A property developer has hit out at corporate agents for “artificially inflating house prices” as she reveals the poor practices she has experienced and witnessed from sales and buying agents.
Lauren Atkins, managing director of property development and investment firm The Malins Group, has said regulation is needed in the agency sector as there is not enough protection for buyers and sellers.
She claims the primary objective of many residential estate agents is to maximise their own earning potential and there is nothing in place to stop them.
Atkins told Estate Agent Today: “Big corporates are actively encouraging cross selling. Furthermore, their bottom-line benefits from artificial inflation of property prices, created by the residential agents.
“I have witnessed residential agents ‘talking the market up’ for decades. This artificial price inflation has played a big part in the exponential increase in house prices. Many property developers, of course, actively encourage artificially maximising sale prices.
“But personally, I think that this is short sighted, as property outperforms every other asset class over time anyway. I see no place for driving people out of the market and curtailing the ability for younger generations to be able to get on the property ladder.”
It comes after her own sale fell-through despite no contact from her own agent.
She said: “Having undertaken thousands of property transactions, over decades in the industry, I have developed pretty thick skin towards estate agents.
“However, it is the unregulated residential sector that never fails to shock, and I have witnessed people's lives being adversely affected time and time again by bad practice. Successive governments have talked about this. We really do need to see some action.
“Last week it happened to me. I was told that the person buying my house was about to exchange contracts on another property, also being sold by the agent I had instructed. Despite the fact I was their client, I only found out by accident that contracts had been issued on another property.”
She has issued a complaint directly with the agent.
But Atkins said the Consumer Protection from Unfair Trading Regulations 2008 fails to protect consumers.
She suggests there should be a legally enforceable code of practice for the sector, minimum entry requirements for agents and a shift to a solicitor agent model similar to in Scotland.
Atkins added: “Most unqualified agents refer to their buyers as clients, with absolutely no understanding of the law of agency- let alone property law. These disciplines are understood by qualified members of the Royal Institution of Chartered Surveyors.”
She added that she recently witnessed a buying agent recommend an offer level on a property that was almost £1m more than two previously accepted offers.
Atkins said: “I very much doubt that the client was made aware that he was significantly overpaying and believed he was paying a fair price. The buying agent secured himself a higher fee.
“This practice impacts more than just the client because these inflated prices, subsequently set benchmarks in the market for all future transactions. One property novice overpaying based on the word of an unscrupulous buying agent, has artificially driven up the price future purchasers will pay per square foot in that area.”
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Strange set of comments.
We are all aware of cases of “overvaluing” to win instructions but agents (in the vast majority of cases) are employed by the seller and I can’t imagine many situations where the seller would like the agent to fail to maximise the price of their property.
Ms Atkins does however cite an example of a buying agent getting their client (the buyer) to pay too much - difficult to judge, there may have been special compelling reasons why the buyer wanted to secure the property.
Property values are not an exact science and (as we are likely to see in coming months) can go down as well as up - will Ms Atkins then be accusing agents of underselling?
The call for greater professionalism and regulation is a well worn path - most of us would welcome the former but many are sceptical of the latter as we have enough already - we need better enforcement.
I don’t see Government introducing ROPA or similar any time soon - competition over competency likely to remain.
Silly woman - ''a property is worth what someone is willing to pay for it'' - this takes into account many factors, not just price.
''even more'' regulation she wants? - she needs to change her career.
This is laughable, Would love to invite the developer to some viewings trying to sell re-sale help to buy apartments totally inflated because they were sold at ridiculously inflated prices when developers raised their prices as close to the £600k cut off for London. We now have over 20 properties sitting on our books because they cannot be sold... The amount of times I tell developers much lower prices to only see their developments come on at £50-£100k more is shocking!
To be fair many agents will stoop pretty low. Low stock = over value (lie), higher fee based on the high price, long tie in, then bully price down and sell for less and the owner pays more fee. We all know them, complete liars and costing owners a fortune.
"It comes after her own sale fell-through..." There speaketh volumes.
It's a fallacy that agents increase prices to earn a measly extra bit of commission.
Agents want sales. Far better to sell quickly at a reasonable price and move on to the next one!
The complaint voiced here isn't a fallacy, it is a reality because agents are working for and paid by the seller.
Unfortunately, prices are now completely out of reach of the many who work near where they need to live because the richest simply outbid them!
As Michael Day suggests the selling agent aims to maximise the price of the property being sold. This is less on account of wanting a larger fee as a percentage of the price paid. It is instead because all the agents is are acting for the seller and not the buyer. This is where and indeed why the market situation is going completely haywire!
To Rob D, "a property is worth what someone is willing to pay for it" only holds true if the buyers are aware of the methods used to bolster selling prices. As most buyers are blissfully unaware of what goes on behind closed doors, many agreed prices are not true market prices based on supply equalling demand in any way.
Martin Levine can see the housing markets are in a state of meltdown and selling agents can do nothing to address the main reasons because it is the selling agents themselves whom are the source of the difficulty here.
Proper agent does make a very good point, I am glad to say!
To Trevor Cooper, yes agents do want sales but if they were able to act with more business acumen they would increase their sales turnover severalfold and that's where my analysis of the problem comes in.
Just Google: The House Price Solution and you will see the complete explanation of how to correct this massive housing market breakdown.
I applaud Lauren Atkins of The Malins Group for being bold enough to tell selling agents the errors of their ways right here!
The best page explaining how to resolve all the selling agent criticism is:
Property Valuations in today’s Housing Market
“She claims the primary objective of many residential estate agents is to maximise their own earning potential and there is nothing in place to stop them” - This just isn’t true. The agents objective is to sell the property before their sole agency period ends. End of. That said, I don’t think agents should be allowed to “value” properties. What inflates the market is “I can get you X (insert instruction winning figure) for your property”. Essentially, the competitor amongst agents is what is driving up prices.
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