Estate Agents – are they a waste of time?
Well it’s Tuesday 26/07/2011 and 11:06 AM and we have recently returned from viewing a new buy to let property. We just spent some time reviewing the home inspection report, looked at how much previous properties in the street have sold for and I’ve agreed with my wife that we want to make an offer on the property.
Whilst I’m not sure at this moment exactly how we plan to finance the purchase, we don’t want that to get in the way of a lucrative buy to let property deal.
Unfortunately, we have just received the following email:
“Hi Just to let you know that my client has accepted the offer on her property. Sorry, I will keep you in mind if we get any other flats in the Street for sale.”
So this has wasted all our effort this morning. We let the estate agent know we were interested in the property, but less than 70 minutes after showing us the property, they had accepted another before we even got chance to make an offer. Why was this? We surmise the following:
- The property was for sale for around £50,000 pounds. The Estate Agent commission tends to vary from around 1% to 1.75%. So at 1% commission they are due to earn £500 in sales commission. If we were going to offer say £51,000, then whilst this extra £1,000 would be a great improvement in the sales price for the seller, but the estate agent would only earn an extra £10 ! Therefore there is nothing there to motivate the estate agent to hold out for a slightly better price from us.
- The property had been for sale for some time already and the owner had already moved out to a new property in Edinburgh. They had already dropped their asking price by £10,000 to try and get a quick sale, so with a firm offer from another purchaser, compared to a potential offer from us, then they would probably go with the existing offer. (A bird in the hand, is worth 2 in the bush and all that…). It probably didn’t help having a commission based sales agent advising them – see reason 1 above !
Our major recommendation from this property buying lesson is not to use an estate agent to sell a property in Scotland. We have sold 3 homes so far with no estate agents and have saved a fortune in fees. A decent property and a sign in the garden and window might be just enough to safe a fortune in Estate agent fees!
So what is the main difference between a Solicitor in Scotland and an Estate Agent?
Solicitors are qualified to do all the legal work required to transfer the ownership of the property to the people who are buying it, whereas estate agents are not qualified and basically just act as a shop window or advertising channel for the property
In Scotland, many solicitors also have an estate agency department which does the estate agency part of the work and also a legal department which covers does the legal aspects of the sale. See ESPC and GSPC for examples.