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Good Article On Eas

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Walls mart

Susie Steiner

April 28, 2006 12:58 PM


The news that Asda is to offer an estate agency service at half the commission charged by high street agents, has been greeted with derision on certain fronts. "You get what you pay for," claimed the National Association of Estate Agents. "Do they really expect to replace the service and expertise that your local estate agent supplies?" blustered Nick Goulding, of the Forum of Private Business. Service? Expertise? I'm sorry, could you run that by me again?

Anyone who has recently tried to buy or sell a house will know from personal experience that there is something rotten at the heart of the estate agency business -- a rot that has its basis in the way estate agents are paid, but is exacerbated by the sheer ferocity of the British housing market.

Any industry where employees are driven entirely by commission is subject to a kind of corruption at its core. When it comes to double-glazing, one might say who cares? But when you're talking about people's ability to afford basic housing, in a society which has a freakish 72% home ownership (compared to Switzerland's 36.5% for example), the decency and honesty of the buying and selling process goes beyond business principles - it's about quality of life.

It is not uncommon for estate agents to be on 100% commission: that is, they don't earn any money at all unless they sell, sell, sell and it is entirely in their interests to inflate prices to a maximum. They act for themselves first, the seller second, and the buyer not at all.

Estate agents are active participants in a kind of inflationary warfare that is actually resulting in a stagnant housing market and a very immobile workforce. People simply cannot afford to move -- they are horrified by the price of upsizing to house their growing family, or changing to that better location in order to improve their quality of life or shorten their commute. So they stay put. It has a terrible effect on the economy (renting nations -- ie most of Europe -- have a far more mobile workforce) and a profound effect on people's life choices.

Imagine, now, a world where estate agents are salaried -- like accountants, say. They offer their service to a range of clients: buyers and sellers alike. They are trained in valuing properties, using a combination of local knowledge, knowledge of the housing stock and economic variables. They are, if you like, a matching service, pairing up house-hunters with houses -- not unlike a dating agency. There would be no reason for them to pursue "sharp" practices, like putting their boards over those of their rivals. They might even decide, in the interests of customer service, to open on Sundays and late into the evenings.

It's never going to happen, but in the meantime, let's call a spade a spade. Estate agency has never been a service-based industry. It has no basis in "expertise". It is as sharp as hard selling gets. It's a world of teenage spivs in shiny suits driving brutal bargains at the expense of first time buyers and families.

The internet is finally starting to rub the shine off those nylon suits -- buyers will go and see homes for sale without any help of a third party, but they need an easy resource to find properties in their area. The internet is providing that resource. Indeed, one of the biggest growth areas is private selling on the internet -- hampered only by not having a sufficient critical mass of housing stock yet. Using these services, the cost of selling your house comes in at around £200 as opposed to thousands.

So Asda is wise and it has a good shot at changing the way we buy and sell homes. We should rejoice in this. If we all decided to ditch estate agents and sell privately or via low-cost Internet companies we might free the housing market from agents' stranglehold. And of course, save ourselves a few grand into the bargain.

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  • 301 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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