THE BLOG
22/05/2014 12:42 BST | Updated 21/07/2014 06:59 BST

Another Estate Agent Scandal: For Sale by Tender

Estate agency fees are hitting the news again... http://tinyurl.com/klhycz9

This time, it's the biggest scandal of them all...

It's known as 'For Sale By Tender' and it has started to become more commonplace, with estate agents seemingly trying to become more appealing to the consumer. I've noticed the practice creeping in at agents in my hometown of Hitchin. These and a whole load of others have come up with a scam, sorry, I mean plan..., to change the way vendors are charged... by charging the buyer instead!

How does it work?: The seller agrees to put the property on the market, at what most people would consider a very low asking price, requesting 'offers in excess of...' (I have a problem with this as well, but that is a topic for another day...). By asking a perceived lower price, the agent pretty much 'guarantees' that they will find a buyer for the property. However; it's not the vendor that pays the agent for selling the property for the highest price possible, it is the buyer who pays the fee to buy the house!

Now, I can see all sorts of problems here...

The first, issue: as soon as potential buyers realise that they have to pay the agents a fee, a number of those buyers will back off and lose interest in the property. I certainly would. Buyers already have to shell out for stamp duty and legal fees, so why should they pay the agent to simply buy a house? The knock-on effect is that with fewer buyers showing interest, the price will inevitably decrease.

The main problem I have with this practice, however, is that it brings into question; who is the estate agent actually working for? If the buyer is picking up the estate agent's bill, then surely they're acting for the buyer? But it was the seller who instructed the agent, so shouldn't it be the seller...?

It's all a bit mind boggling if you ask me. It's yet another money-making farce that needs to be outlawed as soon as possible.

The simple fact of the matter is that it's wrong for the buyer to be paying the agents fee, unless that agent is a specific 'buying agent' (of which there are many). A buying agent will source property for a buyer and negotiate on the property with the agent - a bit like Phil & Kirsty on Location, Location, Location.

I do wonder why some estate agents are employing this tactic. Maybe it's because us online agents are starting to take serious market share from the more traditional high street agents by not charging exorbitant fees. Perhaps the high street agents are trying to hide their inflated fees by appealing to house owners with a no-fee promise, only to then charge the poor unsuspecting buyer. A very strange way around the problem...

This charge-the-buyer approach is just as bad as the unjustified fees that estate agents charge home owners to sell their properties, but most online agents, including us at Hatched.co.uk, are already transforming that injustice. Unfortunately though, we will have to rely on the government to ban this outrageous practice of 'For Sale By Tender' where the buyer pays the agents fee. And I'm not sure I have much hope in that...