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Avoid estate agents, sell your own home

Comment 28th July 2010

 

Currently in the UK if a person wants to set up a company to enable individuals to sell their properties online, and then provides those individuals with a 'for sale' board, the company would be classified as an estate agent.

Under section 1 of the Estate Agents Act 1979,  you are an estate agent if you:

  1. for the purpose of, or with a view to, effecting the introduction to the client of a third person who wishes to acquire or, as the case may be, dispose of such an interest; and
  2. after such an introduction has been effected in the course of that business, for the purpose of securing the disposal or, as the case may be, the acquisition of that interest;

Due to an exemption clause this Act does not apply to the publication of advertisements or the dissemination of information (e.g a newspaper), but because the company provides a ‘for sale’ board it is seen as an ‘introduction’ therefore the Estate Agents Act 1979 and Property Misdescriptions Act 1991 apply.

 

As an estate agent you are bound by the Property Misdescriptions Act 1991, where you can not ‘make false or misleading statements about specified matters relating to property’, therefore before a property could be entered on your website you would have to verify all its particulars.

An office of fair trading (OFT) study into home buying and selling states that changes to outdated legislation, which has hindered firms hoping to set up online services for people to sell their own home, would help both buyers and sellers.  When the Estate Agents Act came into force a high street estate agent was the primary way to buy and sell properties.  The act needs updating to take into account new technologies, the OFT proposes two options for updating the Estate Agents Act 1979:

  1. define the activities that pose risks to consumers, and link the prohibitions and requirements in the law to those activities. 
  2. frame the law in terms of the agency relationship between the seller and the intermediary – if the intermediary is both marketing the property and negotiating then they should be subject to regulation, whereas if the intermediary is a neutral trading platform that facilitates direct contact between individuals, then they should not. 

Why does this matter?

 

The property market is dominated by traditional estate agents and updating the legislation would increase innovation and provide the potential for companies to create new business models.  As a result of the change, more small businesses could start up, therefore encouraging competition and thus creating buoyancy in what is currently a stale market.

Customer satisfaction studies show dissatisfaction with the fees and services received from estate agents.  If alternatives were available the majority of those surveyed would use them in preference to traditional estate agents.

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