An estate agent is a person or business that arranges the selling, renting or management of properties, and other buildings, in the United Kingdom and Ireland. An agent that specialises in renting is often called a letting or management agent. Estate agents are mainly engaged in the marketing of property available for sale and a solicitor or licensed conveyancer is used to prepare the legal documents. In Scotland, however, many solicitors also act as estate agents, a practice that is rare in England and Wales.
It is customary in the United Kingdom and in Ireland to refer to real estate or real property simply as property.
The estate agent remains the current title for the person responsible for the management of one group of privately owned, all or mostly tenanted, properties under one ownership. Alternative titles are Factor, Steward or Bailiff depending on the era, the region and the extent of the property concerned.
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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, in the 20th century, "Estate Agent" started to be used as a generic term, perhaps because it was thought to sound more impressive. Estate agent is roughly synonymous in the United States with the term real estate broker.
The job of the agent is to know his or her community and local factors that can increase or decrease property prices. e.g. if a new road or airport is to be built this can blight houses nearby. Equally, the closing of a quarry or improvement of an area can enhance prices. It is the job of the agent to value based on what has, or has not sold in comparison and to achieve the best price for their client.
The full legal term and definition of an estate agent within the UK can be found on the Office of Fair Trading (OFT) website. Enforcement of these regulations is also the responsibility of the OFT.
In the United Kingdom, residential estate agents are regulated by the Estate Agents Act 1979 and the Property Misdescriptions Act 1991, as well as, the more recently enacted Consumers, Estate Agents and Redress Act 2007.[1]
For residential property, there is a trade association for estate agents, the National Association of Estate Agents (NAEA). NAEA members can be disciplined for breaches of their code of conduct.[2] Their disciplinary process includes everything from cautions and warnings right through to more severe penalties of up to £5,000 for each rule breached.[3]
Some estate agents are members of the Royal Institution of Chartered Surveyors (RICS), the principal body for UK property professionals, dealing with both residential, commercial and agricultural property. Members, known as "Chartered Surveyors", are elected based on examination and are required to adhere to a code of conduct, which includes regulations about looking after their clients' money and professional indemnity insurance in case of error or negligence.
The Ombudsman for Estate Agents Scheme,[4] which obtained OFT approval for the Code of Practice for Residential Sales in 2005 and, as of November 2006, claims to have 2,532 member agencies.
There is a legal requirement to belong to either organisation to trade as an estate agent. Agents can be fined if they are not a member of a redress scheme. The redress scheme was brought in alongside and to govern agents in reference to the HIP (Home Information Pack).
A handful of national residential estate agents chains exist, such as Connells, 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.
Estate agents who handle lettings of commercial property normally charge between 7–10% of the first year's rent as fees, in addition to taking the first month's rent in its entirety. If two agents are charging 10%, they will split the fee between them. Estate agents selling commercial property (known as investment agents) typical charge 1% of the sale price.
The fees charged by residential letting agents vary, depending on whether the agent manages the property or simply arranges for 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 on charges, except that they are forbidden by law to charge a fee for 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 one month's rent) is also generally required. Most residential lettings in the UK are governed by "Assured Shorthold Tenancy" contracts. Assured shorthold tenancies (generally referred to simply as "Shorthold") give less statutory protection than earlier, mostly obsolete, types of residential lettings. Shorthold tenancy agreements are standard contracts generally available from legal stationers and the internet for around £1.00, although most lettings agent will charge £30 to provide one.
It is important that tenant referencing checks are in place prior to a tenant moving into a property. The credit check can be run using credit history data from Equifax, Experian or Call Credit (the three main UK providers) using an in-house website system or a managed referencing service. A reputable agent will also ask for an employment reference and a previous landlord reference to verify that the tenant can afford the rental on the property and that there were no serious problems with the previous agent. It is also essential that proof of ID and proof of residency are also collected and filed.
Estate agents selling residential property generally charge between 2% and 3% of the sale price plus VAT (Value Added Tax) Additional marketing charges are also applied for advertising, in media such as newspapers and websites.[5]
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 the traditional estate agency. New models have been introduced, which uses digital media screens in place of the agents traditional high street window. These screens allow agents to take their listings into remote locations where an office may otherwise not be available.
A report in 2010[6] showed that online estate agents typically charge a fixed fee between £400 - £1,000 with some charging a further commission on sale and many charging additional fees for extra services such as the supply of a "For Sale" sign, professionally taken photographs and accompanied viewings.
In February 2010 the Office of Fair Trading (OFT) announced that a change in the legislation for estate agents has led to a shake up in the way homes are sold, allowing cheaper online agents to become more established than they could before.[7]
New types of property portals based in the United Kingdom have started to encourage UK and worldwide estate agents to collaborate by showing all their properties, thus allowing site visitors to see a vast array of UK and overseas properties all on one website.
Many estate agents are using estate agency software to assist in the sale of houses. The latest technology enables home buyers to receive property details while outside a property, visit estate agents' websites for the latest listings and display properties for sale in the local vicinity using location based applications on mobile phones. A lot of property advertising is now automated for the agents using estate agents' software. Research undertaken in 2007 said that the most effective way of selling property is via 'For Sale' signs, 28% of customers had seen the estate agent's For Sale signs before researching more in depth into the properties. Searching for houses via the internet came in a close second (21%), with newspapers third at (17%). The fourth most effective way, and the most traditional, was customers visiting an estate agent's office (15%). However now in 2010 80/90%% of properties are found via the internet and agents see less people walking into their offices. Boards are still very effective, but many agents are now cutting out paper advertising and moving just to digital such as eMags and just the web.
Other methods included auctions (11%), word of mouth (3%) and leaflets (2%).
Estate agents are known for their unique way of putting a positive spin on their description of properties. For example, 'in need of modernisation' may actually mean a great deal of repair work is required to a house.[8]