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We will all be watching BBC’s Whistleblower in terror tonight as undercover journalists lift the lid on estate agencies. Only 1 in 10 Britons trust estate agents , and Whistleblower’s will do little to improve this opinion. While working undercover as estate agents in London’s busy property market, Anna Adams and Emma Clarke investigate the horrifying tactics that are used by agents throughout the country. Most crucially Whistleblower reveals what agents do for their fee, are they really providing value for the £4 billion that they earn in commission each year in the UK? Whistleblower exposes the unscrupulous lengths that unregulated estate agents will go to, in order to maximise their profit, during one of the most stressful periods in an individuals’ life.

Additionally, a report out today entitled “Estate Agents in Space” (please see below) by James Roper, Chief Executive of the Internet Monitoring Retail Group suggests a new breed of online Property Sales Websites as the future. The report states that 38% of sellers in the UK felt that their agent had offered poor value for money, as agents and vendors incentives are misaligned. The new breed of online Property Sales Websites enable consumers to bypass traditional estate agents that will empower consumers and save them billions of pounds. www.first4sale.com is one such Property Sales Websites, which has already helped thousands of people secure successful and profitable sales, without charging them extortionate commission fees. Vendors can sell through first4sale for as little as £44.99, the money saved on commission can then place buyers in a more lucrative position to purchase their new property or secure a quicker sale. Crucially first4sale allows vendors to control the sale of their own property; by effectively cutting out the middleman this will be a more smooth, hassle free transaction. One such vendor discovered the benefit of Property Sales Websites with first4sale

I advertised the sale of my London apartment through first4sale.com
at a very difficult time of the year (just before Christmas). I was
delighted at the efforts made by the first4sale team who bent over
backwards to help get the apartment in front of as wide an audience
as possible by way of an internet advertising campaign which only
cost £69.99. My apartment sold in less than 3 weeks! If this is
possible using the internet, it is difficult to see why anyone bothers with
traditional estate agents where the selling cost would have been in
excess of £2,200! (SP, London)

For further information on www.first4sale.com or to speak with someone from the website please contact Neill Mabbott, Rachael Ross or Stacey Blevins at Alison Jameson Consultants on 0131 621 7210 or email neill@ajc.demon.co.uk, rachael@ajc.demon.co.uk or stacey@ajc.demon.co.uk.

ESTATE AGENTS IN SPACE

A new breed of online Property Sales Websites empower consumers and will save them billions of pounds; unable to compete, half of today's 12,000 traditional estate agents are set to disappear within five years.

The internet has revolutionised the trading of everything from tickets to televisions; and yet 95% of houses are still sold through traditional estate agents. The traditional estate agency industry has so far kept internet competition at bay by supporting heavily-promoted online listings services such as Rightmove.com, Propertyfinder.com and Primelocation.com that simply advertise property on behalf of estate agents, yet do not allow private individuals to list their own properties. Now property sellers have both a real alternative to using an agent and a better way to market: a new breed of low-cost Property Sales Websites that connects buyers with sellers then supports them throughout the sales process, is about to revolutionise home buying.

An estimated 1.4 million homes worth £224 billion are sold in the UK each year, attracting commissions worth more than £4 billion for estate agents. That commission would pay for 25,000 houses at today's average price of £160,000, so it is hardly surprising that the sector has attracted a superabundance of practitioners over the years.

Four factors are combining to trigger an overdue implosion of the traditional estate agency market: agents have become far too expensive; there is widespread lack of consumer confidence in the real estate industry; the way agents calculate their fees creates a conflict of interest, making it unlikely that the vendor will get the best price for his property; a new breed of internet-based property services largely remove the house vendor's need for an agent.

With most buyers now looking online first, the internet is the obvious place to introduce buyers and sellers to each other. According to the leading US property website, Realtor.com, 77% of American home buyers use the internet to search for a property, while in the UK, 70% are estimated to do so. Britain's largest property website, Rightmove.co.uk, says it gets 10 million visits per month. Currently all big property websites are either controlled or heavily influenced by traditional real estate industry players whose aim is to maintain the status quo by using the internet purely as a marketing channel to feed sales into agents' offices. These two sites are no exception: Realtor.com is the official site of America's National Association of Realtors; Rightmove is jointly owned by three estate agency chains - Halifax, Countrywide and Connells - and insurer, Royal & Sun Alliance. Rightmove, which lists 35% of the million homes offered for sale around the UK, makes its money by charging a flat fee of £250 per month for each office in an agent's chain to list all of the property on its books. This proposition has proven to be an easy sell in a market where some agents spend ten times that amount every month on local newspaper advertising. Rightmove reported that its revenues almost doubled in 2005, to £18.2 million, and its shares soared on its recent London stock market debut, valuing the six-year old dot.com at £425 million.

But there are fundamental flaws in the way the estate agency industry operates that will not be fixed by gluing a web front end on it. Both the Office of Fair Trading and the Consumer Association's Which? have produced damning reports into estate agent practices, confirming that the market has become outdated and complacent, with commission charges completely out of proportion to the service provided. The Office Of Fair Trading reported that more than 20% of both buyers and sellers had a serious problem with an agent and, amongst sellers, 38% felt that their agent had offered poor value for money. The Which? report found that "Consumers entering the home-buying or selling process are substantially disadvantaged by the way estate agents currently operate." Unlike most of the rest of Europe and Canada, the USA and Japan, the sector has no compulsory regulator - just 36% of UK agents subscribe to the only voluntary one. With no exams to pass and no licence to lose, there
is little effective deterrent to prevent bad practice.

Price comparison in the sector is weak. Widespread use of 'pricing points' of between 1% and 4% to determine the agent's reward for selling a house ensures that fees rise in proportion to sales values, and this does not reflect the costs incurred. House prices have more than doubled during the past decade, and so have agent's VAT-attracting fees, resulting in agent's costs of almost £3,000 on an average UK property, and many vendors paying £5,000 or more. No end is in sight to the sector's continued growth: over the next twenty years there is going to be a massive surge in the number of UK households, according Office of the Deputy Prime Minister, caused largely by a sharp rise in the number of people over 55 living alone, forcing prices upwards.

Most sellers assume agents know how to 'maximise the house's value' and will get them the top price, but this is an illusion as the US economist, Steven D. Levitt, points out in his book, Freakonomics. As the agent only gets paid if a sale is completed, and his incentive is based on the sale price, he is therefore motivated to complete as many sales as possible, as quickly as possible, whether they are at the best available price or not. For example, on the sale of a £160,000 house, at the average commission rate of 1.5% the estate agent earns £2,400. A little extra effort, patience and advertising might add, say, £5,000 to the sale price, but while this would put £4,925 more in the seller's pocket, the estate agent's share is a mere £75 in commission. So the agent's and the vendor's incentives are misaligned. The agent's share of a better offer is too small to encourage him to do a lot of extra work in order to get the seller the maximum sale price. Levitt proved this through a study which showed that when estate agents sold their own houses they marketed them for an extra ten days and sold them for an extra 3% or more. With this in mind, a recent comment by a Rightmove spokesman is telling: "Properties are selling more quickly and stock levels declining. On average property took 81 days to sell - down from 94 days the previous month. Strong start [to 2006]."

Another reason people sell through estate agents is for the valuations they provide. Valuing property is not a black art, and the internet now gives consumers easy access to all the information they need to accurately value their own property. At Nethouseprices.com you can browse for free all residential properties sold in England, Scotland and Wales since 2000: the property address, which you can search by postcode or address; the sale price; the date of completion. Mypropertyvalue.co.uk offers a free valuation of property - you fill out an online form with the property details then receive an email with the valuation. Another useful house price calculator can be found at www.nationwide.co.uk/hpi/calculator.asp Or you can visit www.hometrack.co.uk where from £19.95 you can use the same system used by mortgage lenders to get an automated valuation, as well as information on the neighbourhood price range, current values, price trends, historic sales prices and market t
rends.

Contrary to popular belief, an estate agent does not value your property but gives you an estimation of what, in his opinion, it could be worth within the marketplace. Agents valuations may differ widely, and often by thousands of pounds. It is all too common to hear of agents offering a high property valuation to secure the business, then suggesting lowering the price after failing to secure a sale. Only qualified surveyors / valuers can give a valuation that will be accepted by a mortgage lender.

Estate agents are the butt of many a dinner party joke, but the estimated 24,000 homebuyers who complain each year about poor service levels are not laughing. At last, Property Sales Websites are beginning to change the rules of the game by enabling consumers to bypass agents, and rapidly growing numbers of alienated home sellers are embracing them. Tens of thousands of properties nationwide are already available via Property Sales Websites; the more people use them, the better they get, because the bigger the portfolio of property they offer, the more attractive they become to buyers and sellers, thereby creating a virtuous spiral.

Property Sales Websites break the business mould for selling houses by enabling vendors to take control of the process and thereby increase their chances of achieving the best price while saving a lot of money. There can be a lost more work involved for the do-it-yourself vendor in a private sale, but the rewards are high: no agent will be as motivated as the vendor to get the best price and ensure that the transaction proceeds as smoothly as possible; somebody selling a property for £300,000 can easily find themselves £5,000 better off for having used a Property Sales Website, by avoiding agents' fees.

Not all Property Sale Websites are equal. Internet sites that provide property marketing services have been around for several years: there are now a couple of hundred of them; many are home-spun operations that provide little or nothing in the way of additional service or support.

The new breed of Property Sale Websites is different, providing a complete alternative to the conventional estate agent. They recognise the broad range of support services that DIY home sellers may need, and cater for them, guiding vendors through all of the associated processes. In particular, they appreciate that sellers need more than the internet alone can provide, and so offer fully integrated services for local advertising, professional erection of 'FOR SALE' boards outside premises to attract local interest, sending out property details by post as required, personal telephone contact with buyers and sellers if required, follow up liaison thereafter if needed, introductions to mortgage providers, etc. Basic costs are minimal, starting from as little as £50, but if the vendor needs more assistance with, say, finding information, liaising with solicitors or managing a chain, then help is at hand at a predictable price.

The DIY seller has to conduct their own viewings, but this is often the case anyway, even when using a traditional agent, and most buyers prefer to deal directly with the vendor, who generally knows their property best. Technology and automation can do much to help the home seller, and Property Sales Websites are likely to have the best available - such as virtual tours, online diaries, SMS and email alerts as soon as viewing requests or offers are received, and sophisticated monitoring that lets sellers see how effective their chosen level of advertising and offer price is.

The toolkits that good Property Sales Websites provide generally include guidance, such as tips on showing property and dealing with offers, and links to the huge array of relevant information that is available online, about everything from conveyancing to council tax - mortgages to removals. Most suppliers now advertise online, so it is easy for consumers to find whatever additional services they may need, whether it is a virtual tour photographer, independent financial advice, or temporary storage. And the Government is introducing Home Information Packs to improve the process of buying and selling a home, which will further reduce the need for a traditional estate agent: from 1 June 2007 all home owners in England and Wales will need to arrange for a Home Information Pack, a sort of mini property survey, to be prepared before putting their homes up for sale.

When the vendor is ready to sell, they should instruct a solicitor to carry out the conveyancing, and Property Sales Websites will help here too, by recommending specialist property solicitors, who increasingly are prepared to work at fixed cost.

Nicholas Gill, director of one of the most innovative Property Sales Websites, first4sale.com, said: "We recently saved a family £14,000 in estate agent commission when they sold their property through first4sale.com, selling within 5 weeks! The cost to sell was just £99.99, and their first viewing request came within ONE HOUR of taking our Online Marketing Campaign. Another satisfied customer told us that after eighteen months of failing to sell the property through conventional estate agents, they received an offer within weeks of listing it on first4sale.com: the substantial saving of the agent's fee allowed them to pass on the saving to the buyer and enable the sale."

Estate agents are hired by people who probably have little experience in the property market, are typically making the largest financial transaction in their life, may have enormous emotional attachment to their home, and are torn by two pressing fears: that they will sell their house for far less that it is worth or that they will not be able to sell it at all, by setting the price either too low or too high. These vulnerable sellers rely on the knowledgeable agent as their ally to find the golden mean, and yet, as we have seen, the agent's reward scheme - based on a percentage of the sales price - biases them heavily towards seeking a quick easy sale rather than the best price. So it turns out that it is in the agent's best interests to persuade the seller that any semi-reasonable offer is in fact a great offer that only a fool would refuse.

As well as trust, buying and selling houses requires the management and exchange of huge amounts of information. The internet facilitates information handling better than anything else, so it is inevitable that the web will become the primary channel for property sales and associated services. The Government recently announced that all property conveyancing in England and Wales could be carried out over the internet by 2010, by which time the web will have had a profoundly beneficial effect in modernising practices across the whole of house buying and selling.

The estate agency industry has so far retained a stranglehold on the property market, but is about to feel the disruptive effect of the internet on its cosy world. Estate agents' current, progress-defying use of internet marketing to prop up their outmoded way of working will be swept aside by the strong web-savvy, consumer-focussed competitors that are now poised to burst through. In a few short years, the serried ranks of property offices that line both sides of every high street in the land will be gone, and few will mourn their passing. Some of the more professional estate agents will evolve and survive, though the move to a viable low-cost operating model will be beyond the reach of most, for whom the new reality will be a space-time discontinuum.


James Roper, Chief Executive, IMRG - the e-retail industry body

For further information on www.first4sale.com or to speak with someone from the website please contact Neill Mabbott, Rachael Ross or Stacey Blevins at Alison Jameson Consultants on 0131 621 7210 or email neill@ajc.demon.co.uk, rachael@ajc.demon.co.uk or stacey@ajc.demon.co.uk.

This press release was distributed by ResponseSource Press Release Wire on behalf of AJC93 in the following categories: Personal Finance, Business & Finance, for more information visit https://pressreleasewire.responsesource.com/about.