Buyers often forget that when it comes to estate agents, they are not the customer. This is understandably confusing. After all, the agent is the person who finds the properties for you, shows you around and tells you how to make an offer.
Estate agents aren’t out there to trick you or confuse you, but they're also not there to be your friend. They are not there to make sure you get the best deal.
They are there to get the best deal for their client and to sell you secondary or referral services if they can.
Which means you need to advocate for yourself, ask the right questions and focus on what's good for you.
What does an estate agent do?
An estate agent is there to sell the property at the best price possible for the seller. They often will only get paid their commission if they sell the property.
That means they're going to be motivated to sell it, rather than it cluttering up their listings for too long. They will try to get the best price they can for it, as their commission is based on a percentage of the sale price.
This differs for online agents
who sometimes take an upfront fee instead. This often means the seller has to do things like hosting their own house viewings. This means that if you make an offer, you may end up negotiating directly with the seller.
Learning the lingo
Phrasing used in property listings can be tricky. From ‘petite’ or ‘homely’ as code for 'small', to ‘in need of work’ meaning ‘there are no floors or plumbing’. It can mean there are surprises when you go for a viewing.
If you’ve been looking at properties for a while, you’ll get a sense of the language used and the patterns that emerge.
Be sure to look at the terms and conditions of the property too. Things like ground rent, additional fees, leasehold charges etc should all be clear. If they're not - ask about them!
You can also check the EPC
(usually available on the listing) to get a sense of what your energy bills will look like.
Property valuations can be tricky, because they depend on so many factors. The type of property, local area and the state of the property market can all influence the valuation.
It’s also worth remembering that valuations can vary depending on who you ask. An estate agent will likely give a very optimistic valuation to a seller, because they want their business. A Chartered Surveyor is likely to give a more reserved opinion of the value.
When you make an offer, the price is always negotiable. An estate agent can be helpful in helping you know what to offer. They'll know about competing offers, what the seller's priorities are and how long the property has been on the market.
The more you know, the better placed you are to make an offer that gets accepted.
Revealing too much information
Be aware of the screening questions you're asked by estate agents - some of them might not be necessary. When you give away too much information, the estate agent has the upper hand.
In particular, don't feel obligated to answer questions about your incom or your mortgage offer.
Why? Well, imagine you make an offer of £240,00,0 but the agent knows you've been offered a mortgage of £270,000. They might hold out for a higher offer because they know you can afford it.
The estate agent only needs to know the price bracket you want to match you with appropriate properties. Don’t give too much information away.
This is why people can be wary of using in-house mortgage advisors or mortgage brokers attached to agencies. Officially, the two 'arms' of the business aren't allowed to share information. However, the person in charge of your mortgage working with the person trying to sell you a property can make some feel ill at ease.
Rules about presenting the property
Estate agents are legally obligated to be honest in terms of presenting the property and not hiding anything.
However, this usually comes down to asking the right questions. ‘Caveat emptor’ or ‘buyer beware’ means you are responsible for asking the questions about the property. Your estate agent can’t be blamed if you never asked if it was built on a sinkhole, or if the foundations aren’t up to code.
The simplest ways to find this stuff out? Ask if anyone pulled out of buying the property, and for what reason. Ask why the sellers are moving, and if the property has had any trouble selling. Ask if there’s anything on the previous surveys that are likely to cause problems.
If none of that works, you could just ask:
Is there anything you think I should know about this property that could stop me wanting to buy it?
Simple and effective.
Estate agent rules on offers
Estate agents must pass on your offer to their client. However, your seller may have said that they don’t want to hear any more offers after they’ve accepted one. So whilst you may think your offer hasn’t gone through, it may have just been too late.
This can often be a case when there is an auction for a property. This doesn't always take place at an auction house. Instead, potential buyers can submit offers over the phone and by letter, with a set deadline.
Some buyers don’t like this method, as bidding is anonymous so you don't know whether you made a close offer or not.
The buyer has to trust that there was another offer and push up their bid if they really want the property. If there's a lot of interest, you can end up paying way over the odds.
What to ask
Estate agents have a lot of information about the property. Ask them as many questions as possible.
How long has this property been on the market?
How many offers have there been?
What priced offers were rejected?
What is the seller’s situation (eager to move, already found a place, needs to move due to divorce, property inherited etc)?
When does the seller want to move out by?
How many viewings do you have for this property in the next few days?
Do you think the seller would be open to negotiation on the price?
These kinds of questions give you a sense of how much you can negotiate by, and help you make an offer in line with the seller’s expectations and needs.
They want to move quickly? Great, you’re ready with your mortgage in principle and no chain!
They’ve rejected the last offer because it was under the asking price by £25,000? How do they feel about a reduction of £10,000 instead?
No offers in four months and eager to move? You can make a strong case for negotiating the price down.
Referral fees have been in the news recently, but if you haven’t been house hunting you may have missed it!
When you are referred a service through your estate agent, they’ll get a kickback. These are usually added to your fee, meaning you pay more for the recommended service.
So whilst the agent says going with their recommendation will speed the process up, you'll be paying a premium. There's also no guarantee it will speed anything up. The agent should be working to their best ability with any solicitor you choose.
Consumers have the right to know if the company making the recommendation gets money for the referral, and how much it is.
You can ask an agent how much they make per referral, but it should also be clear on any paperwork.
Agents are also absolutely not allowed to make a deal contingent on you using their recommended services. You can’t be more likely to have your offer accepted because you’re using their mortgage broker, for example.
Advantages of an estate agent
An estate agent can be an advantage, as they’re often really keen to get the sale moving. This means they can advise the seller if they think they should lower their price in order to get the sale.
They are also a point of contact when it comes to the property. So if you need someone to answer a question about the property or to relay a message to the sellers, they can. They can also give you an indication of whether your offer is likely to be accepted. After all, a commission on a lower sale price is better than no commission at all.
When a deal is accepted, an agent will often go between the solicitors, buyers and sellers to keep everyone on track.
Access to an estate agent's specialist local knowledge can be invaluable. Always ask lots of questions and find out as much as you can about the property. Just remember that you're not the client.