Article from http://www.bbc.co.uk/news/business-22123316
For thousands of people the start of spring means the beginning of the house-hunting season.
It is also time to ponder one of life's unanswered questions: How do estate agents have the cheek to charge a king's ransom for selling a house?
If that is your view, have you thought of trying to sell it yourself?
This year that should become easier, as the government is changing the rules on selling houses over the internet.
Private sale websites that help you find a buyer for your property will be given new freedom to operate.
As a result, sellers could save thousands of pounds. But is it really a good idea, or could you end up wasting, rather than saving, money?
How does it work?
Selling your house DIY style means exactly that.
When you sign up with a private sale website, they will send you a "For Sale" sign with your phone number on it to erect outside your house.
Get used to the graft of banging the sign into the ground, because from now on the task is only going to get harder.
You take the photographs, you show potential buyers round the property, you organise Energy Performance Certificates (EPC's), and above all, you negotiate on price with any potential buyer.
In return for the website posting your photos, and matching you with buyers, you will pay anything from £300 to £600.
At the higher end of that price range, your property details will also be advertised on the big portals like Rightmove and Zoopla, which dominate the market.
Some sellers, like David Dexter, are ecstatic at the potential savings on offer.
"I think that an estate agent is a service that I can do. And I think it's a really great opportunity to get the house out to as many people as possible. And essentially, to save a lot of money," he explains.
He is selling a three-bedroom house near Reading in Berkshire for £265,000.
His local estate agent quoted a fee of around £4,800, including VAT.
But he has opted to pay £600 for a premium service with The Little House Company, one of many private sale websites.
If he manages to sell it, he will therefore save himself over £4,000.
Traditional agencies
Estate Agencies are having to defend their reputations like never before.
They point out that selling a house is only a small part of the service they offer.
"Selling the house is the easy bit," says Mark Hayward, of the National Association of Estate Agents.
"Much more difficult is dealing with the offer, checking the chain, and talking to lawyers," he says.
Many estate agents will try and establish whether potential buyers are who they say they are, and whether they can really afford to buy your house.
In particular they say price negotiation is a skill that many people think they have, but in reality do not.
Peter Bolton King, of the Royal Institution of Chartered Surveyors (RICS), says private sale websites offer a totally different level of service to that of an estate agent.
"There is a huge difference between paying a few hundred pounds just to put the property on to the internet, compared with all of the services that should be provided, and the security that should be offered, by the good traditional local estate agent," he told the BBC.
Estate agents are also members of the Property Ombudsman scheme, which provides for financial compensation should things go wrong.
Law Change
For anyone thinking of selling privately, the key question is how many houses have actually been sold through such websites.
Houseweb, which has been going for 17 years, claims to have sold 15,000 homes over that time.
But some of the other websites the BBC tried to contact were not so forthcoming with figures. One of the best known did not return our calls.
This may be because the current legal limitations prevent them operating effectively.
When the law that defines an estate agent is changed later this year, these private websites will be relieved of certain obligations placed on estate agents, like having to visit the property concerned.
The government hopes the greater freedom they then will enjoy will allow them to flourish, and the market to grow.
In the United States it is thought around 10% of house sales are carried out through private sale websites.
RICS estimates that the equivalent figure for the UK is currently around 5%, which suggests that de-regulation could make a significant difference.
Advice
The danger for sellers is that they may pay several hundred pounds to a private sale website, but still fail to find a buyer. If they then resort to an estate agent, they will have spent more money, not less.
One alternative is to use an online estate agency instead. They tend to have a larger reach, and so attract a larger number of potential buyers.
Ask yourself whether anyone looking for property in your area is really going to be able to find it on the internet.
Maybe do a web search in the area, and see which property site comes up first.
Or consider a private sale alongside an estate agent sale.
But be careful to get the agreement right with the agent, in case you end up selling privately, but still paying the agent.
"If you get the contract right, if you're absolutely up front with both sides, you could advertise privately, but then you can also work through an estate agent as well," advises Kate Faulkner of the website Propertychecklists.
"But you need to get the contract absolutely watertight to make sure you don't end up paying both fees."
Even if most house-sellers fail to embrace the new websites, the forthcoming deregulation could still end up changing the market.
Some believe that estate agents may be forced to introduce fixed fees for their services, rather than taking an average 1.5% commission.
That could be particularly advantageous for those with larger properties, who historically have faced steeper bills from estate agents.
Information taken from https://www.gov.uk/government/publications/2010-to-2015-government-policy-making-it-easier-to-trade/2010-to-2015-government-policy-making-it-easier-to-trade#appendix-1-buying-and-selling-property-onlineIssue
Some of the laws designed to protect consumers are now so out of date that they’re hampering economic growth.
The government wants to simplify or repeal these laws without losing any that give consumers the protection they need.
Actions
Estate agents
The Estate Agents Act was written before the internet existed. Parts of the Act made it difficult to run some online property sites - the kind that puts buyers and sellers in touch with each other, but don’t offer personal advice. We have changed the law to make trading easier for this kind of online business.
The amendment to the Act came into force on 1 October 2013.
Street traders
Some of the laws covering street traders date from the 19th century. This makes some of them unfit for the 21st century and they need to be updated. Additionally, new European regulations say the UK’s street trading laws are too complex. We need to make some changes to the law for street traders as a result.
We’ll be making these changes in summer 2014.
Background
A 2010 survey by the Office of Fair Trading found that, although many buyers use the internet as a way of looking for property, there wasn’t much choice for consumers who wanted to buy or sell a home without using an estate agent. The government felt that there was space in the market for new players to provide online property marketplaces for private sellers, as long as we made some changes to the law.
Laws on street trading and pedlary are part of retail law. This means they come under the EU’s European Services Directive. As a result, we have to change any street trading or pedlary laws to meet the directive.
Who we’re working with
Estate agents
The consultation ‘Encouraging New Business Models: Proposal to Amend the Estate Agents Act 1979’ closed in August 2012. We published our response on 13 September 2012.
We had over 400 responses from 271 different organisations and individuals. These included traditional estate agents, owners of online property sites, the National Federation of Property Professionals and Trading Standards officers.
Street trading
England, Wales and Northern Ireland jointly consulted on street trading laws from 23 November 2012 to 5 April 2013 and are now analysing the responses.
‘Street Trading and Pedlary Laws: Consultation on Draft Regulations to Ensure Compliance with the Requirements of the European Service Directive’ asked about:
- a new definition of what a pedlar is
- allowing people under 17 to trade as pedlars
- letting councils grant street trading licences for longer than 12 months
- taking away some local authority powers for refusing or revoking a street trading licence
The consultation also contains a proposal to repeal the UK-wide Pedlars Acts to comply with the European Services Directive.
Appendix 1: buying and selling property online
This was a supporting detail page of the main policy document.
Government consulted on amending the Estate Agents Act (1979) and repealing the Property Misdescriptions Act (1991).
We proposed amending the Estate Agents Act (EAA) because the rules governing estate agency work were defined before the internet existed resulting in the Act possibly stopping some online ‘property introduction sites’ developing as a market sector.
How did the law hold back property introduction sites?
Traditional estate agents usually offer clients a range of services. These can include preparing information about a property and giving advice.
Property introduction sites are different from high street agents as they don’t usually offer these kind of services. Instead, they act more like dating agencies - a way for 2 people (a buyer and seller) to get in touch with each other.
The EAA treated estate agents and property introduction sites the same. We considered this unfair to some introduction sites offering a very limited service. It did not involve giving advice or involvement in the property transaction, because complying with the law may have involved them in unnecessary expense.
Removing online property introduction sites from the Act
Taking the consultation responses into account, we amended the EAA to remove certain property introduction sites from the scope of the Act. We believe this will make it easier for them to do business.
Any online site that offers typical estate agency services, such as one-to-one advice and taking photographs of the property, will still be covered by the Act.
We believe that these changes will create opportunities for growth and competition, as well as more choice for the consumer in the market.
Why we have repealed the Property Misdescriptions Act (PMA)
The PMA said estate agents must check the accuracy of the property details they give to potential buyers.
Other laws have now largely overtaken the PMA. The Consumer Protection from Unfair Trading Regulations (CPR) and the Business Protection from Misleading Advertising Regulations (BPR) offer a wider range of protection. They’re also more flexible.
Changes we have made
The amendment to the EAA and repeal of the PMA came into force on 1 October 2013.
Evaluation
The law changes which occurred in 2014 above have made the process of buying and selling houses online much easier. This allows utilising the internet to put the house buyer and seller directly in contact with each other privately without the use of an estate agent. The laws stopping this process were put in place before the internet was invented making it very had to use the internet effectively when selling houses privately.
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