For Consumers"

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“Vendors instruct estate agents to achieve the ‘maximum sale value of their home’ – that is part of the estate agents job. Estate agents compete with each other for instructions by promising to maximise sale value.”

...and when too many agents compete for a limited supply of property to sell (regardless of actual demand to buy those properties) they are more or less forced to inflate the value of the property to secure the instruction. This much we know. But is it bad for the consumer?

It’s obviously bad if you’re trying to buy a house, forced as you are to pay as much money as possible by the agent – that is part of the estate agents job. But perhaps it’s also bad for the seller? They will in all likelihood soon be a buyer, who will then themselves be forced to pay as much money as possible for their next house, and so on. In other words when business is slow and instructions hard to come by, there’s an inflationary force that acts in the market that does not have to with supply and demand in the housing market itself, but supply and demand in the estate agency business. A row of shops on the high street selling the same product should mean competition between them drives prices down, except where those shops happen to be estate agencies. The worst of it is the more reputable and professional will suffer sharing their more pessimistic analysis of the market and their ability to sell property at a given price, meaning they are less likely to have anything to sell at all.

How much of an effect is this having?

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“Vendors instruct estate agents to achieve the ‘maximum sale value of their home’ – that is part of the estate agents job. Estate agents compete with each other for instructions by promising to maximise sale value.”

...and when too many agents compete for a limited supply of property to sell (regardless of actual demand to buy those properties) they are more or less forced to inflate the value of the property to secure the instruction. This much we know. But is it bad for the consumer?

It’s obviously bad if you’re trying to buy a house, forced as you are to pay as much money as possible by the agent – that is part of the estate agents job. But perhaps it’s also bad for the seller? They will in all likelihood soon be a buyer, who will then themselves be forced to pay as much money as possible for their next house, and so on. In other words when business is slow and instructions hard to come by, there’s an inflationary force that acts in the market that does not have to with supply and demand in the housing market itself, but supply and demand in the estate agency business. A row of shops on the high street selling the same product should mean competition between them drives prices down, except where those shops happen to be estate agencies. The worst of it is the more reputable and professional will suffer sharing their more pessimistic analysis of the market and their ability to sell property at a given price, meaning they are less likely to have anything to sell at all.

How much of an effect is this having?

no stamp duty for houses sold privately !

`We say it here, it comes out there` - Broadcast News ;)

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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