Too much secrecy surrounding house buying process, Ed responds to Graham Norwood

Thursday, May 12, 2011 by Ed Mead

Graham Norwood, a freelance journalist with one of the best reputations and no fear of ruffling feathers, has written a blog  http://tinyurl.com/6h3t4pz (text of piece below)  lamenting the excessive control those associated with property buying and selling industry exert. Perhaps the perception buyers in particular have of us is partly because information gleaned off the internet is still relatively blunt, and often of questionable veracity creating a degree of frustration. 

 

I think some of Graham’s ideas are very good and warrant discussion and need to be seen against the extraordinary backdrop of the property industry being almost completely unregulated. Estate agency is still one of the last bastions of the entrepreneur and those involved will therefore have a natural tendency to avoid legislation, added to which the cut throat nature of our industry tends to mitigate against working together, even if the end result might be to the greater good. Tighter legislation would mean more protection and transparency for sellers and buyers and higher fees for those selling. Bear in mind here that the Government revels in the fact that England and Wales have the cheapest selling fees in the developed world. As usual I’m afraid you get what you pay for.

Another factor stitched into the fabric of our industry is the fact that buying a property is almost exclusively an emotional process. This makes dispute resolution (and at least redress is now a mandatory offering to buyers) more difficult and means that the entire business is a subjective one, perhaps giving those seeking objective opinion the feeling that the whole thing is steeped in secrecy. Perhaps it’s simply that many people don’t hear what they want to. It’s also why selling your property online with the owner acting as agent is not only peculiarly un-British, who wants to talk about money after all, but difficult and not like buying a VW Golf where the cheapest deal wins. There’ll always be a place for agents, we all want better ones if we can.

So let’s look at Graham’s points as they come up……

Every property should have a structural survey report, makes sense. A good surveyor will produce a sensible balanced report cataloguing what’s visibly wrong, what’s possibly wrong, and what is likely to go wrong. The last two are again subjective and any opinion given to the client, ie whoever pays for the survey, is designed to cover that client against that advice being wrong. In other words a structural survey is as much of a hedge against defects not picked up by the surveyor and covered by their professional indemnity insurance as anything else. It’s for that reason that everyone should still commission their own survey, and why any home condition report for the general viewing public would lack accountability or perhaps the objectivity each buyer might require.

  1. Formal feedback visible to all buyers. At D&G we already have written feedback on our website for sellers to see, and allowing each buyer to see is an interesting idea. Graham talks about how you get reviews for most items these days and again I’d welcome it if only you could substitute the word objective for subjective. When emotions come into it reliable feedback can delve into unhelpful emotion to convey an impression the next viewer may easily misinterpret.
  2. Offers being visible to all should be de rigeur. It’s the bugbear of most buyers who feel they’re being talked up and given again the fact that most agents are unqualified the temptation must be overwhelming. Our suggestion in best bidding competitions is for the buyers to send the bids to the seller’s solicitor to avoid conflict, publishing the bids would be best of all. However helpful this might or might not be to agents its sellers who’ll baulk preferring the agent who goes to war to get the best price regardless of how they do it. Legislation would be only way to introduce this sensible improvement.

It’s a good debate and one that needs to take place when considered along with other changes that would regulate the industry. Given that this Government have stated they don’t wish to bring forward any further property legislation during this session of Parliament it’s a debate, however urgent, that’ll have to wait.

Text of Graham’s piece

Super-injunctions are at the centre of public debate. The argument rages over whether the wealthy should use the power that accompanies their wealth to prevent others knowing information which, arguably, should be within the public domain.

But what about the housing industry’s own version of super-injunctions? I refer to the highly-arguable ‘privacy’ veil that falls over information when a home is on sale.

In an industry that argues so vehemently against legislative regulation, again even the mildest forms of disclosure advocated by Home Information Packs, and often argues that the general public are “too well informed” about the market thanks to the interent, it is perhaps unlikely that the next few paragraphs will be well-regarded. But here goes.

1. Why should the contents of a structural or lesser survey of a home, not be shared between all prospective buyers, instead of each purchaser having to arrange and fund their own? (After all, an MoT applies to a car beyond three years old, so anyone buying it second hand will have to be aware of it – but will not have to arrange their own).

2. Why not have formal feedback after each viewing, so the potential buyer undertaking the next viewing can see it? (Ridiculous, you say? Well there are public reviews of the quality of almost every other commodity these days – why not homes?)

3. Why not record an offer on a house for sale and let that offer be known, formally, to other prospective buyers? That way, rival bids may develop. These may increase the eventual sale price and income for the seller (and indeed for the estate agent), while removing the lingering belief that many would-be purchasers have that interest in the property is actually just being talked up?

Of course the answer to the ‘why nots?‘ is caveat emptor, Latin for ‘the house sales process must always be defined by estate agents and weighted against the buying public’.

Such is the monopoly that sales agents carry over house sales that their dominance has now created the apparent need for buying agents to counter them. Property thus joins the legal industry in creating such a closed shop of information that only hired hands are allowed access to, or deemed capable of understanding, the essential information.

‘Twas ever thus, perhaps. We used to have to buy books and music only from high street shops until discount websites appeared; we used to be obliged to pay premium prices for air-tickets until ‘bucket’ stores and budget airlines came into play; and we used not to be able to seek compensation from train operators for delays and cancellations until regulators forced it.

Eventually the buyer came out on top in these three areas, forcing those in charge to give up their monopoly on information, distribution and power. Will the same happen one day for those selling homes?