The Need For Change

In March 2004 the Office of Fair Trading (OFT) report into Estate Agency Practise in England and Wales concluded:

“More vigorous price competition is needed in the estate agency market. Estate agents’ commissions continue to be charged at the same percentage rates as ten years ago even though property prices have trebled in this period.”

The most recent report on Home Buying and Selling published by the OFT February 2010, stated the following:

“For many consumers, traditional estate agents provide a good service and they are happy with the face to face contact and traditional package for selling their home. It remains the case, however, that there isn’t a great deal of choice for consumers who may prefer different, and cheaper, ways of buying and selling a home.”

It then goes on to say,

“Price competition between traditional estate agents remains weak and commission rates are sticky – this means that as property prices rise during booms, in real terms, so too do estate agents fees.”

However the large number of estate agency closures and redundancies during the recent property market recession confirms that profits are not excessive. The problem has been a lack of innovation and inefficiency within the traditional business model that is largely unchanged since the 1950’s.

The industry has to wake up and realise that the public will not continue to accept fees that rise in line with house prices in order to cover complacency and inefficiency.