Home Buying and Selling
Market Study
Survey of estate agents
February 2010
OFT1140b
© Crown copyright 2010
This publication (excluding the OFT logo) may be reproduced free of charge in
any format or medium provided that it is reproduced accurately and not used in
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and the title of the publication specified.
CONTENTS
Chapter
Page
1 Executive summary
4
2 Methodology
7
3 Results
9
ANNEXE 1: COVERING LETTER
50
ANNEXE 2: SURVEY QUESTIONNAIRE
51
1
EXECUTIVE SUMMARY
1.1
As part of the OFT's Market Study of Home Buying and Selling, we
conducted a survey of estate agents1 between 12 August and 7
September 2009. Invitations were sent out to 13,849 estate agencies
and responses were received from 798 (a response rate of six per
cent).
1.2
Some respondents worked in estate agency branches that had been
recently established, with about a fifth (18 per cent) in branches
established no more than five years ago. Others worked in branches
with a longer history, with 69 per cent of respondents working in
branches established for at least 10 years.
1.3
Six per cent of respondents reported that their branch belonged to a
franchise.
1.4
On average, respondents said that in the first half of 2009, they
carried out 20 property appraisals and made five sales per month.
1.5
Estate agents most frequently identified local reputation as the most
important factor in attracting sellers to use their services rather than
their competitors', with 73 per cent stating that it was 'very
important'. Quality of service and access to internet property portals –
such as Rightmove and Digital Property Group – were also considered
important, with 57 per cent and 53 per cent of estate agents,
respectively, stating that these were 'very important'.
1.6
Attracting sufficient sellers was identified as the most significant
barrier to opening a new estate agency business, with 57 per cent of
estate agents considering this a 'substantial hurdle'.
1
Where we refer to estate agents in this annexe we mean estate agent businesses that
responded to the OFT invitation to complete the OFT's online survey questionnaire.
OFT1140b | 4
1.7
By far the most common estate agency fee arrangement, used in three
quarters of cases (75 per cent), was the payment of a percentage of
the final property selling price if the property was sold. Where charges
were based on a percentage of the property price, estate agents in the
first half of 2009 charged, on average, 1.6 per cent when acting as a
sole agent. Just over a quarter (28 per cent) of sellers successfully
negotiated a fee below that offered as standard.
1.8
The next most common arrangement, used in just over a fifth of cases
(21 per cent), was a flat fee, payable only if the property was sold,
which did not vary with the final property selling price.
1.9
The most common marketing tools used by estate agents were their
own branch's website, used 'very often' by 93 per cent, and internet
property portals used 'very often' by 92 per cent. Over a third of
estate agents thought that more than 50 per cent of their sales
originated from internet portals.
1.10
Forty-three per cent of estate agents stated that in the first half of
2009, 20-30 per cent of property transactions failed subsequent to an
offer being accepted by the seller. 'Problems elsewhere in the chain'
was the most commonly identified cause stated for property
transactions falling through, with 32 per cent of estate agents stating
that this was 'very often' or 'often' the reason for the transaction
failure.
1.11
Buyers' solicitors were blamed by respondents for delays in the
property transaction process, with almost a third of estate agents (31
per cent) indentifying them as the most common source of delay.
1.12
On average, responding estate agents stated that almost two-thirds
(65 per cent) of clients opted to use the in-house or referred to service
for Home Information Pack (HIP)/ Home Report (HR) provision.
1.13
Of those estate agents that received referral fees from solicitors, 57
per cent said that they received a commission fee of less than £150
and 38 per cent received a commission fee in the region of £250£299.
OFT1140b | 5
1.14
Of those estate agents that received referral fees from solicitors, over
half (53 per cent) informed their clients of the size of the fee. A further
28 per cent informed their client about the existence of the fee, but
not the amount. Nearly all (92 per cent) of estate agents that received
referral fees from lenders said they informed their clients of both the
existence of the fee and its amount.
1.15
Sixty-four per cent of estate agents said they didn't think that estate
agents should be obliged to disclose the level of any referral fee or
other financial benefit received from services offered to buyers (not
just the existence).
1.16
Eighty-three per cent of estate agents said they would support positive
licensing of estate agents.
1.17
Eighty-nine per cent of estate agents said they thought regulations
need updating to address new estate agency models (for example
internet-based estate agents).
OFT1140b | 6
2
METHODOLOGY
2.1
On 31 July 2009 there were 12,715 UK estate agents on the Experian
(Yellow Pages) database. Although this is not an ideal database as it
only contains those businesses advertised in Yellow Pages (and excludes
businesses whose main trade may be a different activity) it was the
most complete source available to us.
2.2
The Experian database categorises businesses based on the section of
the Yellow Pages in which they chose to advertise. For this reason we
suspected that some Scottish solicitors that do indeed operate estate
agency functions, may have been listed in the solicitors section, and
would therefore be missing from the estate agency database. To
overcome the potential problem of under coverage in Scotland that this
would cause, data for solicitors in Scotland (1,134 businesses) was also
included. All businesses on the combined database were then invited to
participate in our survey of estate agents.
2.3
The covering letter2 sent to the majority of these businesses may be
found at the end of the report in Annexe 1 along with a copy of the
questionnaire in Annexe 2. We did not sample from the database as in
recent years OFT postal and online surveys have been subject to low
response rates and it was only likely that we would achieve an ideal
minimum sample size if we contacted every business.
2.4
The practices of individual estate agency branches, even those that form
part of a large organization with centralized procedures, are known from
industry advice to differ on a location by location basis. With this in mind
a branch level approach was chosen in order to capture this variation.
2.5
A small pilot was conducted by a number of volunteer estate agents and
trade associations, including Royal Institute of Chartered Surveyors
(RICS) the National Association of Estate Agents (NAEA) and the
2
A slightly modified cover letter was sent to business in Scotland that asked that solicitors not
in involved in Estate agency to ignore the invitation to complete the questionnaire.
OFT1140b | 7
National Federation of Property Professionals (NFOPP), provided
feedback on the draft survey, highlighting problems and any questions
they found difficult to answer or irrelevant. Comments were also sought
from the Scottish Government, Communities and Local Government and
the Department for Business, Innovation & Skills. The feedback we
received was used to develop the final version of the questionnaire.
2.6
The survey of estate agents was conducted online. A small number of
respondents requested a paper version of the survey. The covering letter
sent to participants by an external mailing company contained a link to
the survey together with a unique username and password. Fieldwork
took place between 12 August and 7 September 2009. Reminders were
sent to non-respondents at the end of the second week of fieldwork.
2.7
The questionnaire asked respondents to provide some data for 2009 and
specified that this should relate to just the first half of 2009. Where
results for 2009 are presented in this annexe they represent 1 January
2009 to 31June 2009. Comparisons made between 2009 and other
years therefore do not take into account any seasonal variations.
OFT1140b | 8
3
RESULTS
Respondents
3.1
Table 3.1 on the next page shows a regional breakdown of responses,
along with details of the number of estate agents in each region invited
to participate in the survey, and the associated response rate. The
response rate did vary within the regions, with the highest (nine per
cent) in the East Midlands and the lowest (four per cent) in London.
3.2
In Scotland 25 responses were received from the 593 listed estate
agencies, while 34 responses were received from the 1,133 solicitors
that were contacted (although a large proportion of these will not have
been involved with estate agency work and so were ineligible for the
survey). Because the exact number of solicitors that participate in
estate agency work is unknown, it is not possible to calculate a
response rate for Scotland. There were 39 responses from estate
agents in Wales yielding a six per cent response rate, 22 from Northern
Ireland yielding a seven per cent response rate, and 687 from England
yielding a six per cent response rate. The overall response rate for the
UK as a whole equates to six per cent.
3.3
Of the 13,820 invitations sent out, 760 were returned to sender. If it is
assumed that all of these were returned due to the associated
businesses leaving the market, the resulting response rate rises to
seven per cent.
3.4
With the response rate being so low (six per cent) it is likely that the
survey results suffer from non-response bias. That is, the
characteristics and attitudes of those who chose to respond differ
systematically from those who did not respond. Therefore, it would be
incorrect to generalise the findings of this survey to the population and
they must only be considered representative of those who responded.
3.5
One business was unable to provide branch-level responses and
submitted a single centralised response that represented a number of
separate branches. In producing the survey results, the data for this
OFT1140b | 9
particular firm was weighted in order for it to represent the correct
number of branches. All other responses in the analysis were unweighted.
Table 3.1: Regional breakdown of survey respondents
Estate
agencies
invited to
participate
Number of
responses
from estate
agencies
East of England
1217
East Midlands
669
London
2844
North East
368
North West
1085
South East
2119
South West
1245
West Midlands
920
Yorkshire And The
775
Humber
England total
11242
Wales
526
Scotland
593
Northern Ireland
326
Total
12687
* this chart includes some solicitors that do not
Solicitor
estate
agents
invited to
participate*
Number of
responses
from
solicitor
estate
agents
Response
rate
108
34
117
19
66
132
106
49
47
9%
5%
4%
5%
6%
6%
9%
5%
6%
678
39
25
1133
34
22
798
participate in estate agency work
6%
7%
7%
6%
Estate agency background information
3.6
On average the individual estate agents that completed the
questionnaires had been involved with estate agency for 22 years.
3.7
Only a small proportion (six per cent) of estate agencies reported that
their branch was a franchise.
3.8
Less than a fifth (18 per cent) of the estate agent branches had been
established in the last five years. Twelve per cent had been established
between five and 10 years, 25 per cent between 10 and 20 years, and
45 per cent over 20 years.
OFT1140b | 10
3.9
On average each responding branch had four full-time equivalent
employees3 (FTE) on 31 April 2009. This was down from five on the
same date in 2008 and six in 2007.
3.10
Estate agents were asked about the area over which they offered most
of their properties for sale. On average estate agents in England sell
properties that are close to their branch, with 55 per cent of them
being within five miles. In Scotland, Wales and Northern Ireland estate
agents mostly offered properties for sale that were within 10 miles of
their branch4 as shown in Table 3.2. Only three per cent of estate
agents typically marketed properties further than 10 miles from their
branch.
Table 3.2: Area over which properties typically offered for sale
within 1 mile of
the branch
UK
England
Wales
Scotland
Northern
Ireland
(798)
(678)
(39)
(59)
(22)
5%
6%
0%
3%
0%
within 2 miles
18%
19%
3%
14%
5%
within 5 miles
51%
55%
38%
25%
23%
within 10 miles
23%
18%
55%
49%
68%
3%
2%
5%
8%
5%
more than 10
from branch
3
Full time equivalent employment is a measure that accounts for variation in the number of
hours per week worked by employees. For example two employees that work part time (20
hours per week) equate to one full-time (40 hours per week) equivalent employee.
4
This result is significant at the 95 per cent confidence level.
OFT1140b | 11
Activity levels and profitability
3.11
In 2009 responding estate agents made an average of 20 property
appraisals per month. This was unchanged from 2008, but below the
2007 figure of 28.
3.12
In 2009 responding agents made an average of five sales per month.
This was unchanged from 2008, but down from nine per month in
2007.
3.13
Forty per cent of responding estate agents made a profit in 2009. This
was up from 31 per cent in 2008, but down from 86 per cent in 2007.
OFT1140b | 12
Market factors
3.14
Estate agents were asked to state the importance of factors attracting
sellers to their agency rather than their competitors' agency (Chart
3.3). The most prominent factor, with 73 per cent of responding estate
agents stating that it was 'very important', was local reputation.
Quality of service and access to property portals were also rated very
highly, with 57 per cent and 53 per cent of estate agents respectively
stating them to be 'very important'. Focusing on just those estate
agents in Scotland, the Solicitors' Property Centre was rated 'highly
important' by 44 per cent of respondents. National reputation (nine per
cent), willingness to negotiate on fees (nine per cent) and the number
of sales listings in local papers (six per cent) were among the factors
considered least important, all of which being rated 'highly important'
by less than 10 per cent of responding estate agents.
Chart 3.3: Importance of factors to attract sellers to agency
Very Important
Important
Moderately important
Of little importance
Unimportant
Number of sales listings in local
papers
Willingness to negotiate on fees
National reputation
One stop' shop
Number of potential buyers
registered
Trade association membership
Office location
Competitive fee levels
Number of ‘for sale’ boards
High profile internet presence
Property valuations
Own website
Access to the SPC*
Competency of staff
Local knowledge of the market
Access to property portals
Quality of service
Local reputation
proportion of estate agents
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Base: 798 Estate agents, *results shown for Scottish estate agents only (59 estate agents)
OFT1140b | 13
3.15
Estate agents were asked to provide their opinion of the potential
barriers they would face in the first year if they were to set up a new
estate agency business. As shown in Chart 3.4, attracting sufficient
sellers and establishing a reputation were the most significant barriers,
with 57 per cent and 55 per cent of estate agents respectively
considering these to represent a 'substantial hurdle'. Of the barriers
asked about, estate agents viewed the cost of IT and office equipment
and finding a suitable location to be among the less sizable barriers
with 27 per cent and 18 per cent respectively regarding these as 'small
hurdles'.
Chart 3.4: Importance of barriers to setting up an estate agency
100%
5 Substantial hurdle
4
3
2
1 small hurdle
proportion of estate agents
90%
80%
70%
60%
50%
40%
30%
20%
10%
Staff training
costs
The cost of office
equipment
Attracting
sufficient buyers
Promotional costs
Finding a suitable
location
Finding suitably
qualified staff
Staff wages
The cost of office
space
Establishing
reputation
Attracting
sufficient sellers
0%
Base: 798 Estate agents
3.16
Other potential barriers mentioned by estate agents included difficulties
obtaining finance and cash flow problems, often due to the length of
time between setting up an agency and receiving first revenues.
3.17
Most of the responding estate agents (60 per cent) expected that it
would take two years from the point of establishing a new estate
agent business to make a profit (Chart 3.5). Most respondents (68 per
OFT1140b | 14
cent) from Northern Ireland, however, estimated that it would take
three years to generate a profit.5
Chart 3.5: Estimated time taken to generate profit if new estate
agency set up
First year
Second year
Third year
Fourth year
Fifth year
Longer
proportion expecting to make profit
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
.0%
UK (797)
England (676)
Wales (40)
Scotland (59)
Northern Ireland
(22)
Base: as indicated in chart in brackets
3.18
Estate agents were asked to rate the importance of various factors
used to advise sellers on the price at which their property should be
put on the market. Comparisons with similar properties were identified
as the most important factor (Chart 3.6) with nearly three quarters (73
per cent) of responding estate agents viewing them as 'very
important'. Knowledge of recent local sales (64 per cent) and
experience of the local market (58 per cent) were also seen as 'very
important' by most estate agents. Among the factors that estate
agents indentified as being the least important for property valuation
5
This finding is statistically significant compared to England and Wales at the 95 per cent
confidence level, but not Scotland.
OFT1140b | 15
was the size of the property, with eight per cent regarding this
'unimportant', online valuation tools (15 per cent), and the Energy
Performance Certificate (65 per cent).
Chart 3.6: Factors determining prices of properties marketed
Very important
important
Moderately important
Of little importance
Unimportant
Base: 798 Estate agents
3.19
Another factor mentioned by estate agents that determined the price at
which the property was marketed was the speed at which the seller
wanted to secure a buyer for their property.
3.20
When comparisons with similar recently sold properties were used for
appraisals when pitching for business, seven per cent of responding
estate agents said this was 'very often' or 'often' shared with
prospective sellers.
OFT1140b | 16
The Energy Performance
Certificate
Size of property (by meters
squared)
Online valuation tools
Extrapolation from original
purchase price
The vendor's opinion
Web searches for similar
properties
Unique or individual selling
features
Your knowledge of the local area
Your knowledge of potential
buyers
Experience of local market
Your knowledge of recent local
sales
Comparisons with similar
properties
proportion of estate agents
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Estate agency fees
3.21
Table 3.7 below shows the frequency of use of different fee structures
offered by estate agents. The far most common arrangement, used in
three quarters of cases (75 per cent), was the payment of a
percentage of the final property selling price if the property is sold. The
next most common agreement, used in just over a fifth of cases (21
per cent), is a flat fee, payable only if the property is sold, which does
not vary with the final property selling price. Other types of fee, for
example a percentage based on the original asking price, were used in
one per cent of cases or less.
Table 3.7: Fee structures and frequency
Fee arrangement type
A percentage of the final property selling price, payable only
if the property is sold
A percentage of the original asking price for the property,
payable only if the property is sold
A flat fee stated in £s, that does not vary with the final
property selling price, payable only if the property is sold
Proportion
75%
1%
21%
A flat fee stated in £s, that is payable upfront whether or not
the property is sold
0%
A flat fee stated in £s, that is payable upfront, with an
additional fee (either flat or percentage based) payable only
on completion
1%
Base: 798 Estate agents. Note: the frequencies do not add to 100 per cent as estate agents
were asked to provide estimates where data was unavailable.
3.22
Some estate agents provided additional information regarding their fee
structures, including:
OFT1140b | 17
3.23
•
a minimum fee where overall charges were based on a
percentage of the property price
•
a sliding scale for percentage based fees, with larger
percentages charged where higher sale prices were achieved,
and
•
initial marketing charges that were non-refundable if the
property were withdrawn from the market - all of the estate
agents that stated this were based in Scotland.
Under the most common fee agreement, where a percentage of the
final selling price was payable upon sale, responding estate agents on
average charged 1.6 per cent when acting as a sole agent6 in 2009.
This was unchanged from 2008 and 2007, indicating that fees of this
type have been relatively stable over the last two and a half years.
6
This represents the average standard fee when the property is being sold exclusively by the
responding agent, and is not representative of fees charged under a multiple agency agreement
where more than one agency is marketing the property.
OFT1140b | 18
3.24
Chart 3.8 shows a breakdown of how this most common type of fee
varied between the UK countries. The average charge in England in
2009 was 1.6 per cent, above that in Wales (1.5 per cent), Scotland
(1.1 per cent) and Northern Ireland (1.1 per cent).7
Chart 3.8: Sole agency average percentage fees in UK countries
1.8%
2007
2008
2009
average sole-agency standard fee
1.6%
1.4%
1.2%
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%
England (676)
Wales (40)
Scotland (59)
Northern Ireland (22)
Base: as indicated in chart in brackets
3.25
Responding estate agents estimated that in the first half of 2009 over
a quarter (28 per cent) of clients successfully negotiated a fee below
that offered as standard.
3.26
Estate agents were asked to identify reasons why it might cost more
for them to sell a more expensive property (in this example a property
of £500k compared to £150k). Chart 3.9 below shows the proportion
of estate agents that agreed that the specified reasons listed increased
the cost. The most common, with three quarters of estate agents (75
7
This result is statistically significant at the 95 per cent level. The difference fees in Wales
compared Scotland and Northern Ireland is also significant at the 95 per cent level.
OFT1140b | 19
per cent) agreeing that it increased cost, was that a more tailored
service was required for more expensive properties. Seventy-three per
cent also agreed that the type of marketing required for more
expensive properties was more costly, and two-thirds (66 per cent)
agreed that more marketing was required. Less than a third of estate
agents agreed that there were likely to be more viewings for more
expensive properties.
proportion of estate agents that identify factor
Chart 3.9: Reasons why more expensive properties cost estate
agents more to sell
80%
70%
60%
50%
40%
30%
20%
10%
0%
More
tailored
service
required
The type of
More
More
Lower
Likely to be None of the
marketing marketing
customer demand for
more
above
needed is is required interaction higher value viewings
more
is needed properties for higher
expensive
with sellers
value
of higher
properties
value
properties
Base: 798 Estate agents
3.27
Other reasons given by estate agents why more expensive properties
cost more to sell included:
•
the need to accompany a higher proportion of viewings
•
viewings taking a greater length of time, and
OFT1140b | 20
•
more expensive properties typically being involved with longer
chains.
Estate agency services
3.28
Chart 3.10 shows the proportion of responding estate agents that
offered particular services to sellers when selling a property for them
and whether they were included in the standard fee or available at
additional cost. Seventy per cent of responding estate agents provided
sellers with E-mail/SMS text contacts to enable communication of
information during the sales process. Nearly half (49 per cent) of estate
agents provided floor-plans of the property being marketed within their
standard charge, while a further 14 per cent charged extra (the
remaining 35 per cent did not provide this service). Over four-fifths (82
per cent) of estate agents provided glossy brochures of the property
being sold. Of these 40 per cent were provided within the standard
fee, with the remaining 60 per cent involving an additional charge.
proportion of estate agents offering service
Chart 3.10: Services offered to sellers by estate agents
100%
Built into standard charge
Available at extra cost
Not available
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
E-mail/SMS
contact details
for sellers to
contact EA
Floor plans
Glossy brochure
Prices shown
per square
metre
360 degree
tours online
Base: 798 Estate agents
OFT1140b | 21
3.29
Estate agents were asked if they allowed their sellers access to online
records relating to their property sale. Nearly two-fifths (39 per cent) of
responding estate agents offered online access to communication made
after an offer had been made, 37 per cent offered feedback after
viewings and 37 per cent offered details of all offers made.8 As can be
seen from Chart 3.11 the vast majority of responding estate agents
offered these online information sources without additional charge,
with one per cent or less charging extra in each instance.
100%
Built into standard charge
Available at extra cost
Not available
80%
60%
40%
20%
Interest by
potential buyers
Promotional
activity
Viewings
arranged
All offers made
Feedback from
viewings
0%
Communications
after offer
proportion of estate agents providing online details of service
Chart 3.11: Provisional of online transaction information
Base: 798 Estate agents
3.30
Aside from selling properties, estate agents commonly offer other
related services. As shown in Chart 3.12, almost four-fifths (78 per
cent) of responding estate agents also offered letting services. Nearly
two-thirds (65 per cent) also sold new development properties where
8
Estate agents are required promptly to provide written details of all offers received except
those which a client has told them in writing need not be passed on.
OFT1140b | 22
their client was a developer rather than a private individual selling their
own home. 14 per cent of responding estate agents also said that they
offered a buying agency service, where they acted entirely on behalf of
a buyer purchasing a property from another party. Eight per cent of
estate agents offered none of the specified additional services.
90%
80%
70%
60%
50%
40%
30%
20%
10%
None of the
above
Buyers
agency
services
Commercial
property
sales
Residential
property sale
by auction
Properties to
buy and
selloutside
the UK
New
development
properties
0%
Letting
proportion of estate agents offering service
Chart 3.12: Additional services offered by estate agents
Base: 798 Estate agents
OFT1140b | 23
Contract types
3.31
The majority of properties (67 per cent) were offered on a sole agency
contract. Fifteen per cent of properties were offered on a sole selling
rights contract. The remaining contract types shown in Chart 3.13
together accounted for the remaining 15 per cent.
Chart 3.13: Contract types used for property sales
proportion of clients using agreements
70%
60%
50%
40%
30%
20%
10%
0%
Sole agency
Sole selling
rights
Multiple
agencies
Joint agency
Joint sole
agency
Base: 798 Estate agents
OFT1140b | 24
3.32
The proportion of responding estate agents offering a 'ready, willing
and able purchaser' clause9 was relatively similar across all contract
types, from 31 per cent for sole agency to 25 per cent for multiple
agency (Chart 3.14).
proportion of estate agents offering 'ready willing and able'
purchaser clause
Chart 3.14: Proportion of estate agents offering 'ready, willing and
able purchasers' clause by contract type
35%
30%
25%
20%
15%
10%
5%
0%
Sole agency
Joint agency
Joint sole
agency
Sole selling
rights
Multiple
agencies
Base: 798 Estate agents
3.33
In cases where a joint sole agency agreement10 was used, 95 per cent
of estate agents stated that they made the seller aware of the
commission being paid to the third party estate agent.
9
Where the seller has to pay the estate agent if they find a buyer who is prepared and able to
buy the property and exchange unconditional contracts (even if the seller withdraws from the
sale and unconditional contracts are not exchanged).
10
A joint sole agency agreement exists where more than one estate agency agrees to share a
single commission from the sale of a property.
OFT1140b | 25
3.34
Estate agents were asked to state the typical period of time that clients
were contractually bound to their services. Twenty-two per cent of
estate agents had no minimum contract period (Chart 3.15). 34 per
cent of estate agents had contracts lasting less than 12 weeks, and 41
per cent had contracts lasting between 12 and 20 weeks. Three per
cent of estate agents had contracts that lasted more than 20 weeks.
proportion of clients bound to typical contract periods
Chart 3.15: Length of typical contract binding sellers to estate
agents' services
30%
25%
20%
15%
10%
5%
0%
no
minimum
<4
weeks
>4 - <8
weeks
>8 <12
weeks
>12 <16
weeks
>16 <20
weeks
>20 <24
weeks
> 24
weeks
Base: 798 Estate agents
Marketing properties
3.35
Estate agents were asked how often they used a selection of
marketing activities to sell properties. As can be seen from Chart 3.16,
the internet plays an important part in this area, accounting for the top
two most frequently cited actions: 93 per cent of estate agents 'very
often' used their own branch internet site to market properties, and 92
per cent 'very often' used property portals. In Scotland 58 per cent of
estate agents 'very often' used Solicitors Property Centres. Some more
OFT1140b | 26
traditional approaches were still used 'very often' by a high proportion
of estate agents, such as contacting their own pool of potential buyers
(86 per cent) and erecting 'for sale' signs (82 per cent). The use of
press advertising was focused on local publications with high
proportions of estate agents 'rarely' or 'never' using national
publications such as national property magazines (88 per cent),
national newspapers (83 per cent) and national general magazines (92
per cent).
National general magazine
National newspapers
Never
National property magazine
Auction
Open/show days for specific
homes
Rarely
Local general magazine
Local property magazine
General mailshots
Sometimes
Solicitors Property Centre*
Local newspapers
A group internet site
Often
For sale signs
Contacting own pool of possible
buyers
Property portal site(s)
Very often
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Your own branch internet site
proportion of estate agents using activity
Chart 3.16: Activities used to market/sell properties
Base: 798 Estate agents. *results shown just for just those estate agents operating
mainly in Scotland
OFT1140b | 27
3.36
Those estate agents that stated that they used internet property
portals were asked to estimate the proportion of eventual sales that
originated as a result of advertising through this channel. As can be
seen from Chart 3.17, a relatively high proportion of estate agents (30
per cent) estimated that 20 - 30 per cent of sales originated from
portals. Thirty-seven per cent of estate agents that used portals
thought that over 50 per cent of their sales originated from this source.
35%
30%
25%
20%
15%
10%
5%
91% to
100%
81% to 90%
71% to 80%
61% to 70%
51% to 60%
41% to 50%
31% to 40%
21% to 30%
11% to 20%
6 % to 10%
1% to 5%
0%
Less than 1%
proportion of sales inititally generated by portals
Chart 3.17: Proportion of sales originating from property portals
Base: 760 Estate agents that sometimes advertise on property portals
OFT1140b | 28
3.37
Of the portals used, estate agents stated how important they
considered each to be. As shown in Chart 3.18, Rightmove was
considered the most important property portal, with 79 per cent of
responding estate agents viewing it as 'very important' and a low
proportion (13 per cent) stating that they did not use it. Two more
portals, Primelocation (14 per cent) and Findaproperty (13 per cent),
were rated as 'very important' by more than 10 per cent of estate
agents. In Scotland, Solicitors Property Centre portals were considered
'very important' by 48 per cent of estate agents, which is equivalent to
the percentage of estate agents in Scotland that considered Rightmove
to be 'very important'.
Chart 3.18: Importance of individual internet property portals
Very important
Quite important
Somewhat important
Not important
Don't use
100%
proportion of estate agents
90%
80%
70%
60%
50%
40%
30%
20%
10%
Base:
Fish4homes
PropertyLive
Globrix
Propertyfinder
Findaproperty
Primelocation
An SPC
portal*
Rightmove
0%
760 Estate agents that sometimes advertise on property portals. *results for
Solicitors Property Centres' Portals are shown just for those estate agents that mainly
operate in Scotland (46).
OFT1140b | 29
Experience of sales process
3.38
Chart 3.19 below shows the average time taken, for successful
transactions, from an offer being accepted on a property to completion
in 2007-09. In 2009 most properties (52 per cent) sold in 11-14
weeks. In 2007, 31 per cent of properties sold within eight weeks,
compared to 20 per cent in 2008 and 26 per cent in 2009.
proportion of properties taking specified time to
sell
Chart 3.19: Average time taken to sell properties, 2007-09
2007
30%
2008
2009
25%
20%
15%
10%
5%
0%
1 to 4
5 to 6
7 to 8 9 to 10
11 to
12
13 to
14
15 to
16
17 to
18
19 to
20
Over
20
weeks
Base: 798 Estate agents. Chart based on un-weighted data.
3.39
Estate agents were asked to identify the party most often responsible
for delays when they occurred. Buyers' solicitors11 were most
frequently recognised as being to blame for delays, with almost a third
of estate agents (31 per cent) identifying them as the most common
11
It should be noted that delays perceived to be due to a solicitor may be caused by the slow
provision of required information from, for example, local authority searches, the seller or the
buyer.
OFT1140b | 30
cause of delay (Chart 3.20). Thirty per cent of estate agents reported
that 'someone else in the chain' was most often liable for delays
(although, this category does not stipulate the cause of the delay in the
chain, which may have been due to one of the parties in the other
categories, for example, solicitors or lenders). Other common causes of
delays were the buyers' lender, and the sellers' solicitor, highlighted by
17 per cent and 12 per cent of estate agents respectively. One per
cent of estate agents stated that sellers were mainly to blame for
delays and no estate agents said that their own estate agency office
was ever responsible.
35%
30%
25%
20%
15%
10%
5%
Your branch
The seller
Local search
providers
The HIP/HR
provider
The buyer
The sellers'
solicitor
The buyer's
lender
Someone else
in the chain
0%
The buyers'
solicitor
proportion of estate agents stating main cause of delays
Chart 3.20: Parties most often responsible for delays
Base: 798 Estate agents
OFT1140b | 31
3.40
Forty-three per cent of estate agents stated that 21-30 per cent of
property transactions failed subsequent to an offer being accepted by
the seller in the first half of 2009 (Chart 3.21). In 2007, 46 per cent of
estate agents reported that less than 20 per cent of transactions fell
through. The equivalent Chart for 2008 was 36 per cent and 47 per
cent for the first half of 2009.
Chart 3.21: Property transaction failures subsequent to an offer
being accepted by the seller
2007
50%
2008
2009
proportion of estate agents
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Fewer
than 10%
11% to
20%
21% to
30%
31% to
40%
41% to
50%
51% to
60%
61 to
70%
71% or
more
proportion of sales falling through
Base: 798 Estate agents
OFT1140b | 32
3.41
The main cause identified for property transactions falling through after
an offer has been accepted by the seller was reported to be 'problems
elsewhere in the chain', with 32 per cent of estate agents stating that
this was 'very often' or 'often' the reason. The buyer not being able to
secure a mortgage was the second most common reason, with 21 per
cent of estate agents reporting this to occur 'often' or 'very often'
(Chart 3.22). Four per cent of estate agents indentified that the buyer
changing their mind was 'very often' the reason for sales falling
through. Three per cent stated that the buyer changing their mind due
to survey or search results was 'very often' the reason for transaction
failures.
Chart 3.22: Reasons for property transactions not being completed
Very often
Often
Sometimes
Rarely
Never
100%
proportion of estate agents
90%
80%
70%
60%
50%
40%
30%
20%
10%
Conveyancing
uncovered legal
problems
Buyer refused
seller's demand
for higher offer
Seller refused
buyer's proposal
of lower offer
Seller changed
mind
Lender refused
buyer finance
due to survey
Buyer change of
mind due to
survey
Buyer changed
mind
Insufficient
buyer finance
Problems
elsewhere in
chain
0%
Base: 798 Estate agents
OFT1140b | 33
Ancillary / third party services
3.42
The majority of responding estate agents could provide a number of
ancillary services, either in-house or via referral to providers with which
they had an established relationship, as shown in Chart 3.23. Ninetyfour per cent of estate agents could provide financial advice (41 per
cent in house and 51 per cent via referral), 95 per cent could provide
surveying services (35 per cent in house and 60 per cent via referral),
96 per cent could offer HIP/HR provision (30 per cent in house and 66
per cent via referral) and 98 per cent could provide legal services (18
per cent in house and 80 per cent via referral).
Chart 3.23: Provision of ancillary / third party services
90%
can provide in-house
can refer customers to provider with which EA has a relationship
proportion of estate agents
80%
70%
60%
50%
40%
30%
20%
10%
0%
Financial
advisor
Surveyors
HIP/HR
provider
Solicitors
Insurance
provider
Search
provider
Lender
Base: 798 Estate agents
OFT1140b | 34
3.43
Those estate agents that offered ancillary services, either in-house or
via referral, were asked how frequently their clients used these
services (Chart 3.24). Almost two-thirds (65 per cent) of clients opted
to use the in-house or referred to service for HIP/HR provision, with the
equivalent proportion for solicitors being 44 per cent, search providers
35 per cent and financial advisors 34 per cent.
70%
60%
50%
40%
30%
20%
10%
Lenders (228)
Insurance
providers
(491)
Surveyors
(733)
Financial
advisers /
Mortgage
brokers (724)
Search
providers
(435)
Solicitors /
Conveyancers
(769)
0%
HIP/HR
providers
(750)
proportion of customers using inhouse/referred service
Chart 3.24: Proportion of clients using ancillary services provided inhouse or via referral
Base: as indicated in chart in brackets
OFT1140b | 35
3.44
Those estate agents that had established relationships with third party
providers of ancillary services were asked if they received a referral fee
or commission from each type of third party provider. Chart 3.25
shows the proportion estate agents that received payments from
providers of each type of service. Nearly half (49 per cent) of estate
agents that referred clients to a third party solicitor received a referral
fee or commission from the solicitor. The equivalent proportion for
insurance providers was 42 per cent, 40 per cent for financial advisors,
and 31 per cent for HIP/HR providers.
proportion of estate agents receiving referral fee / commission
Chart 3.25: Proportion of estate agents receiving referral fees or
commission from third party service providers
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Solicitors
(770)
Insurance
providers
(492)
Financial
advisers /
Mortgage
brokers
(725)
HIP/HR
providers
(751)
Surveyors
(734)
Lenders
(405)
Search
providers
(436)
Base: Estate agents that referred clients to third party service providers, as indicated in chart
in brackets
3.45
Those estate agents that received commission/ referral fees from third
party service providers were asked, within given ranges, to provide
details of the average amounts received for a typical transaction on a
£200,000 property. Table 3.26 shows a breakdown of the fees
received from each type of service provider.
OFT1140b | 36
•
57 per cent of estate agents received less than £150 from
solicitors, and 38 per cent in the range of £250-299
•
nearly all (93 per cent) of estate agents received less than £100
from surveyors
•
most received less than £100 from HIP/HR providers (87 per
cent) and search providers (91 per cent)
•
64 per cent received less than £150 from financial advisors and
27 per cent between £150 and £300. Eight per cent received
over £300, with three per cent receiving more than £500
•
nearly four-fifths (79 per cent) received less than £50 from
insurance providers.
OFT1140b | 37
Table 3.26: Average commission/referral fee received from third
party service providers
Surveyors
HIP/HR providers
Search providers
Financial advisers /
Mortgage brokers
Lenders
Insurance providers
Solicitors /
Conveyancers
9%
56%
47%
57%
15%
-
79%
£50-99
20%
37%
41%
35%
26%
-
8%
£100-149
28%
5%
11%
4%
23%
-
4%
£150-199
2%
2%
1%
0%
13%
-
3%
£200-249
2%
0%
0%
0%
10%
-
2%
£250-299
38%
0%
0%
4%
5%
-
1%
£300 -349
0%
0%
0%
0%
2%
-
0%
£350-399
0%
0%
0%
0%
2%
-
1%
£400-449
0%
0%
0%
0%
0%
-
0%
£450-499
0%
0%
0%
0%
1%
-
0%
More than £500
0%
0%
0%
0%
3%
-
2%
Base
288
84
283
23
351
-
104
Fee received
£0-49
Base: Estate agents that received fees from third parties. Figures for lenders not shown due to
low base.
3.46
Estate agents that received commission/ referral fees were asked
whether they typically made their clients aware of this, and if so
OFT1140b | 38
whether they informed them of the value. Over two-thirds (71 per
cent) of estate agents that received commission from insurance
providers did not typically share this information with their client, while
18 per cent made their client aware of the fee, but not the amount,
and 11 per cent informed their client about the fee and its quantity, as
shown in Chart 3.27.
3.47
Nearly half of estate agents that received fees from search providers
informed their clients of its existence, while a further four per cent also
informed them of the amount. Half (52 per cent) made their clients
aware of fees received from HIP/HR providers, while a further 12 per
cent also informed them about the amount. Over half (53 per cent)
informed their clients of the size of fees received from solicitors. A
further 28 per cent of estate agents informed their client about the
existence of the fee, but not the amount. Over half (57 per cent) made
their clients aware of fees received from surveyors, while a further 10
per cent also informed them about the amount. Nearly all (92 per cent)
informed their clients of both the existence of fees received from
lenders and the amount.
OFT1140b | 39
100%
Typically, we tell them we receive referral fees, and the amount
Typically, we tell them we receive referral fees, but not the amount
Typically, we do not tell them we receive referral fees
90%
80%
70%
60%
50%
40%
30%
20%
10%
Lenders (37)
Solicitors /
Conveyancers
(288)
Financial
advisers /
Mortgage
brokers (361)
Surveyors
(84)
HIP/HR
providers
(283)
Search
providers (23)
0%
Insurance
providers
(104)
proportion of estate agents revealing referral fees /
commission
Chart 3.27: Proportion of estate agents revealing referral fees or
commission from third party service providers
Base: Estate agents that received fees from third parties, as indicated in chart in brackets
OFT1140b | 40
3.48
Four-fifths (81 per cent) of estate agents stated that the in-house
provision of ancillary services accounted for 0-10 per cent of their
profit in 2008. Fourteen per cent said that they accounted for 10-50
per cent of their profit, and five per cent that they accounted for over
50 per cent of their profit (Table 3.28). Nearly all (93 per cent) of
estate agents claimed that less than 10 per cent of their profit was
attributable to the referral of ancillary services to third parties. Six per
cent said that they made 10 - 30 per cent of their profit from referrals,
and one per cent said they made more than 30 per cent.
Table 3.28: Proportion of estate agent profit accounted for by inhouse ancillary services and third party referral fees
Proportion of estate
agents
Proportion of profits attributable to ancillary services
In-house
3rd parties
81%
93%
11-20%
6%
5%
21-30%
4%
1%
31-40%
3%
1%
41-50%
2%
0%
More than 51%
5%
0%
0-10%
Base: 798 Estate agents
OFT1140b | 41
Complaints, enforcement and licensing
3.49
All of the responding estate agents stated that they were a member of
a trade association or professional body. Chart 3.29 below shows the
proportion of estate agents that belonged to each of the specified
organisations. Eighty three per cent of responding estate agents stated
that they were members of the Property Ombudsman (formerly the
Ombudsman for estate agents), and 63 per cent that they were
members of the National Association of Estate Agents.
proportion of estate agents being members of scheme
Chart 3.29: Proportion of estate agents belonging to trade
associations or professional bodies
100%
Base:
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
The Property
Ombudsman
National
Association of
Estate Agents
Royal Institution
of Chartered
Surveyors
Guild of
Professional
Estate Agents
Solicitor's Code
of Conduct
798 Estate agents, Note: Sums to more than 100 per cent as estate agents may be
members of more than one body.
OFT1140b | 42
3.50
The majority of responding estate agents (68 per cent) stated that they
received no complaints from sellers in the first half of 2009. Two per
cent received three or more complaints from sellers over the same
period. Nearly all (89 per cent) responding estate agents stated that
they received no complaints from buyers in the first six months of
2009, and two per cent that they had received three or more. Chart
3.30 shows the proportion of estate agents that received various
numbers of complaints from buyers and sellers.
proportion of estate agents receiving number of complaints
Chart 3.30: Proportion of estate agents receiving complaints from
buyers and sellers
100%
>3
complaints
90%
80%
3 complaints
70%
60%
2 complaints
50%
40%
1 complaint
30%
20%
no
complaints
10%
0%
2007
2008
2009
Base: 798 Estate agents
OFT1140b | 43
3.51
Chart 3.31 shows what typically happened to complaints that were
received. A third of complaints from sellers (36 per cent) and buyers
(33 per cent) were resolved by the receiving branch. A following third
of complaints from sellers (32 per cent) and buyers (33 per cent) were
resolved by the estate agents' head offices. A fifth of complaints from
sellers (20 per cent) and buyers (22 per cent) were dropped by the
complainant. Six per cent of sellers' complaints and seven per cent of
buyers' complaints were sent to the Ombudsman/professional scheme
for resolution. One per cent of sellers' complaints were resolved at the
small claims court.
Chart 3.31: Outcome of complaints made to estate agents
Seller
Buyer
proportion of complaints
40%
35%
30%
25%
20%
15%
10%
5%
Resolved at small claims
court
Sent to
Ombudsman/professional
scheme for resolution
Dropped by the
complainant
Resolved by your head
office
Resolved by your branch
0%
Base: 398 estate agents that received complaints
3.52
Estate agents were asked to identify the qualifications or skills relevant
to providing estate agency services that their staff possessed. Table
3.32 shows the proportion of estate agents that stated that their staff
had the specified types of qualifications and skills.
OFT1140b | 44
3.53
Good communication/ people skills were most commonly stated, with
88 per cent of estate agents reporting that their principals and 90 per
cent that their other staff possessed these.
3.54
Forty-three per cent of estate agents said that they required their
principals to pass an exam following internally-provided training, and
37 per cent of estate agents stated that this was required of other
staff. Twenty-six per cent said that their principals had basic training
by professional bodies (21 per cent for other staff), and seven per cent
said that their principals had a Certificate of Practising Estate Agents
(three per cent for other staff).
3.55
On average responding estate agents reported that their principals
undertook 26 hours of training per year and that other staff undertook
28 hours.
OFT1140b | 45
Table 3.32: Proportion of estate agents with staff possessing
relevant skills and qualifications
Principals
Other staff
Good communication/people skills
88%
90%
Basic knowledge of estate agency
87%
89%
Negotiating skills
86%
83%
IT/computer skills
78%
87%
Typing skills
53%
78%
Marketing
71%
53%
Management skills
84%
39%
Internally-provided training without exam pass required
55%
66%
Internally-provided training with exam pass required
43%
37%
Level 3 Technical Award in Sale of Residential Property
28%
28%
Basic training by professional bodies
26%
21%
Advanced training by professional bodies
23%
8%
Foreign languages
6%
7%
Certificate of Practising Estate Agents
7%
3%
NVQ level 2
3%
7%
NVQ level 3
4%
6%
Level 5 Diploma in Residential Estate Agency
3%
2%
Base: 798 estate agents
OFT1140b | 46
3.56
Estate agents were presented with a number of statements and asked
to state their level of agreement/ disagreement with them. The results
are presented below:
•
93 per cent of estate agents agreed that buyers should be
obliged to validate that they have means to purchase properties
before putting forward offers
•
93 per cent of estate agents agreed that their branch always
makes sure that buyers realise they are acting for the seller
•
91 per cent of estate agents agreed that they always check to
make sure the prospective buyer will have sufficient funds to
buy at the agreed price
•
89 per cent of estate agents agreed that the regulations need
updating to address new estate agency models (for example,
internet-based estate agents)
•
83 per cent of estate agents agreed that there is a need for
positive licensing of estate agents
•
82 per cent of estate agents agreed that possible visits from
Trading Standards Officers ensure that they comply with the
law
•
76 per cent of estate agents agreed that the sanctions for
estate agents who break the law are strong enough
•
71 per cent of estate agents agreed that self regulation (for
example, The Property Ombudsman (TPO) Code) provides
sufficient protection for consumers
•
64 per cent of estate agents agreed that there is a need to
provide more guidance on the law to estate agents
OFT1140b | 47
•
52 per cent of estate agents agreed that there is a need to
provide more guidance to consumers about their rights when
buying and selling homes
•
52 per cent of estate agents agreed that estate agents should
provide more information to their customers on the home buying
and selling process
•
50 per cent of estate agents agreed that all estate agents are
aware of their legal obligations
•
48 per cent of estate agents agreed that there should be
financial penalties on the seller or purchaser for unnecessary
delay after a sale is agreed
•
45 per cent of estate agents agreed that buyers often think the
estate agent is acting on their behalf
•
44 per cent of estate agents agreed that given the introduction
of the Consumer Protection from Unfair Trading Regulations
2008, the Property Misdescriptions Act 1991 is no longer
needed
•
41 per cent of estate agents agreed that online estate agents
(estate agents that do not have a physical branch location)
compete with their branch
•
36 per cent of estate agents agreed that estate agents should
be obliged to disclose the level of commission/benefits received
from services offered to buyers (not just the existence)
•
34 per cent of estate agents agreed that individuals offering
their own home for sale (For Sale by Owner or FSBO) compete
with their branch, and
•
24 per cent of estate agents agreed that all estate agents
comply with their legal obligations.
OFT1140b | 48
3.57
At the end of the questionnaire estate agents were asked if they
wished to add any additional comments. The common themes that
emerged from the responses given are outlined below:
•
HIPs were the most common subject, being mentioned by 10
per cent of all responding estate agents. The general attitude
towards HIPs was negative, with criticism focusing on the cost
and time taken to prepare HIPs, and the perceived lack of
benefit
•
three per cent of estate agents stated their support for the
introduction of positive licensing
•
two per cent of estate agents expressed the need for an
arrangement to financially commit buyers once they had made a
successful offer, with some suggesting a bond/deposit that is
non-refundable following subsequent withdraw of the offer
•
one per cent of estate agents considered that enforcement of
existing legislation needs to be stronger
•
one per cent of estate agents noted that they were at a
competitive disadvantage to rogue estate agents that ignored
the requirement for a HIP and could therefore market properties
more quickly
•
one per cent of estate agents expressed the need for a minimum
qualification to be necessary in order to operate as an estate
agent, and
•
one per cent of estate agents put forward the view that the
present stamp duty system causes problems, particularly for
properties valued close to the thresholds.
OFT1140b | 49
ANNEXE 1: COVERING LETTER
Dear Sir or Madam
OFT Home Buying and Selling Market Study - Online Survey
As you may be aware, we are taking a comprehensive look at the UK
market for home buying and selling. You can find more information about
our Study at: www.oft.gov.uk/homes.
As part of this Study, we are inviting all UK based estate agents to
complete an online survey. Your input to this survey will inform the
outcomes of the Study and could have important implications for your
industry.
The survey is designed to be completed at branch level. We only need one
response per branch and estimate that it will take about 30-60 minutes to
complete. We will not identify individuals or individual businesses should
we use responses in any publication. If you do not have exact figures
please provide a best estimate. The online survey form can be found at:
www.oft.gov.uk/easurvey
Full instructions for completing the survey are provided at the start, as well
as contact details if you have any queries while completing the form. You
will be able to stop and start between questions as you wish, using the
logon details which are as follows:
Username: <<username>>
Password: <<password>>
The deadline for completing the survey is 5pm Monday 7 September
(although early responses would be appreciated). Thank you very much in
advance for taking part.
Yours faithfully
OFT1140b | 50
ANNEXE 2: SURVEY QUESTIONNAIRE
Welcome to the OFT Home Buying and Selling Study Estate Agency
Questionnaire The scope for the market study, along with other related
information, can be found on the home buying and selling web page on the OFT
website. We only require one response from each estate agency branch. We will
not identify individuals, branches or businesses should we use responses in any
publication. Our disclosure policy can be accessed below. The questionnaire
asks for some numerical information relating to: numbers of branches and
employees, property appraisals, property listings, property sales, branch profits,
fees, contract types, completion times, reasons for transaction failures, referral
fees and complaints. It may be useful to have this information to hand before
completing the survey. However, if you do not have exact figures please provide
a best estimate. There are a maximum of 56 questions but, depending on your
responses, you may be asked fewer. We have piloted this questionnaire with
estate agents, and it should take around 30-60 minutes to complete. If you wish
to complete the survey in more than one session please press the 'stop' button.
Your progress will be saved as far as the last fully completed question, and you
will be returned to your current position in the survey when you log back in.
Please complete the questionnaire by 5pm on 7 September 2009.
Thank you for taking part!
Assistance If you have any queries, please contact Darren Eade on 0207 211
8534 or by e-mail at: [email protected] If you are experiencing
technical difficulties with completing the survey online please contact Gregory
Haigh on 0207 211 5886, or by e-mail at: [email protected] If Greg or
Darren are unavailable, please contact the team at:
[email protected]
OFT1140b | 51
Disclosure policy: please note that we may choose to refer to comments
received in response to this questionnaire in our report on this study. In deciding
whether to do so, we will have regard to the need for excluding from disclosure,
so far as practicable, information relating to the private affairs of an individual
whose disclosure the OFT thinks might significantly harm the individual's
interests or commercial information relating to a business which the OFT thinks,
if published, might significantly harm the legitimate business interests of that
undertaking (‘confidential information’). If you consider that your response
contains such information, that information should be marked ‘confidential
information’ and an explanation given as to why you consider it is confidential.
The Office of Fair Trading (‘OFT’) must reserve the right to disclose any
information provided by you (including confidential information) in accordance
with sections 170 and 240 – 243 of the Enterprise Act 2002 where it considers
such disclosure to be appropriate. Subject to the considerations set out above,
the OFT may choose to put information provided by you to third parties, such as
other Government Departments, other contributors to this study and/or
consultants engaged by them, for the purpose of facilitating the carrying out of
this study. The OFT is also bound by the Freedom of Information Act 2000 (the
‘FoIA’). Where a person makes a request in accordance with the FoIA the OFT
may have to disclose whether it holds the information sought and the
information itself (including confidential information). The FoIA contains
exemptions (including one which may exempt confidential information) and the
OFT will not have to make those disclosures if an exemption applies. If you
consider that any information you provide may be exempt from such disclosures
you should say so and explain why. Similarly, to the extent that information you
provide constitutes personal data under the Data Protection Act 1998, the OFT
will process such data in accordance with that act.
OFT1140b | 52
Guidance for completing the questionnaire
You may like to print out this page and have it nearby as you complete the
questionnaire.
•
Stakeholders have told us that experience can vary substantially at a local
level and we have therefore deliberately targeted this questionnaire at
estate agency branches, rather than Head Offices, so that we can gather
views and information on the market at a local level. Branch-level
responses will be more valuable to the study's findings and we strongly
encourage these.
•
Where we use the term ‘estate agent’ (or EA) we mean all types of estate
agency work - whether the business is traditional high street agent, the
estate agency element of a mixed sale and letting, agents trading solely
over the internet, or the sale of homes through auction. For Scotland the
term estate agent also covers Solicitor Estate Agents.
•
The survey covers sales and purchases of homes in the UK and does not
include commercial properties or rentals/letting.
•
Please use the 'Prev' and 'Next' buttons on the survey (not your browser's
'Back' and 'Forward' buttons) to navigate, otherwise your answers may
not be stored.
•
If you wish to complete the survey in more than one session please press
the 'stop' button. Your progress will be saved as far as the last fully
completed question, and you will be returned to your current position in the
survey when you log back in.
•
If your internet connection fails during completion of the survey, the
system may require you to wait ten minutes before you can login again.
Your progress will be saved as far as the last fully completed question, and
you will be returned to your current position in the survey when you log
back in.
OFT1140b | 53
About you
Please complete the following contact details
1. Your business' name:
2. Your job title:
3. How long have you been involved in estate agency (to the nearest year)?
4. Your email address:
5. Your telephone number:
6. Focusing now on the branch for which you are responding, is the branch a
franchise?
yes
no
7. What is the name of the estate agency business operating from the branch?
8. Town/city:
9. Postcode:
10. Does your branch mainly handle sales in:
England
Wales
Northern Ireland
Scotland
OFT1140b | 54
11. How long has your branch been established in its current locality?
Less than one year
1 to 2 year
3 to 5 years
6 to 10 years
11 to 15 years
16 to 20 years
21 to 30 years
31 to 40 years
41 to 50 years
51 years or more
OFT1140b | 55
12. How many full time equivalent employees did your branch employ on the
following three dates? (If necessary please provide estimates.)
Please enter the number:
1 April 2007
1 April 2008
1 April 2009
13. How many residential property appraisals (excluding lettings) did your
branch undertake in... (If necessary please provide estimates.)
Please enter the number:
2007 (1 Jan to 31
December)
2008 (1 Jan to 31
December)
2009 to date (1
Jan to 1 June)
OFT1140b | 56
14. How many residential properties did your branch market/list in… (If necessary
please provide estimates.)
Please enter the number:
2007 (1 Jan to 31
December)
2008 (1 Jan to 31
December)
2009 to date (1
Jan to 1 June)
15. How many residential properties did your branch sell in... (If necessary please
provide estimates.)
Please enter the number:
2007 (1 Jan to 31
December)
2008 (1 Jan to 31
December)
2009 to date (1
Jan to 1 June)
OFT1140b | 57
16. Did your branch make a profit or a loss (in relation to estate agency and
related legal work) in the following years:
Profit
Loss
2007 (1 Jan to 31 December)
2008 (1 Jan to 31 December)
2009 to date (1 Jan to 1 June)
Competition with other Estate Agents
17. Over what area does your branch typically offer properties for sale?
Most properties are within 1 mile of the branch
Most properties within 2 miles
Most properties within 5 miles
Most properties within 10 miles
Most properties more than 10 miles distant
OFT1140b | 58
18. Which of the following factors do you think are most important in attracting
home sellers to use your estate agency services rather than those of your
competitors?
Unimportant
Of little
Moderately
Very
Important
importance important
important
Competitive fee
levels
Willingness to
negotiate on fees
Property
valuations/market
appraisals
High profile internet
presence
Local knowledge of
the market
Quality of service
'One stop' shop
(that is provision of
services like HIPS,
conveyancing etc)
Number of 'for sale'
boards
Office location
OFT1140b | 59
Number of sales
listings in local
papers
Number of potential
buyers registered
Local reputation
(including word of
mouth)
National reputation
Own website
Access to major
property portals
Access to the
Solicitors' Property
Centre (in Scotland)
Competency of staff
Membership of trade
association /
professional body –
for example NAEA,
RICS, OEA, Law
Society of Scotland
OFT1140b | 60
Entering the market
19. If you were to set up a new estate agency business starting with one
branch, which of the following would be the most substantial hurdles to
overcome in the first year?
1 small
hurdle
2
3
4
5
substantial
hurdle
Finding a suitable
available location
The cost of
buying/leasing the
office space
The cost of IT and
other office
equipment
Finding suitably
qualified staff
Staff wages
Staff training costs
Promotional costs
Establishing
reputation and
winning business
from existing local
estate agents
OFT1140b | 61
Attracting sufficient
sellers
Attracting sufficient
buyers
20. Using your experience as a guide, how long after opening an estate agency
business would you expect it to be able to make a trading profit?
First year
Second year
Third year
Fourth year
Fifth year
Longer
OFT1140b | 62
21. How important are the following factors when advising potential sellers
what price a property should be put on the market?
Unimportant
Of little
Moderately
Very
Important
importance important
important
Your knowledge of
recent local sales
Your knowledge of
potential buyers
registered with you
Your knowledge of
the local area (that is
location of schools,
leisure facilities, etc)
Comparisons of
property with
recently sold similar
properties
The Energy
Performance
Certificate rating/or
fuel bills for the
property
Experience of local
market for such
properties
Size of property (by
meters squared)
OFT1140b | 63
The vendor 's opinion
on the property 's
value
Web searches for
similar properties in
the location
Extrapolation from
original purchase
price, where known
Online valuation tools
Unique or individual
selling features of the
property
OFT1140b | 64
22. Please specify which online valuation tools you use and why:
23. Where you use comparisons with similar recently sold properties, how often
do you show these to prospective sellers when pitching for their business?* *As
a guide, please consider: 'Rarely' to mean in less than 25 per cent of cases, 'Sometimes' to be
in 26-50 per cent of cases, 'Often' to be in 51-75 per cent of cases and 'Very often' to be in
76-100 per cent of cases.
Never
Rarely
Sometimes
Often
Very often
OFT1140b | 65
24. Broadly, for what proportion of your vendors did you agree the following
types of fee in 2008 (if not applicable enter '0 ') Note: please do not enter '%' signs
Proportion of clients (%) (0 - 100)
A percentage of the final property
selling price, payable only if the
property is sold
A percentage of the original asking
price for the property, but payable only
if the property is sold
A flat fee stated in £s, that does not
vary with the final property selling
price, but is payable only if the property
is sold
A flat fee stated in £s, that is payable
upfront whether or not the property is
sold
A flat fee stated in £s, that is payable
upfront, with an additional fee payable
only on completion
OFT1140b | 66
25. If you offered a sole-agency contract, what was your standard fee before
negotiation (that is the fee you first quoted potential clients as a percentage of
the final selling price of the property, for example 1.8 per cent), in the following
periods: N.B please do not enter '%' signs
Please enter the number (for example 1.8%)
2007 (1 Jan to 31
.
December) %
2008 (1 Jan to 31
.
December) %
2009 to date (1
Jan to 1 June) %
.
26. Please estimate the proportion of clients that entered into a sole agency
arrangement with you that were able to successfully negotiate a fee that was
lower than your standard fee in... Note: please do not enter '%' signs
Please enter the number (for example 1.8%) (0 - 255)
2007 (1 Jan to 31
December) %
2008 (1 Jan to 31
December) %
2009 to date (1
Jan to 1 June) %
OFT1140b | 67
27. Which, if any, of the following explain why it may cost more to sell a higher
valued property (for instance one valued at £500,000 in comparison to one
valued at £150,000)? Please select all that apply.
More marketing is required
The type of marketing needed is more expensive
Lower demand for higher value properties
Likely to be more viewings for higher value properties
More customer interaction is needed with sellers of higher value properties
More tailored service required
None of the above
Your services
28. In addition to estate Agency services, which of the following services do
you offer? Please select all that apply.
Residential property sale by auction
Letting/private rental/property management services (as an alternative to selling
or buying)
Buyers agency services (that is to help buyers locate, negotiate on and buy
residential property)
Commercial property sales
New development properties
Properties to buy and sell in countries outside the UK
None of the above
OFT1140b | 68
29. Do you offer any of the following services to vendors who choose to sell
through you?
Built into
standard
charge
Available at
extra cost
Not available
Floor plans
Glossy brochure
Prices shown per square metre
360 degree tours online
E-mail/SMS text contact details
for sellers to contact you
OFT1140b | 69
30. Do you allow your vendors to access records online for their property of:
Built into
standard
charge
Available at
extra cost
Not available
Promotional activity /
advertising
Interest shown by potential
buyers
Viewings arranged
Feedback from viewings
All offers made
Communications after they
have accepted an offer
31. Do you offer seller or buyers any other innovative services? If so, please
describe below and explain whether they are standard or at extra cost...
OFT1140b | 70
Contract Types
32. Broadly what percentage of clients sign up to the following types of agency
agreement? Note: please do not enter '%' signs
Proportion of contracts (0 - 100)
Sole selling rights
%
Sole agency %
Joint agency %
Joint sole agency
%
Multiple agencies
%
33. ...and do they usually include a 'ready, willing and able purchaser' clause?
yes
no
not applicable
Sole selling rights
Sole agency
Joint agency
Joint sole agency
Multiple agencies
OFT1140b | 71
34. Where you have a joint sole agency agreement contract, do you make
sellers aware of how commission will be shared with the other estate agent(s)?
Yes
No
N/A
35. What is the typical period of time clients are contractually bound to use your
services? (including notice period)
No minimum period
Up to four weeks
More than 4 weeks but less than 8 weeks
More than 8 weeks but less than 12 weeks
More than 12 weeks but less than 16 weeks
More than 16 weeks but less than 20 weeks
More than 20 weeks but less than 24 weeks
More than 24 weeks
OFT1140b | 72
Marketing properties 36. How often do you use the following to market/sell
properties? *As a guide, please consider: 'Rarely' to mean in less than 25 per cent of cases,
'Sometimes' to be in 26-50 per cent of cases, 'Often' to be in 51-75 per cent of cases and
'Very often' to be in 76-100 per cent of cases.
Very often Often
Sometimes Rarely
Never
For sale signs
General mailshots
Contacting own pool
of possible buyers
Open/show days for
specific homes
Local newspapers
Local general
magazine
Local property
magazine
National newspapers
National general
magazine
National property
magazine
Your own branch
internet site
OFT1140b | 73
A group internet site
Property portal site(s)
Solicitors Property
Centre
Auction
37. You indicated that you make use of property portals to promote your
properties, what proportion of eventual sales do you think were initially
generated as a result of advertising through this channel?
Less than 1 per cent
1 per cent to 5 per cent
6 per cent to 10 per cent
11 per cent to 20 per cent
21 per cent to 30 per cent
31 per cent to 40 per cent
41 per cent to 50 per cent
51 per cent to 60 per cent
61 per cent to 70 per cent
71 per cent to 80 per cent
81 per cent to 90 per cent
91 per cent to 100 per cent
OFT1140b | 74
38. Please indicate the portals that you advertise on and rate their importance:
Don 't use
Not
Somewhat Quite
Very
important important important important
Rightmove
Propertyfinder
Findaproperty
Primelocation
Fish4homes
Globrix
PropertyLive
A Scottish Solicitors'
Property Centre portal
OFT1140b | 75
Experience of sales process
39. For successful transactions, how long on average did it typically take from
offer being accepted to completion in the following periods... (If necessary please
provide estimates.)
9 to 11 to 13 to 15 to 17 to 19 to Over
1 to 4 5 to 6 7 to 8
10
12
14
16
18
20
20
weeks weeks weeks
weeks weeks weeks weeks weeks weeks weeks
2007 (1
Jan to 31
Dec)
2008 (1
Jan to 31
Dec)
2009 to
date (1 Jan
to 1 June)
OFT1140b | 76
40. Where there are delays, who in your opinion is most often responsible for
them?Your branch
The seller
The buyer
The buyer's lender
The HIP/HR provider
The buyers' solicitor/conveyancer
The sellers' solicitor/conveyancer
Local search providers
41. What proportion of transactions fail, in your experience, subsequent to an
offer being accepted by the seller? Please provide estimates for the last 3-year
period.
Fewer
11% to 21% to 31% to 41% to 51% to 61 to
than
20%
30%
40%
50%
60%
70%
10%
71% or
more
2007 (1 Jan to
31 Dec)
2008 (1 Jan to
31 Dec)
2009 to date
(1 Jan to 1
June)
OFT1140b | 77
42. In your experience how often are the following the reasons for transactions
not being completed despite an offer having been made by the buyer and initially
accepted by the seller?* *As a guide, please consider: 'Rarely' to mean in less than 25 per
cent of cases, 'Sometimes' to be in 26-50 per cent of cases, 'Often' to be in 51-75 per cent of
cases and 'Very often' to be in 76-100 per cent of cases.
Very often Often
Sometimes Rarely
Never
Insufficient finance/
buyer cannot get
mortgage
Buyer change of mind
due to survey or
search results
Lender refused buyer
finance following
survey results
Buyer changed mind
for personal reasons
Seller changed mind
for personal reasons
Buyer refused seller 's
demand for higher
offer
Seller refused buyer 's
proposal of lower
offer
Conveyancing
uncovered legal
OFT1140b | 78
problems
Problems elsewhere in
chain
Ancillary/3rd Party Services 43. What relationships if any, does your branch
have with the following providers of services to home buyers and sellers? Please
select all that apply.
Can provide
these services
in-house (that
is our business/
group owns the
service
provider)
Can refer
customers to
providers with
No Answer
whom we have
an established
relationship
Solicitors / Conveyancers
Surveyors
HIP/HR providers
Search providers
Financial advisers / Mortgage
brokers
Lenders
Insurance providers
OFT1140b | 79
44. Broadly, what proportions of customers choose to use your services or the
services to which you refer them (to the nearest 10 per cent)? Note: please do not
enter '%' signs
% of consumers using services to which we refer them (0 100)
Solicitors /
Conveyancers %
Surveyors %
HIP/HR providers %
Search providers %
Financial advisers /
Mortgage brokers
%
Lenders %
Insurance providers
%
OFT1140b | 80
45. If customers choose a third party you refer them to, does your business
earn a referral fee from the third party? Please select all that apply:
Solicitors/Conveyancers
Surveyors
HIP/HR providers
Search providers
Financial advisers / Mortgage brokers
Lenders
Insurance providers
None of the above
OFT1140b | 81
46. On average, for a typical transaction on a £200,000 property, what total
referral fees/commission would you receive from third parties?
More
£0- £50- £100- £150- £200- £250- £300 £350- £400- £450than
49 99 149 199 249 299 -349 399 449 499
£500
Solicitors /
Conveyancers
Surveyors
HIP/HR
providers
Search
providers
Financial
advisers /
Mortgage
brokers
Lenders
Insurance
providers
None of the
above
OFT1140b | 82
47. Do you tell customers that you will receive referral fees/commission?
Typically, we
do not tell
them we
receive referral
fees
Typically, we
tell them we
receive referral
fees, but not
the amount
Typically, we
tell them we
receive referral
fees, and the
amount
Solicitors/Conveyancers
Surveyors
HIP/HR providers
Search providers
Financial advisers / Mortgage
brokers
Lenders
Insurance providers
None of the above
OFT1140b | 83
48. Broadly, and in total, what proportion of your profits for 2008 were
accounted for by the ancillary services referred to in the previous questions
(solicitors, surveyors, HIP providers etc)?
0-10%
More
11-20% 21-30% 31-40% 41-50% than
51%
No
Answer
Provided inhouse
Provided by third
parties
Complaints, enforcement and licensing 49. If your business is a member of a
trade association or professional body, please indicate which codes your
business is required to comply with: (please select all that apply)
Royal Institution of Chartered Surveyors
Solicitor's Code of Conduct
The Property Ombudsman (formerly the Ombudsman for Estate Agents)
National Association of Estate Agents
Guild of Professional Estate Agents
None of the above
OFT1140b | 84
50. How many complaints did you receive in the following periods... (If necessary
please provide estimates.)
From sellers
From buyers
2007 (1 Jan to 31 December)
2008 (1 Jan to 31 December)
2009 to date (1 Jan to 1 June)
51. For 2008, broadly what happened to complaints you received from sellers or
buyers? What proportions of complaints were…
Seller % (0 - 100)
Buyer % (0 - 100)
Dropped by the complainant
Resolved by your branch
Resolved by your head office
Sent to Ombudsman/professional
scheme for resolution
Resolved at small claims court
OFT1140b | 85
52. What qualifications or skills relevant to providing estate agency services do
your staff possess? (Please tick all that apply.)
Principals
Other Staff
No Answer
Internally-provided training with
exam pass required
Internally-provided training
without exam pass required
Basic knowledge of estate
agency
Good communication/people
skills
Typing skills
IT/computer skills
Foreign languages
Marketing
Negotiating skills
Management skills
NVQ level 2
NVQ level 3
Level 3 Technical Award in
Sale of Residential Property
OFT1140b | 86
Level 5 Diploma in Residential
Estate Agency
Certificate of Practising Estate
Agents
Basic training by professional
bodies
Advanced training by
professional bodies
53. Broadly, how many hours training do your staff undertake in a typical year?
Hours training
Principals
Other Staff
OFT1140b | 87
54. To what extent do you agree with the following statements?
Strongly
Strongly
Agree Disagree
agree
disagree
There is a need to provide more guidance to
consumers about their rights when buying and
selling homes
Buyers often think the estate agent is acting on
their behalf
Our branch always makes sure that buyers realise
we are acting for the seller
Online estate agents (that is estate agents that don
't have a physical branch location) compete with
my branch
Individuals offering their own home for sale (For
Sale by Owner or FSBO) compete with my branch
All estate agents are aware of their legal obligations
All estate agents comply with their legal obligations
There is a need to provide more guidance on the
law to estate agents
Estate agents should provide more information to
their customers on the home buying and selling
process
Consumers are more likely to experience problems
when using internet-based estate agency models
than traditional high street estate agents
OFT1140b | 88
The regulations need updating to address new
estate agency models (for example internet-based
estate agents)
Given the introduction of the Consumer Protection
from Unfair Trading Regulations 2008, the Property
Misdescriptions Act 1991 is no longer needed
Self regulation (for example the OEA/TPO Code)
provides sufficient protection for consumers
Possible visits from Trading Standards Officers
ensure that we comply with the law
The sanctions for estate Agents who break the law
are strong enough
Estate egents should be obliged to disclose the
level of commission/benefits received from services
offered to buyers (not just the existence)
We always check to make sure the prospective
buyer will have sufficient funds to buy at the
agreed price
Buyers should be obliged to validate that they have
means to purchase properties before putting
forward offers
There should be financial penalties on the vendor or
purchaser for unnecessary delay after a sale is
agreed
There is a need for positive licensing of estate
agents
55. Are there any other issues or comments you would like to add?
OFT1140b | 89
56. Would you be willing to be contacted by the Study Team to explore the
issues in more detail?
yes
no
OFT1140b | 90