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Written by rosalind renshaw

Estate agents should have a legal responsibility to sell a property at, or close to, their initial valuation.

If they fail to do so within an agreed timescale – say, three months – the seller would be able to require the agent to buy the property.

The proposals have come from an RICS member with more than 30 years of experience in the housing market.

Peter Hendry, of Property Match, in Mapperley, Nottingham, is calling for the Government to amend the Estate Agents Act to incorporate his reforms, aimed at preventing agents from over-valuing houses.

He said that the housing market needs to function more successfully, and to keep “functioning this way through several consecutive economic cycles”.


He says that if agents were confident in the accuracy of their valuation advice, they should be prepared to buy properties on the assumption that they could be sold-on within a reasonable timescale.

He said: “In this situation there should be an even chance that the agent will make a profit on half of the properties s/he is required to buy in this way, and so this new provision would not, in itself, penalise a genuine agent.”

He went on: “The great benefit of enacting such legislation would be that the housing market would be unblocked. People would, at last, be able to move more frequently and more confidently.

“An added benefit would be that the property market would remain open for business throughout changing economic cycles.”

Hendry said: “Even when the main economy is going into a downturn, the housing market could be insulated from the effects by using this method of pricing.

“Similarly in an upturn, the housing market could be insulated from over-exuberant pricing by these methods, which would self-regulate the prices estate agents chalk up.”

He said that good agents would not find the proposed new responsibility too onerous. He thought that they would be able to buy a property outright, from commission, after about 50 sales.

However, he said it would be a burden on firms which over-price properties.

Hendry said he had recently seen a property for sale through an estate agent. It was in very poor condition and yet its asking price was higher than that for which any comparable property in the area had sold.

A second property in the same road, on with another agent, had gone up 62% since being sold seven years previously – a rise of 9% per year. Yet the only material change was that this property had lost part of its garden. It emerged that the property had been on the market for a year.


Hendry said: “These two recent experiences underline the problems facing buyers, as a result of the methods used by estate agents to market houses, even in what are undeniably, extremely tough market conditions.


“No wonder agents are generally regarded with scant respect. The way they market houses needs substantial improvement.”

Hendry also proposes that vendors should have to commission an open-market valuation of their property at the same time as getting an EPC produced. He suggests a Domestic Energy Assessor could be trained to do this, using Land Registry information.

He said: “The need for the Government to intervene in the workings of the housing market is obvious.”

Comments

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    Ppl like you get all the barnis. I just get to say thanks for he answer.

    • 25 April 2011 13:22 PM
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    I fell about laughing when I read this. Its one of the most ridculous things printed I have seen for ages. I wondered if it was the 1st of April

    • 18 October 2010 13:25 PM
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    I have rarely seen anything which was so unintelligent or ill thought out. Peter Hendry, I am sorry but you are a complete nob head of the highest order. Indeed if there is such a thing as a silver nob award then you should surely be the sole contender for 2010. Think through the logic of your ridiculous comment and then reflect for a moment on the practicalities. We already have a situation whereby advisers are scared to advise, in case the clients circumstances change in twenty years time and they get sued. Now you are proposing that a client has a right to demand that their own agent buys the property if they don’t get a sale ? Fools like you destroy entire economies and frankly you should never be let near to any commercial organisation. I am sure that in Nottingham, where houses range between £10.50 and £50,000 its not a problem but in the rest of the country it will involve millions! What a fool.

    • 16 October 2010 17:30 PM
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    Everybody stop commenting on this idiot. He is obviously trying to get some headlines for his failing business

    • 15 October 2010 17:40 PM
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    Well said Martin! :-) Estate Agents wouldn't be able to get away with over-valuing properties unless there was an incompetent surveyor there to back them up. Otherwise, everything would fall apart when the buyer attempts to get a mortgage. Mr Hendry needs to look in the mirror, as his profession are partly responsible for the current problems. I'm amazed that we haven't heard about surveyors being taken to court by the banks for over-valuing houses before the recession! Surveyors have reacted to the current crisis by going in the opposite direction, and now under-value perfectly good homes, thus causing HUGE problems for the buyer when they try to get a mortgage!! Mr Hendry you are a complete plank, and need to join the real world!!!

    • 15 October 2010 16:25 PM
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    Oh dear, I think Mr Hendry has been at the whiskey again! His suggestion would only lead to Estate Agents under-valuing properties to lessen their risk, not to mention the fact that owners of 'non-standard' properties would find it difficult to locate an agent willing to 'take the risk'. I also suspect Mr Hendry was hit on the head, and is suffering from amnesia. His final proposal about the vendor being required to obtain an 'open market valuation' at the same time as the EPC sounds rather like the recently demised Home Information Pack! I suspect Mr Hendry is feeling the pinch, as his services are not in as great a demand as a few years ago. I suggest he take a much needed break, possible one where nurses and counsellors are readily available!!

    • 15 October 2010 16:15 PM
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    Is this guy for real!!! He states it would only take commission on 50 sales to buy a property outright. In the real world estate agents have to pay rent, rates, marketing bills, Rightmove charges, telephone bills, back office systems, front office systems and also STAFF ! So Peter Hendry, can you now see why you are talking from your rear end? Oh yes, and your concept is also rubbish too.

    • 15 October 2010 14:56 PM
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    Alice in Wonderland is real I always thought Alice through the Looking Glass was fiction Peter Hendrey must be the Mad Hatter! what a total winderful idea????????

    • 15 October 2010 12:53 PM
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    lunatic!

    • 15 October 2010 12:26 PM
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    Estate agents have always over valued houses in order to entice the vendor to put the house onto their books. I know because I did it and was told to do it. So, less of the poor honest estate agent. A friend of mine who is also an estate agent told me that the last thing he wanted to do in business was to tell the vendor what he really thought their house was worth because he would never get any houses on his books! So keep telling fibs boys,while there is no come back on you, why not!

    • 15 October 2010 11:55 AM
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    I have never heard anything so absurd. I think this would lead to that many properties would not be put on the market at all as the estate agent would not be able to afford to, or unwilling to take such a risk. This would lead to a market which would be a lot more restricted than when we had the Home Information Pack.

    Ultimately, the value of most properties are decided by the valuer not the estate agent.

    • 15 October 2010 10:58 AM
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    What an idiotic idea. I have been in the family property business since I was 15, and I have in my 35 years seen so many surveyors who couldn't value a donkey never mind a property. Practical experience of buying and selling is the best teacher. The fundamentals of any business are willing buyer willing seller and the market finds an equilibrium. Yes there are bad estate agents, and these are experienced agents, who will overvalue properties to get the instructions, and there are sellers who are greedy and accept that valuation, but to expect estate agents to buy the properties is going a bit too far, and in fact they wouldn't be able to afford to do that. I suppose next he will be suggesting that before a property is put on the market it should have an RICS valuation. Ask anyone buying or refinancing a property about valuations from these so called surveyors and nobody has a good word to say about them because they are undervaluing by 25-30% when in fact the market proves them wrong time and time again.

    • 15 October 2010 10:37 AM
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    Good agents would not find the proposed new responsibility too onerous. He thought that they would be able to buy a property outright, from commission, after about 50 sales. What!!?? I have never heard anything so ridiculous. So that said agent would have to bank 100% of the commission made from selling 50 houses just to be able to buy one? What about business running costs? Assuming that this wouldn't be possible, which of course it wouldn't, how else would the Estate agents make these purchases?? I don't see a queue of mortgage lenders offering estate agents finance do you?

    • 15 October 2010 10:33 AM
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    too late pal you had your chance to price reasonably and cocked it up now you surveyors have gone the other way and are down valuing reasonable properties youve killed the market and remortgage market your almost no better than the robbing banks. The horse has bolted and your trying to close the door and driving people mental in the process should have done your jobs in the first place.. wont achieve anything but glad to get that off my chest..

    • 15 October 2010 10:18 AM
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    Have I missed something? It's not April 1st is it?

    Why waste time. Make the agent buy the property immediately he has valued it, before even putting the property on the market. Save the vendor a load of hassle, and of course reduce property values at the same time.

    Better still why not force the vendor to use a RICS qualified surveyor to value the property on the basis that as he has charged a fee for his professional opinion, he stands by it and makes up any shortfall in the eventual sale price.

    • 15 October 2010 10:14 AM
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    I suspect that our Mr Hendry is actually trying to feather his own nest here. If his suggestions were enacted & agents forced to purchase properties they couldn't sell, then that would result in Mr H still being paid his fee for valuing said property. Hmmm - a bit of self interest cropping up here. I've worked with estate agents & - yes - there are quite a few who persist in marketing a property initially for more than it could realistically be sold for. I don't like this practice but cannot see his suggestions working as there aren't that many agents who could afford to buy in property that they can't sell in order to sell it on at a later date. Instead of keeping the market going, this would actually stall it yet again as reliable agents shut up shop rather than risk falling foul of this rather stupid & self interested suggestiom. Won't work Mr H. Back to the drawing board methinks.

    • 15 October 2010 10:11 AM
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    I'm a Financial Adviser coming to the defence of Estate Agents! Worrying that such an experienced surveyor has such off the wall thinking,and to think he's been controlling pricing etc with his perspective and views is scary.

    • 15 October 2010 10:09 AM
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    And the surveyors never get it wrong do they. Typical surveyor dribble, and if they all have been over valued how come the surveyors have signed them off, surely on this basis if a property is reposessed the surveyor should take responsibility for a shortfall if the loss is beyond that of comparables.

    • 15 October 2010 10:06 AM
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    What it needed is, training, proper qualifications and licencing for all estate agents. Until we get this, anyone can set up an estate agency and that is wrong!

    • 15 October 2010 10:05 AM
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    What is this surveyor on? Maybe we should have the same principle across all industries and control it by the state. He has obviously never understood the idea of a free market. If a property is on for too much it will not sell. So reduce the price. Simple. Nobody has a crystal ball to know exactly what the current market will pay. It is always changing.

    • 15 October 2010 09:32 AM
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    The result would be all properties would be valued at less than what they are worth.

    • 15 October 2010 09:27 AM
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    what planet is this guy on. So I have a house on in Mayfair for £30 million which i cant sell and I have to buy it please.......

    • 15 October 2010 08:58 AM
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