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Government Confirms Repeal Of The Property Misdescriptions Act

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responsibility is set to be lifted from websites, but an industry group warned that buyers could now get a worse deal.

The government plans to allow the two types of business to operate under separate rules.

But Peter Bolton King, of the Royal Institution of Chartered Surveyors (Rics), said: "These [planned changes] mean that prospective homebuyers and sellers will find it harder to distinguish between intermediaries and traditional estate agents.

"Consumers could, perhaps unknowingly, be left responsible for undertaking their own detailed sale negotiations without the advice and guidance of a property professional.

No laughing at the back please.

Article here

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No laughing at the back please.

Article here

I have to add that I have learnt something new. Apparently EAs have to ...

"Traditional estate agents must, for example, ensure information about properties is accurate, no pressure is put on customers, and an effective consumer complaints procedure is in place."

:blink: ..... :lol:

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Best watch the Tesco PR operation I think... If they come out with an announcement in the next few days then it's reasonable to assume they've been lobbying behind the scenes and are about to go for it big time.

Good point.

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Didn't Tesco have to pull their site before because of this law?

Yes. So the games back on!

EAs are one of the only few protected businesses left anyway. Insurance used to be through a broker then people decided they wanted to save money and so the Insurers went direct. Fair enough that property goes the same way. Sellers set the prices anyway, Solicitors draw up the contract. All EAs seem to do is be glorified advertisers or more accurately middlemen for rightmove.

Can't see they would be missed.

Perhaps the EAs of the future would work for the buyer, seeking the right place and negotiating the price down. Happens in the USA.

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Now, how about the solicitor's process - it just seems arcane, and odd. And lenghty. Could that be simplified?
I've been saying on here for some time that contracts like house sale and rental agreement should be a simple universal form with no small print. A couple of sides of A4 should be enough. There is no moral grounds for small print in any contract.
Assuming Tesco or others go for the same business model again the £199 fee (that Tesco proposed I mistaken remembered £99) would need 5,025 listings to take £1m in revenue
You've obviously never been to a Tesco.

It's not about advertising 5000 houses. It's about advertising 500,000 houses.

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Quite - if you have ever had a RICS report it always states that the report is guidance only and the buyer needs to seek additional expertise if required to satisfy themselves that the building is sound. None of the sharks take responsibility for any advice anyway.

Indeed as far as I can tell there is no-one looking out for the buyer in the house buying process. The EA works for the seller, the surveyor covers their backside and the solicitor never even sees the house - and no-one seems actually liable if anything goes wrong. So they might as well let anyone have a go - because frankly it's like the Wild West already.

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On the face of it at least, the property buying/selling landscape is going to change significantly.

Yes I agree there.

As Henry Pryor's twitter suggests, big retailers and banks will be able to act as "intermediary" agents now.

Henry Pryor ‏@HenryPryor

Proposals to amend Estate Agents Act will allow big retailers & banks to become 'intermediary agents'.

So I wonder if the banks will have plans to go into this big time, to try and help balance their books?

Or cynically thinking, have the government introduced this to help out their pals at the banks?

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Good memory:

"Shortly after launching, Tesco Property Market was closed[4]. It was deemed that Tesco were acting as an estate agent and therefore needed to comply with the Property Misdescriptions Act (1991) and would need to join the Ombudsman for Estate Agents scheme, which resulted in Tesco closing the venture."

http://en.wikipedia.org/wiki/ISold_estate_agents

So, is this potentially "it" as far as traditional Estate agency goes?

Edit being discussed on EAtoday comments:

http://www.estateagenttoday.co.uk/news_features/NEWS-FLASH-Government-to-reform-Estate-Agents-Act-and-ditch-PMA

If it is, this is going to decimate the UK high street like nothing else. So many towns in the UK have 1 grocer, 1 pub and 3 estate agents.

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Assuming Tesco or others go for the same business model again the £199 fee (that Tesco proposed I mistaken remembered £99) would need 5,025 listings to take £1m in revenue so ultimately this would have to be an addition area for an existing on line sales platform in order to keep costs down and make this profitable (excluding opportunity to flog home insurance or carry removal advertising etc). The potential profits don't look huge unless the (human) costs are kept low and they do lots of business. Mind you Tesco would probably be happier with an extra £500k profit now than when they were looking at this last.

As eBay are already big in 2nd hand car sales they could be another potential candidate as could amazon (less likely).

Or did Tesco plan to put loads of EAs out of business so they could use the former EA premises for more Metro stores :ph34r:

It's the commoditisation of the housing market. Once that happens, if you have good competition, fees will be rock bottom.

And so they should be. Estate agents relied on matching prospective buyers with sellers. The internet makes this function self-service, with a computer doing the servicing. Better than the estate agent.

Once a sector is commoditised you can expect making a profit to be tough, which then brings in people who deliver better services for less.

IMHO this type of offering needs critical mass. To get that you need an incentive. If the selling fees are 3K from an estate agent, you have no buyers and cut the price 10K this is going to look attractive. Cushion your loss plus the estate agent can't sell your house anyway.

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Didn't Google dabble with it too?

Loosening the law could open the floodgates ...

Streetview is the natural partner for this. Want to buy a house? Here is:

* images of the house you can move around to visualise the space

* images of the street

* images of all local amenities like the local park

* maps of all local conveniences / services

They already have the tech to do all the above. Question is, can they arrange the appointment? Very difficult skill, I guess estate agents have the edge.

Oh no, wait, people can read and there is google calender. Estate agents are +all+ dead if this goes through.

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So I wonder if the banks will have plans to go into this big time, to try and help balance their books?

Or cynically thinking, have the government introduced this to help out their pals at the banks?

No, this is simply an attempt to cut red tape in order to kick start a dead market.

EA's will have no form of recourse when Tesco etc start providing competition. That can only bring price correction, cutting out the hypers.

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No, this is simply an attempt to cut red tape in order to kick start a dead market.

EA's will have no form of recourse when Tesco etc start providing competition. That can only bring price correction, cutting out the hypers.

Totally agree. Right now prices are being held up by agents competing for business from sellers, which they do by promising absurd prices.

The incentive to distort the price up will be removed when the seller uses a direct "service" like the one Tesco planned. They will put down the price they feel is right.

How many people have decided to sell, been round 5 agents only to be told by Foxton's that their house is "worth" 20K more? That won't happen if this goes ahead.

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The Consumers Affairs Minister Jo Swinson said removing the "red tape" would "cut through bureaucracy and allow people to buy and sell more easily".

However, the Royal Institution of Chartered Surveyors (RICS) warned that home buyers could lose out from the change.

"Consumers could, perhaps unknowingly, be left responsible for undertaking their own detailed sale negotiations without the advice and guidance of a property professional," warned Peter Bolton King from RICS.

He said that buyers and sellers would find it tricky to tell the difference between genuine estate agents and websites which simply offer a list of homes, putting them at significant risk.

W, T and, indeed F? Agents, by definition, are there to represent the interests of one party in a negotiation. In the case of estate agency, it is the vendor who pays the agent to represent their interests and yet, somehow, this King twerp (does he think that using his middle name gives him more gravitas or something?) appears to believe that removing an agent from a negotiation is somehow going to cause the party who conventionally represents their own interests to 'lose out'? The agent is running a business where the more a house sells for, the more money they make - the current system is inherently loaded against the buyer who, more often than not, is not experienced in haggling and hard-nosed negotiation.

I can accept that a lack of an agent may be a risk to a vendor (although I suspect that in many cases it would be materially inconsequential or could even be better for the vendor as they may very well achieve the same price and not have any commission to pay) but to suggest that the removal of an agent may cause both parties to lose out either shows a complete lack of understanding of the respective interests of those involved or, more likely, is a bit of disingenuous propaganda.

"He said that buyers and sellers would find it tricky to tell the difference between genuine estate agents and websites which simply offer a list of homes, putting them at significant risk." Frankly, is there any difference anyway? When I sold my house in 2004, the agent took a few pictures, put them on a website, made a few phones calls and that was pretty much all they did. The notion that they somehow provide a form of risk mitigation is utter nonsense - I did my own research and decided my own asking price before even engaging an agent.

It's inevitable that the EA business will evaporate eventually with the advent of the internet - it's simply a matter of when. Repealing this act is just another step towards what will eventually become the norm - direct selling with a website sitting between the vendor and buyer as an advertising medium.

In my opinion, this represents a significant opportunity for RightMove if they can structure their business to allow private advertising alongside EA advertising. As time passes, one side of the business will grow while the other gradually dwindles away. I wouldn't be surprised to see Google get involved in this either - what company is better placed to facilitate individuals to directly market their houses?

Edited by Armitage Shanks

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Actually, thinking about it, I wouldn't be surprised to see Branson get involved in this either. His general ethos is to look for markets where he thinks there's an opportunity to run a business within it more efficiently than those currently doing so. What better examples exist today than this?

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If it is, this is going to decimate the UK high street like nothing else. So many towns in the UK have 1 grocer, 1 pub and 3 estate agents.

I was amused to hear someone from one of the credit reference agencies on the radio ages ago, talking about the metrics used to assign some sort of judgement on a town's relative affluence, for the purposes of scoring credit risk. One of the criteria which apparently indicated prosperity in their model was.....many estate agents on the high street.

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In my opinion, this represents a significant opportunity for RightMove if they can structure their business to allow private advertising alongside EA advertising.

They've already started to put the squeeze on EAs according to one of the other threads here. I expect they'll be moving into this real soon now – although it might go through low-cost intermediaries to begin with, possibly the companies doing EPCs, to provide basic house-selling templates and photo services. The guy who did my EPC was a former EA anyway.

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Yes. So the games back on!

EAs are one of the only few protected businesses left anyway.

ISTM that it's a bit perverse to claim that a piece of legislation which is designed to protect consumers creates a protected business.

I'm not sure that from the pov of the buyer that this change is welcome. There's going to be nothing to stop direct sellers adverting their properties with a tissue of lies wasting people's time doing viewings on unsuitable properties that they would have skipped if they had the truth in the first place.

tim

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They've already started to put the squeeze on EAs according to one of the other threads here. I expect they'll be moving into this real soon now –

I consider those two statements to be contradictory.

They are putting the squeeze on EAs by ramping up fees for unlimited postings, but private sellers only want to advertise a single property. If they introduce such an option the EAs will use it selectively instead of being ripped off for unlimited postings

tim

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  • 396 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% +
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      • up 5%



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