Estate agent guide
Estate agent guide
|Page 1: What an estate agent does
Page 2: How are agents regulated?
Page 3: Do I have to use an estate agent?
Hannah Shanks - Editor
What is an estate agent?
The term estate agent is used in the UK to refer to somebody employed to sell, rent or manage a property. Historically three different terms were used – estate agent for the person responsible for managing a landed estate, house agent for the person involved in letting or selling homes, and land agent for the person involved in land management. During the course of the 20th century, these duties were amalgamated into the umbrella term estate agent.
Modern estate agents bear little resemblance to the duties of those once employed to manage a large country estate. Nowadays, they usually work in companies, ranging from the small to the very big, selling and/or letting a range of properties in a particular area. After being approached by the owner of a property who wishes to sell or let, estate agents do the marketing of the property and negotiate with prospective buyers or tenants.
Do they charge for their services? How do they make money?
Residential sales estate agents make their money by charging the seller of a property a percentage of the selling price as their fee. The buyer of a property does not have to pay the estate agent. The exact percentage varies between agencies, but will generally be between 1.5 – 3% of the value, plus VAT, with Londoners paying more for estate agency services than the North of the country. As they claim their fee from a completed transaction, it is an agent's own best interests to sell a property and to sell it at the highest possible price. This is also a reason to be suspicious of an agency which quotes you an exceptionally low commission rate – with less financial incentive to sell your house, they might not do such a good job.
Estate agents who work in residential lettings may charge a property owner in different ways, quoting flat fees for providing various services such as drawing up a lease in addition to a charge which is paid once they have provided a landlord with a tenant. If they are also responsible for managing a property and collecting rent then they may charge a commission on the rent for providing this service. They will also generally charge the tenants for finding them a rental property. This is usually a flat fee, ranging up to about £250, which is described as an application or administration fee.
So what does an estate agent actually do all day?
A wide range of duties. Residential estate agencies usually handle either sales or lettings, although some do deal with both. An agent who works on sales will meet people who wish to sell a property and work with them to agree on a timescale and asking price. They handle marketing for the property which involves things like choosing where it should be advertised in order to target the most desirable potential buyers, according to the type of property, price and area. They meet potential buyers, discuss what they're looking for and take them to view houses that they think are suitable. When they succeed in finding a buyer for one of their properties they will generally hand over to the lawyers who handle the legal side of things. (Although estate agents initiate and manage the selling process, the legal side of the transaction is undertaken by solicitors or licensed conveyancers).
What training do you need to become an estate agent?
No formal training is required to register and operate as an estate agent; most people start by working their way up in an existing firm before taking on more responsibility or setting up on their own. The ease with which you can set yourself up as an estate agent (last year the BBC registered a fake agency, "Cheatem & Ripoff" in order to demonstrate how quick and easy it is to do) means it is possible for unscrupulous or incompetent individuals to give the profession a bad name.
The Office of Fair Trading prevents people who are undischarged bankrupts from becoming estate agents, although they can work for estate agency companies belonging to other people. The OFT also has the right to ban any individual they feel to be unsuitable – usually because of previous misdemeanours - from practising in the field.