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Paul Smith

May 2009

DIY estate agencies: outlook gloomy

VIRTUAL estate agencies are having the door shut in their faces as sellers scurry for the security of the established version during the current difficult economic climate.

According to research undertaken for Spicerhaart, the public are moving away from cheap DIY sites because they feel nervous about the future and are therefore more risk averse. Indeed, all the virtual websites we have been monitoring have lost significant market share.

Our findings, undertaken by an established research company, show that consumers are adopting an ‘economical and controlled’ mindset — in contrast to the indulgent and ‘have anything’ culture of recent times.

While they criticised estate agents for lack of transparency over what they got for their money, most said they didn’t want DIY selling because it was too much effort and involved too much risk at a time when they were working even harder at running the household and trying to make ends meet.

Many liked the halfway approach — an online estate agency run by estate agency professionals; however they didn’t like the word ‘virtual’ as it felt too remote and distant.

Relatively wealthy and experienced sellers responded best to the online concept, although females wanted more reassurance on quality and a fuller service.

They also identified security as an issue, particularly when it comes to vetting buyers and ID verification. Those over 50 years old were much more cynical about DIY sales sites.

While sellers liked the overall low cost pricing of DIY sites, there were also concerns about paying up front and some services even feeling ‘too cheap’, resulting in a negative reflection on the expected quality of the services.

There are also particular services which consumers want to be handled by experts, including quality marketing through the main portals, the valuation, Home Information Packs, conveyancing, For Sale boards, professional photography and the floor plan.

Our research has also provided us with other extremely valuable information, but it does go to show how easy it is to make assumptions about what our market needs without asking the very end users as to what they actually want.

It will be interesting to see whether the public still hold the same views once the economy picks up or whether they will be more prepared to take a risk.

But then again, if you want your teeth fixed, you would go to see a dentist. Expert advice is always worth paying for.

No grieving over old procedures

NEW rules aimed at simplifying disciplinary and grievance procedures in the workplace are to be welcomed in the hope that issues will be nipped in the bud as they arise rather than ending up before an employment tribunal.

On April 6, the new 45-point ACAS Code of Practice on Disciplinary and Grievance Procedures was introduced, replacing previous legislation with a far simpler, but not legally binding, code.

You will no longer have to deal with issues in a fixed way but, if a case does go as far as a tribunal, compensation awards may be increased by up to 25 per cent if the employer failed unreasonably to follow the Code or decrease compensation by up to 25 per cent for an employee’s unreasonable failure.

The Code does not apply to redundancy dismissals or to the non-renewal of fixed term contracts. However, employers are still required to offer the employee an appeal against the decision. Some HR experts point out that during a recession, staff who have been made redundant or dismissed may feel they have nothing to lose by bringing a claim within the three month time limit and their case could still end up before an employment tribunal.

Estate agencies will need to take specific legal advice for each individual situation and keep written records, whilst also having dedicated policies about disciplinary, equal opportunities, bullying, harassment and discrimination in place.

Unity over cooling-off period so vital

NEW legislation concerning the introduction of a cooling off period for sellers has been given a frosty reception by estate agents. Now we at Spicerhaart are calling on other agents to join us and fight this unwieldy and unfair legislation through the courts.

Back in the March edition of Estate Agency News, I highlighted how under the ‘Cancellation of Contracts Made in a Consumer’s Home or Place of Work etc Regulations 2008’, consumers must now be given a ‘Notice of the Right to Cancel’ when certain contracts are made, advising them they have to do so within seven days of signing in their own home.

Trading Standards and the Office of Fair Trading are adamant this applies to estate agencies and are threatening legal action with a potential fine of up to £5,000 for those who flout the rules. We understand in parts of London, action is already being taken against some estate agents.

However, we don’t agree the rules apply to agents and will challenge this through the High Court if we can get sufficient backing from other agencies. We believe it is in all our interests to fight this and we are happy to lead the way, subject to other agencies getting involved and contributing towards the estimated £30,000 to £40,000 legal costs.

Our view is that under Schedule 3 of the Regulations, there is an exemption which states this does not apply to ‘A contract for the construction, sale or rental of immovable property’ with exemptions for home improvements such as double glaz

ing. Unless I’m mistaken, houses and flats are clearly immovable property!

Reluctantly, we ourselves have had to introduce new documentation alongside our existing contracts in order to comply until this matter can be clarified. However, if we don’t all fight this, there is talk of even more stringent regulations on the way, with the EU extending its cooling off legislation to 14 days and also covering lettings agreements. Who would want to go ahead and market a property knowing their initial costs might not be met?

If you would like to get involved and fight this ridiculous legislation, please email us at coolingoff@spicerhaart.co.uk.