Category Archives: sell my home

Commisery for Purplebricks customers overpaying for tied solicitors by hundreds of pounds?

How much ‘commisery'(tm) might you feel if you had been encouraged or even required to use a specific firm of solicitors by your estate agent, only to find that over £380 was going straight into your agents pocket as a backhander from the solicitor in question? All perfectly legally of course.

In a written quotation from late 2018 recently sent to the author (see below) on conditions of strict anonymity, the firm quotes the fees for its professional services as £599 plus VAT (excluding disbursements). However, £382.85 plus VAT of this is paid straight back to Purplebricks PLC as a referral fee. So, exactly the same service that the firm of solicitors are charging customers £718.80 for, could be literally hundreds of pounds less expensive if they weren’t paying a huge introducer fee to Purplebricks.

Like many, but by no means all, estate agents Purplebricks PLC (stock market ticker #PURP ) make much of their income from referring people who buy and sell through them to a solicitor. It’s a perfectly legal practice as long as it is declared to the customer at the outset. The Property Ombudsman scheme

also requires that an agent informs the clients (the person selling) of any commission they make in this manner (see screenshot).

The quotation sent to the author makes it clear that this eyewatering sum has been correctly declared to the person being quoted. However, I have no knowledge of whether sellers are informed of how much Purplebricks might earn from a buyer who also uses the same firm, neither do I have any evidence to suggest that Purplebricks are not complying with the law.

Given that Purplebricks customers who choose to defer the typical upfront payment of around £1,100 are effectively required to use this firm of solicitors or pay an additional fee to ‘not’ use them, there may be some readers who might question whether a Publicly Listed Company that champions itself as a cheap way of selling your home but, who charge a fee even if they don’t sell* PLUS earn hefty backhanders from closely associated companies is very cheap at all.

*according to Jefferies, 49% of Purplebricks customers don’t actually sell. This has been strongly disputed by Purplebricks but the firm, who are notoriously litigious, have never supplied evidence to disprove the claim. Readers must draw their own conclusions.

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“Best and final offers” – What does it mean at PDQ?

new board 1a soldWhen there is strong interest on a property and a number of offers are received in quick succession, at PDQ (as at many other agents), we often advise the owners to use a process called ‘best and final’ offers to decide which potential buyers offer to accept; effectively a blind auction. We have found is the fairest and least pressured way to agree a sale because everyone is bidding equally. We also find it helps prevent gazumping.

Experience and evidence shows this ensures the best price is obtained for our customers, unlike the alternative ‘open-bid’ system used  by some agents which often results in a lower sale price and bad feelings

For example, a bidder who has been told the other bidder has offered, say, £500,000, may only offer £501,000 despite being prepared to go much higher to secure the property. When bidding blind, all interested parties reasonably expect the other bidders to value the property as highly as they do and, to be able to afford to bid to that level. Consequently, bidders will offer their genuinely best price rather than the lowest price they believe they can get away with.

Note: If you are a buyer reading this, all agents have a legal and contractual obligation to negotiate the best price for their customer, the seller.

At PDQ, we ensure that all offers remain confidential to us, the person who has offered and the owner I.e. no-one else who has offered is given the level or substance of any other persons offer unless instructed to do so by the owner.

Once initial offers have been received and the owner has agreed to the best and final process, we ask everyone who has offered for their ‘best and final’ offer. At this point, we also explain that no-one is under any obligation or pressure to increase however, we inform that everyone else who has offered also this opportunity and, if they wish to make a higher offer, this is the time to make it.

Once we have all of the best and final offers, we put them to the owner along with every buyers position and any proof we have of that position* (buying with a mortgage, cash, subject to the sale of another property, and any chain details we have been able to confirm). The owner then makes a decision and the successful bidder is informed.

NB – Under English law; any offer received by an estate agent must be passed on to an owner (and confirmed in writing) up to the point of exchange of contracts unless, the agent has a written letter from the owner instructing them not to consider further offers. So, whilst best and final offers may have been agreed, offers must still be put forward by all agents. However, at PDQ, we generally advise owners to honour agreements made under best and final unless there are very good reasons to change buyers (often known as gazumping) such as the buyers position has changed from cash, to requiring to sell a property before being able to purchase.

Discover what PDQ can do for your property or business here

*Agents have an obligation under Property Ombudsman rules to make reasonable attempts to ascertain the ability of a buyer to fund the purchase. However, it is illegal for an agent to insist you use their financial advisor or, to state or imply that an offer will not be put forward or, may be less favourably considered, if a buyer refuses to use an agents preferred supplier.

A solution to the housing crisis that doesn’t cost councils a penny?

The housing market is in crisis with many first time buyers locked out of owning and, in many areas, being able to rent property at affordable levels. As a country, we also have a homeless problem with a shocking lack of care for the mentally ill and, our military veterans.chris matterport me

Various solutions have been tried over the years and charities have also played a vital role in alleviating some of the need. For years there has been much hand wringing and blame-gaming by politicians for who is at fault but, the problem stubbornly remains.

Owning a home of ones’ own is not a human right but, having a secure place to call home is.

I believe there is a solution that has been staring us as all in the face for many years and it does not require any additional spending.

Local government (councils) currently sit on, and annually invests in, billions of pounds worth of investments, predominantly in stocks and shares for their pension funds. This is almost always invested in major companies who have little to no local connections or interest in the well-being or growth of the area and people whose money they have invested in them. Neither is there any guarantee that these investments will provide any return and, may even lose money.

However, if local and national government were required to use a minimum of 50% of existing pension funds and new contributions to invest in their own local housing needs, this would have immediate, medium and long term benefits. This investment would be in the form of, but not limited to

  • Making means-tested local authority buyer property deposits available

  • Building new, and refurbishing existing vacant property stock, means-tested, short to medium term social housing

  • Building flats and help centres for the homeless to be leased to and run by homeless charities at nominal rates

Making means-tested local authority buyer property deposits available. This would operate by offering qualifying local residents secured loans for private property purchase to be used as deposits. Deposits would be up to ten percent of the purchase price and would be based over a ten-year period. The homeowners would make affordable capital repayments with no interest over the first 10 years (e.g. £20,000 loan = £83.33 per month for 10 years) guaranteeing local government a minimum return on their investments and a source of income.

Any remaining initial loan amount plus interest would be repaid in whole or in part on the sale of the property (most buyers move home 2 to 4 times in their lifetimes though this figure varies) or, become due after ten years. The interest rate would be calculated as a percentage rate of the median house price inflation over the term of the loan for the Council area as a whole as using ONS or HM Land Registry figures. Homeowners who did not need or want to move after the ten year period would have a commercial interest rate calculation made for the previous ten year period (set against Bank of England rates) which ould be payable as a lump sum or, spread over a further ten year period at a variable current rate of interest.

To protect the homeowners and facilitate the flow and turnover of housing stock, the maximum chargeable interest would be capped at a set amount of any house price inflation. To ensure council pension investments were assured of a return (unlike at present), the minimum interest payable would be at an agreed minimum percentage; (for example, this could be set at 1% below Bank of England Base rates over the period.

Building new, and refurbishing existing vacant property stock, means-tested, short to medium term social housing. Self-explanatory. Councils would again have funds available to invest in their local housing needs to bring back derelict and unused housing stock into use and, to build new housing stock for social rent.

Building flats and help centres for the homeless to be leased to and run by homeless charities at nominal rates. Not only is looking after this countrys’ homeless a moral imperative, there are also sound financial reasons to help people back into society and a secure home. By utilising existing pension funds and contributions to invest in these buildings, existing expenditure on policing and emergency accommodation can be utilised elsewhere or, saved.

If implemented, I believe the above innovations would build happier communities and good, better-maintained cities, towns and villages. The positive consequential advantages would be many. A happier society tends to be healthier, crime drops, jobs are created and wages increase.

From purely a cold investment point of view, the above paragraph outlines how I believe this will help ensure local property prices remain stable and grow, bringing in good returns for the pension funds who have invested in them. The greatest returns though are for our society.

My partner mustn’t know you’ve been here…

The Christmas period is a happy time for many and for making new friends and entering into new relationships. Sadly, it is also (and not entirely unrelated in some cases) a catalyst for the end of relationships too.

shutterstock_397156225If you are going through a break-up (or are planning to), for whatever reason, and there is property involved (and always if you have children), try to aim to keep it as civil as possible. It will cost you a great deal less in stress and money in the long run (and your children will thank you at some point too)! This is advice born out of both painful personal and extensive business experience.

As agents, we are often asked to discreetly give an opinion on price prior to the other partner even knowing the relationship is about to end.

A good agent will always be discreet but, the chances are your neighbours will spot a stranger coming to your door and will drop you in it, usually at THE most inappropriate time. “Morning you two, I saw you had a friend popping in this morning. Is it family?”

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awkward

If we are invited in once the split is advanced, we often find that one partner will always angle towards the lowest valuation possible and the other, the highest; dependent on who hopes to buy out the other/ stay in the home.

This often causes even more pain and anguish as you now both have a new cause of tension: whose agent/ valuation is right?

That said, divorce lawyers will often suggest that each party obtains their own valuation. The cynics amongst us, may believe that this is designed to stir up more angst and expensive legal work but that is pure speculation. Cough.

If lawyers are involved, from experience, it is better for both people to ask for their respective lawyers to commission an RICS surveyor to give an opinion on value and any obvious defects in the property with both people agreeing to abide by that surveyors value but, to set the marketing price at a set figure above the surveyors valuation (e.g. 5% – 10% to allow for negotiation and surveyors being, occasionally, cautious). The cost of the surveyor split two ways will be FAR cheaper than the cost of one or two letters between lawyers as each side battles it out to try to win the ‘whose value is right argument’.

Once you have a mutually acceptable figure, we would advise you choose a good agent, who will accompany every appointment. Both people agree to ensure the home is in a presentable condition and that they leave the house empty while viewings are taking place (so no one can accuse the other of trying to affect the viewers’ decisions about a property).

wigradiusimagesAll agents must, by law, check to see if anyone else has a financial interest in a property and, must also treat each person equally. If you have a court order giving you control over the process, the agent will need to take a copy of this.

It’s also vital before you put your home on the market, that you both agree who is taking what in terms of curtains/ carpets etc. and anything from the garden etc. and that this is given to the agent. At PDQ, we ask all of our clients to complete a legal Property Information Questionnaire and the Law societies Fixtures and Fittings list to give to potential buyers to a) eliminate confusion and potential arguments over what is being sold/ left with the property and, b) to speed up the sale process once a sale has been agreed.

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Christmas can be a GREAT time to sell, however humble your home may be.

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Many people delay putting their home on the market prior to Christmas in the mistaken belief that they are:

a) unlikely to find a buyer “it’s the wrong time of year”  or,

b) going to be snowed under with viewers over the festive period (excuse the pun)

In fact, the run up to Christmas can be one of the best times to have your home up for sale. 

“It’s the wrong time of year” – Certainly, there are less buyers looking for and viewing homes in the run-up to Christmas BUT, those who are, are deadly serious. If someone calls our office in November December and says they want to find a home, we know they are very likely to actually buy.

The surge of buyers looking on our website year after year from December the 26th is profound. If you wait until the New Year to put your home up for sale, it will miss that surge of motivated buyers and will just become one of the many homes coming onto the market in the New Year. Smart sellers know this and put their home up for sale before Christmas; avoiding the competition and adding rarity value to their property.

As for being bothered over the festive period? Less but higher quality viewings that have been vetted by a good agent will mean you are very unlikely to be bothered by hordes of viewers (and, if you are, the resulting likely higher sale price will help cover those Christmas extras on your credit card!). Additionally, a 3D tour, such as the ones we use at PDQ, by Ocean3D is perfect to allow potential buyers to see if your home is going to match their requirements before physically viewing; meaning that those who DO view are far more likely to buy and, be far less likely to be wasting your time.

Do I need listed building consent to erect a timber garden shed/ studio?

An interesting discussion/ training session in the office today.

 
A potential buyer wants to erect a wooden studio (large shed) on a property we are selling.
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The property itself is Grade 2 listed which would normally mean planning permission would be required* however, the land the shed would sit on is not attached to the property or its immediate surroundings but, is accessed via a shared path and a 30 yard/ meter or so walk.
The legal definition of curtilage** suggests to us that the land does not form part of the curtilage of the main property. Accordingly, it does not form part of the listing in our opinion and, so, the shed/ studio will not need planning permission as long as it complies with the other permitted developments. Outbuildings are considered to be permitted development, not needing planning permission, subject to the following limits and conditions:
Please note: PDQ are not lawyers and we have advised the buyer to consult with their legal advisors to verify this opinion and would advise readers in a similar situation to take independent legal advice before proceeding with any actions that may incur cost or time.
If you need advice on a property you are thinking of selling or developing property in Mid or West Cornwall, give us a call or drop us a line below. Before employing any agent, always ask to see their CV. Here’s mine
Director
PDQ Estates Ltd

*References:

Planning Portal

Local Government Lawyer

Call-centre estate agents national market share falls by 24% in the month*

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In May, Mike DelPrete caused eyebrows to be raised in estate agency when he claimed that call-centre agents (incorrectly labelled online agents by some**), as a sector, had increased their market share of new listing to 7.1% from a previous (relatively) steady 5% or so for the past year or two. However, in his latest release, covered in Estate Agent Today, his research shows a 24% reversal in fortunes in the call-centre sectors share as a whole.

28/06/2018 EAT Today: “He (Mike DelPrete) also says that the total market share of the top five online agencies, based on new listings, is down to 5.4 per cent for May.”

08/05/2017 EAT Today: “Specifically, he (Mike DelPrete) says new listings market share for the online agents in the UK is up from 5.7 per cent in January to 7.1 per cent last month.”

At a glance, DelPretes’ data does not appear to take into account properties that have been multi-listed by some agents (portal juggled) but, nonetheless, demonstrates that the call-centre agency model is struggling to gain the massive, sustained growth in market share it has long promised as a sector.

There could be a number of factors at play in this dramatic drop much of which could be further bad publicity over the model and its chief players facing negative press from ASA rulings and consumer programs but predominantly on social media with Purplebricks, in particular, facing a daily barrage of complaints and abuse from unhappy customers which may be affecting other players in the sector by association.


*7.1% in May to 5.4% in June = 1.7 percentage point, a drop of 23.94% Source EAT as referenced in the article.
**It is incorrect to state that call-centre agents (those without high  street offices) are online, as almost all estate agents are online’ with high street agents having been so in the main since the early 1990s’. A more accurate and less confusing description of the YOPAs’ eMoovs’ and Purplebricks brands then, is “call-centre”.
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