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By Sarah Modlock
The number of properties being sold across the UK is the lowest since the Royal Institution of Chartered Surveyors (Rics) started in 1978 - down 52% in September year on year. London is the region with fewest sales per estate agent, at an average of just six in the previous three months. "As it stands, only those with significant finances are in a position to access the market," says Rics spokesman Jeremy Leaf. "The housing market continues to hold its breath and unless mortgage liquidity improves, the market is likely to remain a dormant beast for some time to come." The Bank of England's hefty cut in interest rates to just 3% should help clear some of the blockage. Despite this, homeowners can still expect to pay more to sell their property as estate agents admit to raising their fees to make ends meet. Estate agents typically charge between 1% and 1.5% of the value of a property, but some are increasing this to 2.5% to boost their earnings as house prices fall and sales decline. The Bank of England has noted the trend in rising estate agents' fees, warning in its latest regional trends survey that prices were rising across the country.
Downs and ups A survey by property consultants Hometrack reveals that house prices fell for a 12th consecutive month in September. The latest drop has pushed up the annual rate of decline to a record level of 6.2% for the year to the end of September. The Government's own house price survey notes that property prices fell by 3% in the three months ending September. Hometrack also recorded a further fall in the number of new buyers registering with estate agents; 5.3% less people starting the 'househunting' process in September 2008 compared with August 2008. A 1.5% fall in the number of people putting their property on the market during the month suggests a declining trend now estate agents enter their most barren season. The amount of time homes are taking to sell continued to increase to 11.5 weeks from an approximate 9 weeks in 2007. "Our fees have gone up because of the nature of the property market as it is - we are having to do more to find buyers for our customers," said a spokesman for London-based agents Kinleigh Folkard & Hayward, which has raised its average fee to 2% of sale price. "In this situation, it is inevitable that fees will have to go up - we have 50 branches across London and have had to raise our fee across the board." Birmingham-based estate agent Abbey Estates says it was also forced to increase fees as sales dried up. An increase from 1.5% to 2% in the estate agent's fee on the sale of the £228,000 average price of a detached home would leave the seller paying costs of £4,560, some £1,140 more than in the past. But customers should not take this lying down, according to campaigners, Which? "Consumers should not be forced to pay more to sell their home just because transaction numbers have fallen," said Mark McLaren, principal public affairs officer at Which? "We have long been worried about unfair terms in estate agent contracts. In the property downturn, consumers need to be on their guard, read the draft contract carefully, and make sure they fully understand its implications, especially regarding what fees may become due, and when." Pay more and paying twice As if paying more is bad enough, the Office of Fair Trading (OFT) has warned that home sellers could be paying twice. Sellers who sign a 'sole agency' agreement with an estate agent are liable to pay the agent their fee even if another estate agent ends up selling the property. The OFT says that with the growth of internet property retailers, it is critical that anyone signing such agreements understands the restrictions they place on them.
If you have signed a 'sole agency' agreement with an estate agent but sell your property through an internet property retailer who is in fact acting as an estate agent, you may end up paying two sets of fees. If you're using only an internet property retailer, or only one high street agent, you don't face this risk. Some internet property retailers claim not to be estate agents when, in the OFT's view they are. Internet property retailers who engage in estate agency work must be careful not to mislead consumers by claiming on their websites that they are not estate agents. So check very carefully before you sign up. DIY estate agency As financial belts are tightened across the UK, homeowners are taking a 'do it yourself' approach to moving home to help keeps costs down, according to new research from Lloyds TSB Mortgages. Over half of those surveyed by the bank admit they plan to undertake the removal process themselves to help save cash in the current climate. A further one in ten homeowners plan to adopt the role of estate agent and sell their property privately to avoid estate agent fees. According to the findings the average homeowner spends £7434 on their home move, with one in five spending over £15,000. "In the current economic environment it's not surprising that consumers are taking a more cost conscious approach to moving home," says Lloyds TSB's Alison Burns. "Shopping around for good deals and opportunities to earn rewards on your spend is always a good idea but there are some areas where you should not cut corners, such as legal fees and a thorough survey, as this could end up costing you more in the long run." Useful links: |
So you decide to take the plunge and sell your property. You've probably been weighing up the timing and the costs. But as the market slumps to a 30-year low and estate agents are selling less than one property each week, you need to be prepared for them to ramp up their fees.
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