Why the government should encourage online estate agents
Traditional estate agents are angry. But Paula Higgins applauds the government for wanting to encourage online agents
August 10, 2012
Do we actually need traditional estate agents? Or should they go the way of record shops and video rental chains? That is the question at the heart of an almighty row brewing between estate agents and government over what the Estate Agent Times calls “explosive proposals” which would cost estate agency jobs by encouraging homebuyers to bypass them totally. Agents are organising angry letter-writing campaigns to ministers. You can see why estate agents could be worried – but what about the homeowner?
The Department of Business, Innovation and Skills has a consultation closing today (August 10th) which is aimed at encouraging new business models by amending the 1979 Estate Agents Act exempting certain supermarkets and online estate agents from the regulation. The Act gives homebuyers protection from cowboy estate agents, and so at first glance you might think it a bad idea to water it down. Shouldn’t online agents be held to the same standards as traditional estate agents? Well yes – but only if they are offering the same services.
In reality, online agents often offer more limited services (for a reduced fee), and yet are still regulated as though they are full-service estate agents actively engaged in showing properties in person to potential buyers, accepting offers and conducting negotiations. Online agents are only exempt from the regulations if they merely publish advertisements (such as Rightmove). If they go beyond that – by for example, offering sellers a For Sale sign, or sending out property particulars, then they must be fully regulated in the same way as Foxtons or Savilles.
This is unnecessary, and reduces competition among estate agents. Which is precisely why the traditional estate agents are so worried. Their business model of having lots of very expensive high street outlets has almost completely ignored the internet (with some exceptions). This high cost model is paid for by the often hefty fees of tens of thousands of pounds that sellers have to pay. Increasing competition in the house-selling industry will be good for the homeowner, enabling them to get a wider range of services for lower fees. The government is right to encourage that by modernising out-dated regulations from the pre-internet age. But it must do it in a way that ensures that homeowners remain fully protected from cowboys, whether online or offline.