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Sunday, 6 March 2011

Sunday, March 06, 2011 Posted by Jake No comments Labels: ,
Posted by Jake on Sunday, March 06, 2011 with No comments | Labels: ,

"Why are you so negative about everything in your blog?" said a little voice. "Say something nice before springtime". So I set myself the task of finding a benevolent salesman. The one I came across, the one that always works in the interests of the public, is the Estate Agent.


For those of us who own our homes, the value of our house probably forms the bulk of our personal wealth. Apart from living in it, we use it to borrow money cheaply by re-mortgaging, and we hope it will make a big contribution to funding our old age should we downsize to a cheaper home to release capital. The monetary value of our houses exists because of the liquid housing market, which in turn exists because of the much despised Estate Agent.


Why are Estate Agents regarded as being close to the bottom of the morality pile? Cushioned from the absolute pits only by used car salesmen and politicians? The truth is the Estate Agent’s reputation is entirely undeserved. Like mild mannered Clark Kent, Superman disguised as a reporter, estate agents are actually some of the best disguised heroes of our economy.


Most salesmen lie. Zero fat; high interest; free broadband; low repayments; extended warranty; stay slim and beautiful – fibs told by supermarkets, banks, telephone operators, credit merchants, electrical goods retailers, and resting celebrities. But all these salesmen are ranked above Estate Agents. Why? After all, these other salesmen are there to lie to us. Sure, the Estate Agent lies to us – but he also lies for us. He enables us private citizens a rare opportunity to dabble as perpetrators in the rip-off game by proxy, which is both exhilarating and a wee bit shameful.



For most of us, the only things we will ever sell on our own accounts are our house, our car, and our labour. In these transactions, our only ally is the estate agent. The second hand car salesman has a simple business model. He buys our used car from us for as little as possible, pointing out the mileage, the condition of the bodywork, the state of the engine all as reasons why we should consider ourselves lucky to get half what he is offering. He then sells the car, having given it a polish and vacuuming, pointing out the mileage, the condition of the bodywork, the state of the engine all as reasons why the purchaser should consider themselves lucky to only pay half what it is worth, which is twice what he paid us. This salesman transfers ownership of the car from us to him, at the lowest possible price, and from him to the purchaser at the highest price – dissembling at all times in his own interests.


When we sell our labour, our employers tell us about the hard business conditions holding down their ability to raise our salaries, about how the employment market is very slack and pay rates are being driven down, and our competitors are making inroads into our client base by dropping their prices, and that we should hold on for next year when there will be bonuses all round assuming we work longer and harder and the Bank of England doesn’t raise interest rates and the oil price stays on a stable track. The employer is pulled in many directions including shareholders’ interests, keeping the company balance sheet strong, incentivising the staff, incentivising himself. Of all the levers he has to pull, the one controlling staff costs is most readily to hand. Raising the wage bill is not high on the employer’s "to do" list. Even our colleagues will see a pay rise for us as a drain on the cash that could be paid to them. In the negotiation for salaries we have no allies.


But when we sell our houses, our interests are most closely aligned to the salesman – the estate agent. The estate agent takes a percentage cut, so the more we get the more he gets. We hold control of the property until the moment of sale, giving us the whip hand, with the ultimate sanction of pulling out if we doubt his service. Even when we are buying our houses, our own and the estate agent’s interests are intertwined – both of us wanting things to move quickly to completion enabling us to move in, and the agent to take his commission and move on to the next sale.


Estate agents’ little white lies, such as the seasonal effect, may be misleading. There is actually not much correlation between the peak months of the years 2002-05, with peaks appearing in different months each year. But this little lie is arguably not much more then the dentist telling you it won’t hurt a bit. The reason you are having your tooth pulled has no more to do with how much the extraction process hurts, than the reason you are selling your house has to do with the time of year. Once you’ve decided to do it, then just do it. 


Even the nuisance value of flyboarding, or the fraud of inventing or withholding purchase offers to manipulate the parties is not judged by the regulators to be the cause of significant unjustifiable harm. A report by the DTI, providing an impact analysis of imposing further regulation on estate agents (URN 06/2045) stated that if none of the OFT’s proposed changes were made to the current regulatory regime, then “the overall detriment to consumers is likely to remain at approximately £21 million per annum”. £21 million in a market valued by the Inland Revenue in 2006 at £324 billion, with 1.775 million property sales. Putting in the OFT’s additional regulation would only benefit consumers by an amount that is peanuts relative to a multibillion pound market.


So, where do we find those uncounted millions of consumer detriment? Anyone who owns a house desires to see its value rise. We are all hoping to squeeze an extra £10,000 when we come to sell. If the estate agent misrepresents our property in the advertising, no-one knows that better than the owner of the property. We don’t shout out if the Estate Agent skates over that damp patch, crumbling roof, or bit of woodworm when he is showing potential buyers around our houses. After all, we tell ourselves, all that stuff is the buyer’s responsibility. Not spotting the problems isn’t our fault, but the fault of the buyer’s surveyor. Caveat Emptor – let the buyer beware!


Estate Agents also lie on behalf of the buyer. The Estate Agent seeks a quick sale. Getting an extra £5k on the sale price is great news for the seller – but only adds £100 commission for the Estate Agent, which is hardly worth the effort. And it’s easier to talk the seller down than to talk the buyer up. So sellers are given stories of imaginary buyers offering £30k less than the quoted price to lower their expectations and bring the price down.


All salesmen are in the business of spinning a story to make a sale. However, only one does it on the behalf of ordinary people - the Estate Agent. In this most major transaction between private individuals, the estate agent levels the field of dishonesty. Like a diplomat lying for his country, the estate agent lies for his clients. In politics and businesses, where many people are employed, the wheelers and dealers get to their positions by a process of natural selection. Those who can do what is necessary - without compunction - to get an advantageous deal become the negotiators and salesmen, leaving the rest to do the background work. If it weren’t for the estate agents, we private citizens would have no-one to rely on except ourselves. A large part of the private citizenry find telling total whoppers difficult, while a smaller part finds it no problem at all and will eagerly take every advantage they can misappropriate. If it weren’t for the estate agent maintaining the balance, all the best houses would be occupied by the worst rotters. And what would that do to property prices!


So why do we despise the poor Estate Agent? Buying and selling a house is one of the few times in our lives when we are at the sharp end of a really big deal. Sure, we may work in companies doing big stuff, but for that we only receive our meagre salaries. When we do a house sale, hundreds of thousands of pounds move through our own bank accounts. Ours!


Perhaps the real reason we look down on Estate Agents is the very knowledge that when buying or selling our houses he is lying on our behalf, and that we are complicit in this.


It’s one thing to be cheated by your bank, or to pinch stationary or take a sickie from your employer. When your bank manager talks you into buying an overpriced loan, he feels he does it for the bank and not for himself. Neither he nor you regard it as a personal injury committed by one human against another, comparable to a mugging. And when you take a day off ‘sick’ to watch the cricket, you feel the company won’t really miss you and you will catch up tomorrow. There is a psychological distance in a dodgy transaction between a company and a person.


But when we trade our houses, the other party is very similar to us. After all, both buyer and seller are moving into/out of the same house. They want to live in the same sort of area, have a similar sized family and priorities, and similar budgets. So there would be a greater sense of hurt being cheated by ‘one of us’, and greater guilt in the cheating of a brother citizen. Most people feel bad about sinning. Pinching a penny chewing gum from the sweet jar at the age of 5 can leave a guilty memory for decades. Profiting by extra thousands of pounds, or escaping a dilapidated property or evil neighbours, by selling your house under a smokescreen could leave even deeper guilty scars, but for the use of a proxy perpetrator of the con.


Hence our need for a scapegoat – the Estate Agent. Someone for us to pile our sins on, and send out, scorned and reviled, into the wilderness. When we see the Estate Agent, we see a glimpse of our guilty selves – and perhaps that is what we actually find so distasteful.

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