Most of my clients are cautious and considered when it comes to money. Many are buying a property with the aim of bettering their overall financial position and, for this reason, it’s a huge transaction that deserves plenty of careful consideration. This week, I was baffled by some choices one of my clients made. They had a house to sell in an excellent part of the South East, in a very sought after estate and within reach of one of the best primary schools in the area. They have been very lucky and were largely insulated from the recession. When it came time to sell, the comments from estate agents were incredibly optimistic and included phrases like “It will sell itself in a weekend”, and “We have dozens of ready buyers, and available properties on this estate are under huge demand”.
When discussing this with the vendor, and with this in mind, I proposed that they consider selling the property themselves. All they really needed was access to Rightmove and Zoopla, a free weekend and I would help them qualify and manage the offers at no extra cost. They were nervous about this prospect, not sure about what goes on behind the scenes of a house transaction. They felt that the experience of an estate agent was crucial in securing a successful move, and I might have agreed, had I not worked in an estate agents for three years.
The reality is very different. Estate agents market properties; they advertise them and bring buyer and seller together. That’s it. They don’t handle the legal side of things, the solicitors do that for you. Solicitors have years of qualifications behind them to ensure the transaction is robust and everyone know exactly what they are buying / selling. They don’t handle the finances; mortgage brokers and lenders handle all of that, again typically with a few years training and qualifications behind them.
So surely the highest costs would be the legal and financial aspects? Nope. The solicitors would cost just £600 to handle the sale and around £1200 to handle the purchase. The finances cost around £1600 to cover arrangement fees, valuations and booking fees, and all of these are inclusive of VAT. The brokers in this example, AALTO Mortgages, did not charge a broker fee as they are paid commission from the lender. The estate agents fees? £4800 plus VAT – a whopping £5760 for putting the property on Rightmove, doing three viewings and agreeing a sale within the space of a week! The solicitors, lenders and broker would then spend about six weeks handling the rest of the deal for them. The agents will likely not be involved apart from the odd chase-up to check everything is on track.
I can understand wanting the attention of an estate agent when houses might take months to sell, and where the agents really need to ensure everyone is steered towards your property to ensure it gets the best chance of a sale. I still don’t agree they are worth such staggering amounts of money though. What’s the alternative? Do we really need to use estate agents in areas of the country where property is in such demand that it’s expected to “sell itself within a week”?
Well, there are three important things to think about when it comes to marketing your house. Firstly, advertising. You absolutely have to get the property onto Rightmove, Zoopla and the like, as nearly everyone will start their search there. Secondly, there are viewings and arranging them can be tricky. Is the vendor doing them, is the agent? What can they do evenings, weekdays only, what if someone cancels or need arranging. It’s complex, tedious but incredibly important and there need to be a robust system in place and someone in control of it. Thirdly, qualification. There is an old adage in estate agency that says “All buyers are liars”. It’s harsh, but generally true. Everyone leaves out a little negative information when approaching a negotiation. They might not mention the bad credit they are worried might stop them getting a mortgage, they maybe haven’t quite secured enough deposit, or they might not have even sold their house! Everything about the buyer needs to be questioned, checked, and verified to ensure the vendors can go forward and spend money safe in the knowledge their buyer won’t intentionally let them down in the months to come.
The first two aspects can easily be handled using online services that grant access to Rightmove and Zoopla and will arrange viewings for you to carry out for as little as £600. The second part can easily be handled by your mortgage broker. What would be ideal is a service that combined these two aspects into one place. Mortgage brokers that can sell houses? Watch this space!
Your home may be repossessed if you do not keep up repayments on your mortgage.