Why Would Anyone Suggest It?

The argument is simple enough. Estate agents are invariably commission based and competing to win instructions to sell property.

If the person trying to win an instruction is also responsible for telling you what your home is worth, there is obvious potential for a conflict of interest. They might over value to win the instruction or even under value to get a quick sale.

Also, because estate agency is largely unregulated, by that, you can literally leave school and start telling people how much their homes are worth - there is obviously a cause for concern.

After all, there is a whole industry of RIC's qualified surveyors whose sole job is to assess and value property. Currently, they only get involved after a buyer is found, shouldn't they be getting involved before a property goes on the market? Wouldn't it save a lot of the delays, price re-negotiations and stress we currently experience in our current property selling process? 

It's Stressful For Agents As Well.

Indeed, for the honest and reputable estate agent, one of their worst fears and frustrations is losing the chance to sell a really great property because another unscrupulous agent has over-valued it just to win the instruction.

Sellers often don't realise how important the first few weeks of marketing are. On the first day of marketing a property will receive its highest level of exposure and interest. It will be listed at the top of all the major property websites as a 'New Instruction', and all the buyers will be chomping at the bit to have a look. If after a glance they see the property has been overpriced they will simply "move on" and wait for the next new instruction. Then the following happens.

• Constant Price reductions
• The listing becomes stagnant

Ultimately the property sits on the market for months, even years until the seller takes it off feeling disillusioned or the property undergoes a series of price reductions, agent changes etc and eventually sells. Either way it is time consuming and in a declining market very costly. 

Imagine This ...

You decide to sell your home. But instead of calling three estate agents for free valuations, you're told that estate agents are no longer permitted to tell you what your property is worth.  

Instead, you have to pay a few hundred pounds to get your valuation from a licensed property valuer or chartered surveyor. Their job is to let you know the official guide value of your home, they will also let you know if there are any significant issues which may need addressing before you put your home on the market. All the surveyors work within a set framework revolving around price per square meter based upon location with a margin for condition, individual features and market conditions.  

Once the valuation is complete, you could then call round your local estate agents to choose who you want use to sell your home. The estate agent could "tweek" the price, but it would have to be agreed with the surveyor first.

Once on the market, if buyers wanted to bid over the asking price, the property would be free to go to a sealed bids scenario where ultimately the offers from the best buyers in the best positions to proceed would be put forward to the seller, the seller would then open the sealed bids in front of the agent and choose the buyer they would like to proceed with. Each time a property is sold, the price per sq meter for that area would be updated to reflect any changes in the market. Sounds simple enough ...

But would it actually improve the property market?

If every valuation came from an independent professional working from a set framework with no financial interest in the property, asking prices would become more consistent, transparent and official.

Buyers would probably have greater confidence knowing they had been carried out by a licensed professional and sellers would have a clear understanding of how and why their property has been valued at the price. Both buyer and seller would also be aware of major issues which might affect the value.

Would Estate Agents Become Better Agents?

Maybe. At the moment, most sellers are more interested in hearing an agent say:

"I think your home is worth more .... "

Over:

"We're the best company to market and negotiate your sale because..."

So interestingly, by removing the pressure of valuing a property it might strengthen the profession. Instead of competing over who is offering the best price the agents would compete on what really matters:

• Marketing quality.
• Photography.
• Negotiation skills.
• Sales progression.
• Communication.
• Local knowledge.
• Customer service.
• Results.

Success would depend less on the number they promised at the kitchen table and more on the service they delivered afterwards. Perhaps many reputable agents might well welcome that shift.

More Trust?

Maybe independent valuations could increase public trust by separating advice from sales in so much as homeowners might feel they were receiving objective guidance rather than a sales presentation. Buyers would feel the property has been properly assessed giving them more confidence in their intended purchase.

Valuation Framework.

Property valuations are subject to an individuals opinion to a certain extent and two chartered surveyors can legitimately value the same property differently. That said, every area has it's own guide price per square meter so the basic valuations will have a consistent framework to work from. Ultimately, the seller would still retain the right to choose the asking price, but a buyer would have access to the valuation report (just like an online EPC) so they could form their own opinion.

But What About The All Important Local Agent Knowledge.

The surveyors who value property are there to set a base price around a framework of other similar properties which have been on the market and sold within a specified time frame. They would then give the seller the valuation which the seller could use as a baseline marketing price. The seller would then call in their local estage agents who would offer that all important real time market insight:

• Which school catchments buyers are chasing.
• Which roads command unexpected premiums.
• Where demand has suddenly increased.
• What buyers are currently willing to stretch to.

This knowledge could then be used to adjust the marketing price to allow for market conditions.

What About Mortgage Valuations & Level 2/3 surveys?

Many lenders now simply do drive by valuations and use the sqm to value properties for lending purposes, that said if the loan to value is high they could either refer to the online survey or do their own.

Level 2 and 3 surveys are usually more in depth surveys and buyers could request to have these done in the normal way as an additional level of peace of mind.   

What if the Surveyor Gets The Price Wrong? 

Provided the valuer has used the valuation framework,  the property should have some on the market at the correct price. Provided the agent is offering a comprehensive marketing package to include rightmove etc - even if the property had been slightly undervalued, all the buyers would see this very quickly and the interest levels would be very high. This would ultimately lead to a "sealed bids" scenario as discussed earlier.

As with any professional industry the valuer / surveyor would be fully accountable for their valuations and reports. There would be a redress scheme along with compensation payable for any mistakes and ultimately a valuer could be struck off for negligence.

The Bottom Line

Whilst removing estate agents from the valuation process entirely wouldn't magically fix the housing market, it might reduce some commercial bias and streamline the process once a buyer has been found, yes there would be a couple of hundred pounds extra upfront costs, but maybe these costs would be preferable to the stress, delays, re-negotiations and other problems we currently experience in England and Wales. 

Estate agents possess valuable skills and local knowledge that shouldn't be underestimated, but they are being blindsided by unscrupulous agents working in an unregulated market where the focus on fake prices is used to win instructions over the ability to deliver a quality service.

One thing is for sure, the property market in the UK is outdated and broken. Change is underway with the new reforms and yes many sound great, but will they address the real issues and deliver accountable solutions?