Changing regulations – What Does The Future Hold?
The number of estate agent-related queries on Google is believed to have grown by 35 per cent in the last year and more people are using the internet to search for properties to rent or buy than ever before. Before the OFT Home Buying and Selling market study was released a few weeks ago there seemed to have been a lot of speculation on future regulations – we were even alerted to the fact that a report was due to be released several days beforehand by the OFT themselves.
What The OFT Thinks
The findings have fuelled some hot debates and sparked some biting comments but there were several points to come out of the report as far as I was concerned:
1. There’s an increase in the number of people who are satisfied with their estate agent – which is great to hear – long may that continue. There are some great agents out there and hopefully this means more people are finding the good ones over the bad.
2. The OFT found that “More innovation is needed in the home buying and selling market” – we’re not still in the 80’s and things had and have to change sometime – the industry hasn’t changed dramatically in recent years, so I guess this isn’t unexpected.
What this creates is an opportunity for increased competition and more challengers to the traditional model – those who adapt their models will surely lead the way. Competition has to be healthy here.
3. They also found that – “updating legislation to allow new entrants into the market, could lead to a better deal for house buyers and sellers”. This is great as it shows that unlike many other ‘bodies’ the OFT actually has the consumer, customer or end user at heart.
One of the great things the internet has done is force business to put their customers first and makes it a very risky playing field for any of the old fashioned businesses that don’t.
“More than a quarter of sellers (27 per cent) who used a traditional estate agent have considered using an alternative selling method” – this is one of the highest figures I have seen to date, but it’s interesting to see this number on the increase. It’s obviously great news for Tepilo and new entrants.
Innovation Is Key
“The OFT believes that innovation in this sector, in particular through online services, could have a dramatic impact on the cost of buying and selling a home.”
The model has to change, and costs are in need of a drastic rethink – they need to be proportional to the amount of work involved in selling and marketing a property – I don’t believe a percentage of property value is the best way to go here.
“Current legislation, dating from 1979, may be hindering the development of new business models and needs reform so that new entrants, for example those that only introduce private sellers to each other, are not burdened with inappropriate regulation.”
It will be interesting to see what reforms this involves – I think there are a number of areas of confusion here, and some which could be easily clarified.
64% Of Sellers Don’t Negotiate The Fee!
“64 per cent of sellers in the OFT’s survey in England and Wales did not negotiate a lower fee” – This is an interesting stat and speaks for itself. I am not convinced that it should be down to the homeowner to be having to barter in an estate agents to get lower fees – I think they need to have differently priced choices in the first place.
“Encouraging new business models, online estate agents and private seller platforms could put useful competitive pressure on traditional models and lead to better value for buyers and sellers.” – This seems to be a theme throughout the report – that the OFT supports reduced costs and use of online platforms – which is probably why the focus of traditional agents has reportedly been turned to their own online strategies.
“We also encourage home sellers to negotiate hard on commission fees and consider using alternatives to traditional estate agents.” – This was highly unexpected, but very welcome from a Tepilo point of view.
I think the report touched on some interesting points, some of which need to be addressed further, and it will be interesting to see what impact the findings have over the next few years.
Reducing costs, improving online presence and exploring new ideas seems to be generally supported but above all keeping the customer at the front of all future plans – which is great for all homeowners/tenants out there.
