Money week

Could we do without estate agents?

Greengrass mentioned in MoneyWeek…

We should all admit that we need and love estate agents, says Lucy Kellaway in the Financial Times. Kellaway is moving house. When she started the process, her main question was, “Why do estate agents still exist?”

We used to need them – just to tell us what was for sale and where, and to take viewings. But “now the internet does this”.

Anyone can list their house for sale. Anyone can then look at the outside on Google Earth, while the seller can let anyone view the inside with a few online videos. As for the price to charge or to pay, setting that “could now be done by an eight-year-old”. The only hard bit left (showing people around) could be done by an “Uber of house showers” at £10 an hour rather than the £20,000 most people end up paying estate agents to sell. So why do they still exist?

It’s not about logic, says Kellaway. It’s about the way we go mad when it comes to buying and selling houses: houses are where “all our money lives”, so “even the sanest people become unhinged”. They dither. They change their minds. “Chains break and everyone gets stuffed.” It is all very frightening. That’s why we should learn to love estate agents.

I agree with Kellaway on almost all of this. But the mystery to me is not that estate agents still exist, but why more people don’t bring sanity into the market by using buying agents. Estate agents don’t work for buyers. They work for sellers. That’s quite right: they clearly can’t have the interests of both at heart at once, so must fight for the side that pays them.

So given that buying and selling houses is not just an emotional roller-coaster, but also complex and very time-consuming, why don’t all buyers hire an expert to be on their side? Someone who knows every house on their patch, when it last sold and what for, what its price per square foot should be given the price of the house next door, and where its damp patches are. Someone who knows the ebbs and flows of buyers and sellers (is it near a closing army base? Are the schools improving? Is it near the Scottish border?) and can then negotiate the right price based on these factors.

The usual argument against buying agents is price. Buyers don’t want to pay the 1% or so a good agent costs. I think that’s a mistake: a house is the biggest purchase anyone ever makes. So why do it without advice? It seems to me that, for all the reasons Kellaway lays out, we could easily do without estate agents – as long as the buyers started used buying agents. Where do you find one?

Laura Silverman in The Daily Telegraph suggests Greengrass Property in London or BrightonMove in Brighton. MoneyWeek roundtable regular Henry Pryor operates in much of the south, and my own house in Scotland was found by Saint Property.

by Merryn Somerset Webb (MoneyWeek)