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Estate Agents Discuss Overvaluing

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OFT publishes new advice on how estate agents should act

Tuesday 20th September 2011

Agents who deliberately overvalue in order to gain an instruction will be guilty of a breach of the law, new guidance has underlined.

It also emphasises that manipulating images could land an agent in trouble.

Breaches could mean a criminal record: magistrates have the power to levy fines up to £5,000 and Crown Courts to impose unlimited fines or up to two years’ prison.

Full story & comments here:

http://www.estateagenttoday.co.uk/news_features/NEWS-EXTRA-OFT-publishes-new-advice-on-how-estate-agents-should-act

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Fines of up to £5000. Well that will discourage them won't it. P*ssing in the ocean springs to mind.

You can get a fine of £50,000 for fly tipping, that's ten times the suggested 'fraud' fine being proposed (it is fraud to knowingly mislead a buyer). And doctoring photos will already be covered with exisitng laws. Just need to enforce them folks.

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Fines of up to £5000. Well that will discourage them won't it. P*ssing in the ocean springs to mind.

You can get a fine of £50,000 for fly tipping, that's ten times the suggested 'fraud' fine being proposed (it is fraud to knowingly mislead a buyer). And doctoring photos will already be covered with exisitng laws. Just need to enforce them folks.

"magistrates have the power to levy fines up to £5,000 and Crown Courts to impose unlimited fines or up to two years’ prison."

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Someone putting their house on the market in May asked me for a price and I said you could try £130k.

They had 3 agents round, 2 said £130k they went with the 3rd who said £140k.

They are still waiting for their first viewing. The agent advised them to drop to £135k and has now suggested £130k.

Looks like a classic case to me, the agent gave them false hope to get the instruction - lock him up!

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"magistrates have the power to levy fines up to £5,000 and Crown Courts to impose unlimited fines or up to two years’ prison."

Wouldn't that require a criminal standard of proof (ie beyond doubt, etc) - could be hard to prove in court.

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Laws and prices never sit very comfortably together, not sure this is a good idea. If a London estate agent had valued a bog standard 2 bed flat in Brixton at £175k in June 1999 people would have laughed that it was £50k overpriced, but one year later that was the going rate.

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Someone putting their house on the market in May asked me for a price and I said you could try £130k.

They had 3 agents round, 2 said £130k they went with the 3rd who said £140k.

They are still waiting for their first viewing. The agent advised them to drop to £135k and has now suggested £130k.

Looks like a classic case to me, the agent gave them false hope to get the instruction - lock him up!

Classic....but in the end it defeats the object....the house lingers longer without a sale, so it then goes stale... a prospective buyer will think....it was overpriced at £140k still overpriced at £130k...they are having a laugh. ;)

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Laws and prices never sit very comfortably together, not sure this is a good idea. If a London estate agent had valued a bog standard 2 bed flat in Brixton at £175k in June 1999 people would have laughed that it was £50k overpriced, but one year later that was the going rate.

Visionary eh?

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Classic....but in the end it defeats the object....the house lingers longer without a sale, so it then goes stale... a prospective buyer will think....it was overpriced at £140k still overpriced at £130k...they are having a laugh. ;)

It doesn't defeat the object if they stay with the same agent and it sells eventually (at whatever price). The agent gets the fee instead of someone else.

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The first thing they need to acknowledge, on an Industry wide basis, is the fact that house prices rose by 300% from 1996 to 2006, whilst the average wage rose by just 6.5k.

And that the long term measure of affordability is 3x salary of an individual.

Which they are not capable of doing.

The Government have acknowledged this manipulated rise was due to Mass Fraud and criminal activity, yet they have not prosecuted the people responsible.

Instead Ministers have profited personally and rewarded the thieves.

Hardly sends out the right message, does it?

Edited by Milton

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It doesn't defeat the object if they stay with the same agent and it sells eventually (at whatever price). The agent gets the fee instead of someone else.

Maybe...only if they can sell at any price.... I was thinking more that certain agents are known locally for overvaluing property....people therefore tend to avoid looking at their stuff....you know the ones with plenty of obvious overpriced stuff in their windows, and the ones that spend loads on advertising the overpriced stuff...fancy photos and glossy brochures etc. ;)

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What I would really like to see is every FTB in the country sign up to a representative organisation, who spoke on behalf of all First Time Buyers.

And that Organisation told Ministers and the Housing Industry in no uncertain terms.

Your Industries cannot survive without First Time Buyers. Bring House Prices back down to 3x salary of an individual, or F@ck off.

End of Conversation.

First Time Buyers Control the prices of houses. But only if we all believe we do.

If we had adopted PR, some up and coming political party, could have gotten a LOT of seats, with just that simple message.

3 Million priced out by 2015.

**Remember the average first time buyer mortgage multiple in 1997 was in a range of 2.3x - 2.5x an individual's salary**

Edited by Milton

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It would be difficult to prove something is overvalued.

what about this one?

http://www.rightmove.co.uk/property-for-sale/property-18748320.html

looks like the EA has changed the price after it went under offer to look like it has sold for more- is that not market manipulation?

this seems super shady or have i missed something......?

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what about this one?

http://www.rightmove.co.uk/property-for-sale/property-18748320.html

looks like the EA has changed the price after it went under offer to look like it has sold for more- is that not market manipulation?

this seems super shady or have i missed something......?

Clearly not detached either!

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Meanwhile they get locked into a sole agency agreement and have to pay costs if they withdraw.

So they could:

1. Refuse to budge on the price on the grounds that that was what the agent suggested

2. Harrass the agent - daily phone calls, twice weekly visits - loud and angry in the office when there are other possible punters around

3. Offer to drop the price (& the phone calls & visits) if and only if they reduce the lock-in to, say, three months from first instruction

4. Ask for a written breakdown of costs incurred (it might be worth paying them be able to walk away)

5.Dispute and ask for proof of every item

I'm sure with abit of imagination people can add a few things to the list to make one the client from hell that you just want to get off your books.

Might be worth going to see another agent and offering them the sole agency if they can find a way to get out of the existing one - they will know what is legally enforceable & I doubt there's much sense of fair play and comradeship among EAs

Edited by cartimandua51

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3 Million priced out by 2015.

**Remember the average first time buyer mortgage multiple in 1997 was in a range of 2.3x - 2.5x an individual's salary**

IF you could get a mortgage - it was, IIRC, at least as difficult then as now as the housing market was at the bottom point of the almighty crash that took place from 1988/9, when there were a huge number of repossessions.

A fairer comparitor is the long-term average of about 3.5 times income

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A house has come on the market where we are renting at 50% more than the previous sale in the street. It is 14% higher than the highest all time sale which was in 2007. All 4 bed detached in the North West.

I was reminded of this thread and the OFT guidelines so I phoned them this morning and asked what was happening about their guidelines. In the Spring they intend to issue an updated set of guidelines. I told them about the house in my street and they were very interested in having a specific example and wanted details via email which I sent. Interestingly they said that the guidelines they issued last year were now in force and estate agents should already be sticking to them. They suggested that if anyone did think an estate had marketed a property at an unrealistic price they should be reported to their local trading standards.

From their guidelines:

3 The Breaches

Examples of misleading actions:

Recommending an asking price in the market appraisal that is unrealistic given current market conditions (in order to acquire the

instruction).

What penalties might you face?

5.5 If you are convicted of committing a criminal offence under the CPRs or BPRs the penalties are:

• on Summary conviction in the Magistrates Court (Sheriff or Justice of the Peace Court in Scotland), a fine not exceeding the statutory

maximum – currently £5,000

• on Conviction on indictment in the Crown Court (Sheriff Court in Scotland), an unlimited fine or imprisonment for up to two years, or

both.

http://www.oft.gov.uk/shared_oft/consultations/oft1364con.pdf

http://www.oft.gov.uk/OFTwork/consultations/estate-agents/

Have we to get some agents fined and locked up?

Edited by Democorruptcy

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I'd be interested to learn exactly how many successful prosecutions have been made to date.

I suspect that it is, and will remain, a very round number.

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This is a stupid waste of time.

All an agent has to do is issue the seller with a bit of paper saying that's what its worth (conservative value).

Then his **** is covered. Then he says to the buyer, current legislation means we have to be conservative with valuing, but we think with the local market being what it is we can get x. If you issue us with a letter saying you would like it marketed for x that's fine.

This is just meddling with the market. In the same way the government always meddles. Don't meddle with the market and let it find its own level.

With the number of search engines and information at your fingertips these days it is easy to find the approximate value of a house. The stupid rich are fast diminishing, and the stupid poor are protected by their banks unwillingness to grant a mortgage on a house that is surveyed vastly under the attempted purchase value.

If you market a house over valued it will not sell. If it does sell then it is not over valued because someone was prepared to pay that vlaue for it. End of.

Edited by Gigantic Purple Slug

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A house has come on the market where we are renting at 50% more than the previous sale in the street. It is 14% higher than the highest all time sale which was in 2007. All 4 bed detached in the North West.

I was reminded of this thread and the OFT guidelines so I phoned them this morning and asked what was happening about their guidelines. In the Spring they intend to issue an updated set of guidelines. I told them about the house in my street and they were very interested in having a specific example and wanted details via email which I sent. Interestingly they said that the guidelines they issued last year were now in force and estate agents should already be sticking to them. They suggested that if anyone did think an estate had marketed a property at an unrealistic price they should be reported to their local trading standards.

From their guidelines:

Have we to get some agents fined and locked up?

Brilliant! As the OP, well done for recalling this. Very interested by the update - well done for taking action too.

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If you market a house over valued it will not sell. If it does sell then it is not over valued because someone was prepared to pay that vlaue for it. End of.

You are missing the point.

I think there is no chance of the house selling at that price.

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