Estate agent
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Estate agent is a United Kingdom term roughly synonymous with the United States term real estate broker, a business that arranges the selling, renting or management of homes, land and other buildings. However in many instances, estate agents are mainly engaged in the marketing of property available for sale and a solicitor is used to prepare and exchange contracts.
It should be noted that, in Ireland, real estate is generally referred to simply as property.
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[edit] Origin
The term originally referred to a person responsible for managing a landed estate, while those engaged in the buying and selling of homes were "house agents", and those selling land were "land agents". However, sometime during the 20th century "estate agent" started to be used as a generic term, perhaps because it was thought to sound more impressive.
[edit] Regulation
In the United Kingdom residential estate agents are largely unregulated (although legal provision exists to introduce regulation). Some estate agents are members of the Royal Institution of Chartered Surveyors (RICS), the principal body for UK real estate professionals. However, the vast majority of RICS members — known as Chartered Surveyors — who practice estate agency do so on commercial property.
For residential property a trade association, the National Association of Estate Agents (NAEA), exists, but as a non-professional body it has limited scope for disciplining members when appropriate. The Ombudsman for Estate Agents Scheme[1], which obtained the British Government's Office of Fair Trading (OFT) approval for the Code of Practice for Residential Sales in 2005 and, as of November 2006, claims to have 2532 member agencies.
There is no legal requirement to belong to either organisation in order to trade as an estate agent. Due to the lack of effective regulation, dishonest and fraudulent practices may exist in the industry[2].
[edit] Industrial structure
A handful of national residential estate agents chains exist, the largest by far being Countrywide plc, with the majority being locally or regionally specialised companies.
Several multi-national commercial agencies exist, typically being Anglo-American, pan-European or global. These firms all seek to provide the full range of property advisory services, not just agency.
Only a handful of large firms trade in both commercial and residential property.
[edit] Fees
[edit] Leasing
Estate agents leasing commercial property normally charge between 7–10% of the first years rent as fees, this is in addition to taking the first month's rent in its entirety. This will be the total fee. If, say, two agents are charging 10%, they split this between them. Estate agents selling commercial property (known as investment agents) typical charge 1% of the sale price.
Residential letting agent's fees are extremely variable, depending on whether the agent manages the property or simply arranges new tenants. Charges to prospective tenants can vary from zero to £300 in non-refundable fees usually described as "Application", "Administration" or "Processing" fees (or all three). There are no guidelines for letting agents with regard to charges except that they are forbidden by law to charge a fee for seeing a list of properties; otherwise, they are free to charge as they please.
The first month's rent in advance plus a refundable bond (usually equal to a month's rent) is also generally required. Most residential lettings in the UK are effected through a particular form of contract known as an "assured shorthold tenancy". Assured shorthold tenancies give less statutory protection in terms of security of tenure than earlier, mostly obsolete, types of residential lease. Assured Shorthold Tenancy agreements are standard contracts generally available from legal stationers and the internet for around £1, the average letting agent will charge £30 to provide such a contract.
[edit] Selling
Estate agents selling residential property generally charge between 1/2% to 4% of the sales price plus VAT, depending on the contractual arrangement and whether an individual firm has sole rights to the sale.[3]
[edit] Other approaches
Since around 2000, online estate agents have provided an alternative to the traditional fee structure, claiming cheaper, fixed fee selling packages. These online estate agents claim to give private property sellers the ability to market their property via the major property portals (the preferred medium used by traditional high street estate agents) for a fraction of the cost of traditional estate agency.
[edit] References
- ^ Ombudsman for Estate Agents Scheme explained
- ^ Anna Adams, "The secret agent" BBC online, March 2006
- ^ Selling arrangements
