Axing the Agent may Lead to a Destabilised Property Industry

The current lack of buyers in the market, and trouble selling house has heralded the rise of FSBO, Property For Sale By Owner-s going it alone, advertising on property portals, and specialist FSBO websites, or even the top of cupcakes, and sacking the agent. This is currently predominantly done for second homes overseas. I think there is a great market for this at the moment, as they give far greater exposure to the property and thus increase the chances of selling.

But recently it has gone a stage further, with the BBC running a series called Axe the Agent, about people selling without agent's in the UK, which may become more popular in the near future.

Agents have been the cornerstone of UK house sales for so long; one must wonder what shape the property market would take if the majority of homes were sold without agents, and especially if they were eventually fazed out altogether.

In this current credit-crunched time, when the housing market has plummeted, it is widely held that the bottom will only come; recovery only begin when the gap between what buyers feel they should be paying for a property (how little they can get it for), and what a seller is willing or becomes forced to drop to. This is true for FSBO sales just the same as it is for agent managed sales.

That said, without agents, would the situation where the gap becomes so pronounced ever arise, which would also mean the great price growths we saw during the recent boom, and all the booms that went before it may also be unlikely.

In the market boom, sellers were in control. There were plenty of buyers, and if one investor or family wouldn't meet the seller's expectations, they would simply be turned away in expectation that another would be along shortly. Thus prices would continue to rise as far as this trend continued.

The gap between buyers expectations and sellers realisations exists now because the market crashed, and the clamps were put on credit as the whiff of bad debt drifted ominously across the Atlantic and burned our banks and investor's fingers as though it carried acid in its wake.

Once the market became a lot harder to sell in; when they were a lot fewer buyers in the market and prices started to fall, that is when -- it became a buyer's market -- buyers gained an equal if not larger portion of control over what they would pay for their next house, and then, when everyone wanted to get a bargain, that is when the gap started to form. In short the shoe is on the other foot.

So the situation above arose when the primary pricing participle was an estate agent, let's take a look at where we might be without them.

Without an estate agent's market experience and qualifications, would sellers have the confidence to put their prices up? Not even so much the confidence, but there are a breed of honest people out there who probably would think putting their price up when the property hadn't changed or been improved was dishonest, or if they did they would do so guiltily, and probably by a lot less than an estate agent would. In this case the next family that came along would probably get the house for the price before it was put up, if not maybe even a little less depending on their circumstance, cute kids etc.

And then isn't it possible that the other breed of people would be putting their prices up by far more than the market is ready or calls for, especially in catchment areas for good schools etc. It is a widely held thought that prices being pushed up too quickly in speculation of a continued stream of avid buyers, led to the UK property market crashing so quickly and so severely. Thus if this became the case, wouldn't we always be prepping for an even greater crash than the last?

As things stand now, we have had our booms and our busts, but on the whole house prices have continued on an upward trend over the long term, I am worried that without estate agents there may not be enough stability in the market for this to continue.

OK, agents may still be doing the valuations for people selling through axe the agent websites, probably under a new title, house pricing consultants or such, performing their role in the same way as surveyors do. But this will not stop the problems I have laid out above, unless their services are retained, in which case the agent hasn't really been axed, has it?

And then there is the people who may need to sell in a hurry and may not be able to even afford the independent consultation fees, what price would they put their property on the market at.

In closing: I think there is a definite market for FSBO websites in the current climate; often these websites offer greater exposure to the property and can lead to a quicker sale of properties, or even just a sale. And I don't see the problem in using them to offload off plan or new built properties overseas, certainly better than E-baying them for 3 grand. But if we want to have a stable and prosperous housing market in the UK over the long term, I don't think we should be too quick to herald the end of the estate agent profession.