Buying a house without estate agents – Does blame really lie with estate agents?

Buying a house without estate agent support might be riskier than you think.

There are many elements to a property purchase and sale. Much within our control and much of it not. However, with experience and a keen eye, most of it can be negotiated and resolved, and with a seasoned expert, such as a buying agent, at your side, almost all of it can be avoided altogether.

So who are the players involved in a property transaction? You might be surprised at how many there are, the roles they play, and how your trust just might be misplaced.

House buying without an estate agent might well not be as good an idea as you think!

And then there are the outside, uncontrollable factors such as the media and shifting government policy.

Like with every profession, there are good and bad staff. The bad ones will indeed suffer from greed, poor time management, a lack of respect for the clients, poor communication, be overly pushy to clients, buyers and solicitors – but most will not.

Sadly, you can’t choose which agent to buy a house through – the house is on with the agent listing it. But as a seller, you can choose which agency to sell it through and as a buyer you can employ a buying agent.  And here is another problem. The current system creates competition between agents to ‘bag’ the best houses. So, many will overvalue the home to win the instruction. But this is easy to get around.

Sadly but understandably, most sellers are just as greedy. Rather than examining the justification for each valuation given, most sellers will accept the highest price provided, meaning that the agents are encouraged to overvalue again. So I ask you, who’s at fault here; the agent for overvaluing or the seller’s greed?

Conveyancing Solicitors

Let’s start by splitting this profession in two. For property, there are two main types that you’ll come across, a qualified solicitor and a licenced conveyancer. Generally, but not always, the solicitor’s firm will be more expensive, and similarly, you will most likely be assigned an individual in a solicitor’s firm who may have an assistant.

My personal experience with a conveyancing firm is that their clients tend to be a case number rather than an individual. To be clear, I am not saying that one is less suitable than the other. However, there are two types to consider here.

Let’s talk averages. Regarding solicitor paid hours, I am advised that the average property conveyance takes between 3 and 5 hours. So if you are paying your conveyancing firm less than £500 for your transaction, you might want to think about why!

What is absolutely true is that unless you have agreed to a ‘no win, no fee’ contract, your solicitor will be paid whether the transaction completes or not. Perversely, should the sale not go through, the chances are that you’ll instruct your solicitor again, and then you’ll pay them again. Perhaps not as much, but you’ll pay.

So what’s their incentive to ensure that the transaction happens? In short, nothing. Instead, their motivation is to do the best they can for their client, and if that means advising them not to buy the house of their dreams, then that is what they will do.

Thirty years ago, my experience was that a conveyancing solicitor, when encountering a problem, would seek to find a way to resolve it. Today, I have heard it said many times that instead, they seek to highlight the problem area and absolve themselves of any liability. Perhaps this isn’t bad, but that’s not the point of this blog; the point is to discuss who’s at fault when a sale falls through.

As an agent, it was part of my job in acting for my client to be informed at all times as to the progress of the transaction. However, calling a solicitor was often a challenging task. We were considered a nuisance, and any information provided was done in a fashion that got us off the phone as fast as possible, usually without the fullest answer. So how were we to keep both sides informed? And yet, guess who got the blame when we didn’t know the answer?

I once asked a solicitor if local authority searches had been requested as the sale had been going on for too long without correspondence. ‘Yes.’ I was told only to call the local authority to be informed that no such request had been made. So I called the solicitor back only to discover that what he meant by the searches having been ordered was that he had put a letter on a Dictaphone for his assistant to type up!

Solicitors are, more often than not, really busy. They take on many cases and have to shuffle them around. But, again, my experience is that many a solicitor will write a letter or email and not follow it up, leaving it until they receive a reply or a chase from ‘the annoying’ estate agent. Clients generally do not think to chase their solicitor, instead preferring to believe that they have their complete and unequivocal attention at all times. That’s where a good and respected buying agent can really help. With a full knowledge of the transaction, they can help the agent ensure that all the information is properly communicated.

At Rowallan Exclusive Property Buying Agents, we have built up relationships with some excellent solicitors who will be available whenever you need them, who will visit the property in question to help them understand it, who will work long into the evening and most importantly, will find a solution to the problems, ensuring that you get the house you’ve asked them to buy for you!

When you have a good one, hang on to them and don’t let them retire. Of course, they probably charge more than many of the piers, but there’s a good reason for that.

Losing your purchase or sale because your solicitor is too busy and then paying them a second time isn’t sensible. Instead, get and pay for a great one and only pay once.

Mortgage brokers

Mortgage brokers are salespeople. You reach out to them with your needs, and they try to find you the best product for your situation. So what’s wrong with that, I hear you say?

On the surface, absolutely nothing. But when you look more deeply, then it’s not so straightforward. Take, for example, the commission they get for each product. Is the advice given to you based on that or their earning potential? What would you do, look to increase your take-home pay or provide the best advice?

Did they look at the whole market for you, or did they look at their favoured products? There’s a world of difference between a tailor-made mortgage and one that comes off the shelf, and anyone buying a more expensive house will know only too well the savings that can be made by picking the right mortgage advisor.

I believe the brokers I have used in the past have given me the best advice, but as I said above, there is good and evil in every profession. A great broker will keep all parties informed, as knowledge and communication are the backbones of every transaction, and a great buying agent will ensure that the advice being given is right for you.

However, when it comes to ensuring that the exchange can take place, your broker needs to ensure that you have your mortgage agreed upon and that there is sufficient time to complete the sale before the offer expires.

I’ve seen it happen, where a mortgage offer has been made but is then withdrawn due to changing rates or policies. They, their client and often their client’s solicitor are made aware of the imminent nature of a change. Still, to avoid nervousness in the transaction, this information is withheld from the agent and/or the chain (other properties involved within the transaction), which, had it been known about earlier, would have allowed the seller to re-market or negotiate alternative terms.

Building surveyors

Disclosure. Following my degree, I trained as a rural surveyor and took my RICS (Royal Institute of Chartered Surveyors) exams in 1996. I have lots of contacts and surveyors that I would consider friends, but do they cause sales to fall through?

Absolutely. Again, as I mentioned above, in my 35 years in this industry, I have seen things change out of all recognition. It used to be that a surveyor would cover it all. Their survey could be relied upon, and terms in the summary, such as ‘typical of a house its age’, would be the norm.

Surveyors would care more about talking you through the survey (there are several types of survey to consider) and based on their findings, help you understand what you might or might not need to do, with the prices suggested for remedial work being well within reason.

Whilst they report on what they see, they also make multiple suggestions for additional surveys from trained specialists, from checking the wiring to establishing that the drains are clear. This, of course, lengthens the whole process raising doubt over doubt. And when the remedial cost suggestions come in, more often than not, they are hugely inflated, further exacerbating the problems on a house that is ‘typical for its type.’

Whilst they report on what they see, they also make multiple suggestions for additional surveys from trained specialists, from checking the wiring to establishing that the drains are clear. This, of course, lengthens the whole process raising doubt over doubt. And when the remedial cost suggestions come in, more often than not, they are hugely inflated, further exacerbating the problems on a house that is ‘typical for its type.’

Fortunately, whilst a first or second-time buyer might find this report scary, an experienced buyer or a buying using a buying agent, will usually understand its shortcomings. But this regularly leads to the next problem. Gazundering.

Unless the sellers get their counter survey, the buyer will often use their survey to knock money off the agreed price. This will often include items considered when negotiating in the first place; therefore, the buyer is looking to knock money off the price for the same thing twice.

This sort of practice erodes trust, breaks any good-natured faith in the transaction and again, the burden of resolution is placed on the shoulders of the estate agents to fix. But who’s really at fault here? Let’s not forget that surveyors, like solicitors, are paid whatever the outcome.

Unrepresented buyers

Buyers come in many forms. Cash, cash/mortgage, first-time, experienced, wealthy, or less so, young or old and chain (related transaction) or no chain. Some honest and some not. In my experience, the most trusted by agents and sellers alike are those that have employed a buying agent.

However, they all have one thing in common; the intention to purchase a property.  As an agent, my experience with unrepresented buyers was that they were super communicative when they wanted a viewing or to make an offer. Yet when the agent wished to feedback or to discuss progress, buyers tended to be much more reserved.

Unrepresented buyers also forget or intentionally withhold vital changes to circumstances. For example, a problem with their mortgage or related sale is critical information that can affect a purchase. If passed on, the seller can make a reasoned decision as to whether to continue as agreed or to re-market. Often, if the agent is informed at the earliest possible stage, they can find a solution. But when the information comes too late, it’s too late.

Buyers will understandably pay higher credence to their solicitor’s advice than the agent, forgetting that the agent may have a far more profound and holistic understanding of the emotions involved.

For example, there are many circumstances where a buyer’s solicitor seemingly took too long to exchange. Warnings from the seller via the agents are issued that unless the exchange happens by a certain point, the seller’s frustration will cause the sale to collapse. The buyer’s solicitor may advise that the buyer pays no heed to the agent. Yet, when the buyer is finally ready to exchange, the agent may have, under instruction, found an alternative buyer.

Or, the buyer may instruct their solicitor to refrain from informing the agents of a possible delay to their previously agreed completion date, causing problems for the seller and the agents to resolve.

Buyers and sellers tend to ask their agents questions that are often better asked of their solicitors. This is often down to finding it easier to get hold of the agent and expecting them to resolve the situation. However, I often found solicitors even making the same suggestions, probably because they were too busy.

Unrepresented buyers will often forget or even deny to themselves that they do not have whole market knowledge, instead relying on the murmurings of the media, friends or family. To avoid the many problems in the purchasing process a buyer needs to be well equipped to understand the deep levels of conveyancing and property buying. In addition, the emotions often involved would be tricky for a therapist to deal with, let alone an untrained estate agent.

Often demanding an estate agent’s attention for viewings outside of trading hours, endless demanding phone calls, setting up and often expecting attendance at ancillary services appointments such as an electrical check, and all without paying the agent a penny for their time, may lead to animosity.  Which if a simpler buyer with a more understanding and helpful attitude should make themselves known to the agent or seller, you can understand the temptation any business or human being might consider.

Many buyers will reasonably expect and demand that their seller and agent remove the property they are purchasing from the open market to protect their interest. Yet, again quite reasonably, they will continue to keep an eye on other opportunities themselves that crop up from time to time. Let’s suppose a better property does become available; it is very likely that they will ‘jump ship’, leaving the seller with a loss of marketing time, devastation to their family and any onward purchase.

Perhaps the worst and most malicious act a buyer can make, yet interestingly, often the most unreported, is gazundering. Gazundering is the act of reducing the offered price at the last moment. There are many reasons for lowering the price, from a lousy survey to the title needing to be advertised.

However, gazundering, which mostly happens in a falling market, is the most wicked. This is especially bad if the sellers are buying another property and rely on the funds from their sale. The gazunder might well make the entire process impossible.

Sellers

Sellers are generally represented by their chosen agent but not always; like buyers, they more often than not have a tangible goal; to move. If using an agent, they will choose one following a recommendation or after a vetting process. Usually, two or three agents will visit the seller’s home, recommend an asking price, hopefully, based on some comparable sales, and persuade the seller why they might use them.

The general result is that, if using an agent, the seller will use their preferred agent but will most often ask that agent to market the house at the highest reasonable price suggested. When not using an agent, and having obtained free advice, the seller will adopt the price they wish to ask and seek to sell off-market or on an unrepresented property portal.

In a rapidly rising market, this pricing position is great. By the time the sale has reached an exchange of contracts, the asking price will likely have been caught up by the actual, on-the-ground prices.

However in a falling market, the opposite of course applies. And when the house doesn’t sell due to the inflated price requested by the seller, over 50% will often opt to change their selling agent rather than accept that their price was wrong!

When a buyer is found and an offer is made at an inflated price, the buyer will usually have a mortgage. Although working for the bank, they are somewhat protected by the bank’s valuer, who will advise the bank if the price is reasonable. If the valuer disagrees with the price offered, he will ‘down value’ the property.

Down valuations are commonplace. To enable the sale, the buyer will need to raise capital privately to fill the funding gap, or the seller will need to lower their expectations. The buyer or seller will often ask the estate agent to remedy the problem. Interestingly they won’t get paid if they do not manage it. But the bank valuer does!

Sellers will always approve their property’s marketing before it is made public. Yet when a house isn’t selling, the agent’s marketing is often blamed. Accurate marketing is a vital part of the legal process, and buying a house without estate agent details or floor plans can lead to intentional misdirection and exaggeration.

In an ideal world, before putting the house on the market, a seller will have approached their solicitor to ensure that all the titles and legal paperwork are in order. However, this is not usually the case, and problems arise after a sale has been agreed, due to incomplete paperwork, a lack of planning permission, an insufficient title registration, legal issues with neighbours and any amount of other unforeseen problems that the agents were not in a position to know about.

As with buyers, sellers are perfectly entitled to change their minds and decide not to sell or, worse, not sell to their agreed purchaser. The seller at least gets to keep their home, but after all expenses, the agents are profoundly out of pocket.

And again, as with buyers, sellers often have plans that get in the way of pre-agreed completion dates, such as holidays or work commitments. Moving important dates requires plan changes that can cause untold problems. For example, finding an available removal firm or someone else in the property chain cannot make a change to suit everyone else.

Emotions, understandably, run excessively high, and it is often down to the agent to fix a situation not caused by them, yet, when unable to do so, they are blamed. I understand that; it comes from ‘shooting the messenger’, yet buying a house without estate agent support and dealing directly with the seller may well lead to unnecessarily stressful emotions causing a breakdown of all communication.

Finally, gazumping. As with the buyers gazundering, some sellers might instruct, often contrary to agreements, agents to continue to market their property in the hope of finding a buyer willing to pay more.

This is a client’s instruction and rarely an agent’s wish or recommendation. Think about it for a moment. The agent has already agreed a sale and will charge their fee on exchange. Having a buyer pay an additional £50,000 will make very little difference to their fee; a gazump may cost the agent more than they benefit from a fee increase!

Banks/Mortgage Valuers

The banks have a large part to play in the smooth completion of a sale or purchase. As discussed above, the bank’s mortgage valuer, who is often mistaken as working for the buyer, will value a property based on their cursory glance.

Comparative research is expensive, and an estate agent will do it as part of their job. Mortgage valuers will often look towards estate agents, often competitors of the selling agent, to provide evidence of a property’s value, yet not expect to pay anything for this costly information.

The valuer often needs to be corrected in their conclusion, yet they are almost impossible to persuade. However buying a house without estate agent working on behalf of the seller means that there is far less opportunity to speak with the valuer, something that estate agents will regularly do on behalf of the buyer and seller.

Why does this matter? Well, it all stems from the asking price. An unrepresented buyer will offer what they need to secure the property of their dreams. On the other hand, if the asking price set by the seller is too high, then a down valuation is sure to follow.

‘Ahh,’ you might say, ‘the agents set the price, not the seller.’ But of course, in truth, the agents follow a client’s instructions, not the other way around.

Rarely, but it does happen, the solicitors do not request the mortgage funds in time, or the banks have a blip, and the funds required to complete the purchase are not made on time, causing last-minute stresses.

I have seen situations where agents have had to get involved with arrangements for an overnight delay when frankly, this is a legal matter and should be handled by the acting solicitors.

Outside factors

So to the government and the media. As we all know, the media love to excite a possible story, and as a population, we tend to absorb it and start to believe some truth within it. So when a hostile commentator who stands to gain by falling house prices (perhaps they have stocks in other investments that will rise as a result) writes an article in a high-brow or otherwise newspaper, people begin to become cautious.

And when one or two do, the rest follow and before you know it, buyers are pulling out of sales or at least reducing their offers. Selling or buying a house without estate agent to persuade a seller or buyer through facts on the ground, of the real market conditions can be fatal. A buying agent is also a useful advisor of the facts to their client ensuring that buyers listen to their needs and reality and not simple short term speculation.

The government will regularly interfere with the property market, be it with tax legislation on buy-to-let property, stamp duty or other schemes like the failed home report or implementing European-led EPCs. Stamp duty holidays particularly cause change well outside the estate agents’ control.

Buyers will rush to exchange before the opportunity window closes, raising competition, prices and expectations. Yet, they withdraw should they not exchange on time, leaving a massive hole in the marketplace.

Conclusion

So does the blame lie with estate agents? On occasion yes, but I’d argue that the blame lands more fairly on the shoulders of others. Estate Agents have more to lose than almost everyone else and stand to gain the biggest reward for success.  The problem is the system; the system allows for errors, delays and less than attractive selfish human interference. It simply doesn’t work. And before you say it’s better in Scotland, that system in Scotland has flaws too. Lots of them.

There’s no real fix unless the government changes the legislation. And if you think about it, why would they? Not to be cynical about it,  solicitors financially stand to gain from the system as it is now, and they, as a body, will advise the government on appropriate changes. Go figure!

So what’s the solution?

As a seller, you are somewhat protected by your representative, the estate agent. As a buyer, you can be protected by a buying agent. A knowledgeable and experienced buying agent understands the quick-sand areas and will ensure that their client, the buyer, is well protected. A buying agent is a skilled negotiator who will ensure that their client will pay the right price for the right house with the greatest chance of success.

At Rowallan Exclusive Property Buying Agents, we have the required knowledge and experience. Whether buying a house without estate agent support or the property is sold off-market, the buying agent can bridge the gap left by the estate agent. Our help will save you time, expense and money.

With almost one in three sales falling through and experienced buying agents likely to negotiate the best prices, can you afford to avoid employing a buying agent!