Home Buying and Selling Market Study

Survey of estate agents

February 2010

OFT1140b

 Crown copyright 2010

This publication (excluding the OFT logo) may be reproduced free of charge in any format or medium provided that it is reproduced accurately and not used in a misleading context. The material must be acknowledged as crown copyright and the title of the publication specified.

CONTENTS
Chapter 1 Executive summary 2 Methodology 3 Results ANNEXE 1: COVERING LETTER ANNEXE 2: SURVEY QUESTIONNAIRE Page 4 7 9 50 51

1
1.1

EXECUTIVE SUMMARY
As part of the OFT's Market Study of Home Buying and Selling, we conducted a survey of estate agents1 between 12 August and 7 September 2009. Invitations were sent out to 13,849 estate agencies and responses were received from 798 (a response rate of six per cent). Some respondents worked in estate agency branches that had been recently established, with about a fifth (18 per cent) in branches established no more than five years ago. Others worked in branches with a longer history, with 69 per cent of respondents working in branches established for at least 10 years. Six per cent of respondents reported that their branch belonged to a franchise. On average, respondents said that in the first half of 2009, they carried out 20 property appraisals and made five sales per month. Estate agents most frequently identified local reputation as the most important factor in attracting sellers to use their services rather than their competitors', with 73 per cent stating that it was 'very important'. Quality of service and access to internet property portals such as Rightmove and Digital Property Group were also considered important, with 57 per cent and 53 per cent of estate agents, respectively, stating that these were 'very important'. Attracting sufficient sellers was identified as the most significant barrier to opening a new estate agency business, with 57 per cent of estate agents considering this a 'substantial hurdle'.

1.2

1.3

1.4

1.5

1.6

Where we refer to estate agents in this annexe we mean estate agent businesses that responded to the OFT invitation to complete the OFT's online survey questionnaire.

OFT1140b | 4

1.7

By far the most common estate agency fee arrangement, used in three quarters of cases (75 per cent), was the payment of a percentage of the final property selling price if the property was sold. Where charges were based on a percentage of the property price, estate agents in the first half of 2009 charged, on average, 1.6 per cent when acting as a sole agent. Just over a quarter (28 per cent) of sellers successfully negotiated a fee below that offered as standard. The next most common arrangement, used in just over a fifth of cases (21 per cent), was a flat fee, payable only if the property was sold, which did not vary with the final property selling price. The most common marketing tools used by estate agents were their own branch's website, used 'very often' by 93 per cent, and internet property portals used 'very often' by 92 per cent. Over a third of estate agents thought that more than 50 per cent of their sales originated from internet portals. Forty-three per cent of estate agents stated that in the first half of 2009, 20-30 per cent of property transactions failed subsequent to an offer being accepted by the seller. 'Problems elsewhere in the chain' was the most commonly identified cause stated for property transactions falling through, with 32 per cent of estate agents stating that this was 'very often' or 'often' the reason for the transaction failure. Buyers' solicitors were blamed by respondents for delays in the property transaction process, with almost a third of estate agents (31 per cent) indentifying them as the most common source of delay. On average, responding estate agents stated that almost two-thirds (65 per cent) of clients opted to use the in-house or referred to service for Home Information Pack (HIP)/ Home Report (HR) provision. Of those estate agents that received referral fees from solicitors, 57 per cent said that they received a commission fee of less than 150 and 38 per cent received a commission fee in the region of 250299.

1.8

1.9

1.10

1.11

1.12

1.13

OFT1140b | 5

1.14

Of those estate agents that received referral fees from solicitors, over half (53 per cent) informed their clients of the size of the fee. A further 28 per cent informed their client about the existence of the fee, but not the amount. Nearly all (92 per cent) of estate agents that received referral fees from lenders said they informed their clients of both the existence of the fee and its amount. Sixty-four per cent of estate agents said they didn't think that estate agents should be obliged to disclose the level of any referral fee or other financial benefit received from services offered to buyers (not just the existence). Eighty-three per cent of estate agents said they would support positive licensing of estate agents. Eighty-nine per cent of estate agents said they thought regulations need updating to address new estate agency models (for example internet-based estate agents).

1.15

1.16

1.17

OFT1140b | 6

2
2.1

METHODOLOGY
On 31 July 2009 there were 12,715 UK estate agents on the Experian (Yellow Pages) database. Although this is not an ideal database as it only contains those businesses advertised in Yellow Pages (and excludes businesses whose main trade may be a different activity) it was the most complete source available to us. The Experian database categorises businesses based on the section of the Yellow Pages in which they chose to advertise. For this reason we suspected that some Scottish solicitors that do indeed operate estate agency functions, may have been listed in the solicitors section, and would therefore be missing from the estate agency database. To overcome the potential problem of under coverage in Scotland that this would cause, data for solicitors in Scotland (1,134 businesses) was also included. All businesses on the combined database were then invited to participate in our survey of estate agents. The covering letter2 sent to the majority of these businesses may be found at the end of the report in Annexe 1 along with a copy of the questionnaire in Annexe 2. We did not sample from the database as in recent years OFT postal and online surveys have been subject to low response rates and it was only likely that we would achieve an ideal minimum sample size if we contacted every business. The practices of individual estate agency branches, even those that form part of a large organization with centralized procedures, are known from industry advice to differ on a location by location basis. With this in mind a branch level approach was chosen in order to capture this variation. A small pilot was conducted by a number of volunteer estate agents and trade associations, including Royal Institute of Chartered Surveyors (RICS) the National Association of Estate Agents (NAEA) and the

2.2

2.3

2.4

2.5

A slightly modified cover letter was sent to business in Scotland that asked that solicitors not in involved in Estate agency to ignore the invitation to complete the questionnaire.

OFT1140b | 7

National Federation of Property Professionals (NFOPP), provided feedback on the draft survey, highlighting problems and any questions they found difficult to answer or irrelevant. Comments were also sought from the Scottish Government, Communities and Local Government and the Department for Business, Innovation & Skills. The feedback we received was used to develop the final version of the questionnaire. 2.6 The survey of estate agents was conducted online. A small number of respondents requested a paper version of the survey. The covering letter sent to participants by an external mailing company contained a link to the survey together with a unique username and password. Fieldwork took place between 12 August and 7 September 2009. Reminders were sent to non-respondents at the end of the second week of fieldwork. The questionnaire asked respondents to provide some data for 2009 and specified that this should relate to just the first half of 2009. Where results for 2009 are presented in this annexe they represent 1 January 2009 to 31June 2009. Comparisons made between 2009 and other years therefore do not take into account any seasonal variations.

2.7

OFT1140b | 8

RESULTS

Respondents
3.1 Table 3.1 on the next page shows a regional breakdown of responses, along with details of the number of estate agents in each region invited to participate in the survey, and the associated response rate. The response rate did vary within the regions, with the highest (nine per cent) in the East Midlands and the lowest (four per cent) in London. In Scotland 25 responses were received from the 593 listed estate agencies, while 34 responses were received from the 1,133 solicitors that were contacted (although a large proportion of these will not have been involved with estate agency work and so were ineligible for the survey). Because the exact number of solicitors that participate in estate agency work is unknown, it is not possible to calculate a response rate for Scotland. There were 39 responses from estate agents in Wales yielding a six per cent response rate, 22 from Northern Ireland yielding a seven per cent response rate, and 687 from England yielding a six per cent response rate. The overall response rate for the UK as a whole equates to six per cent. Of the 13,820 invitations sent out, 760 were returned to sender. If it is assumed that all of these were returned due to the associated businesses leaving the market, the resulting response rate rises to seven per cent. With the response rate being so low (six per cent) it is likely that the survey results suffer from non-response bias. That is, the characteristics and attitudes of those who chose to respond differ systematically from those who did not respond. Therefore, it would be incorrect to generalise the findings of this survey to the population and they must only be considered representative of those who responded. One business was unable to provide branch-level responses and submitted a single centralised response that represented a number of separate branches. In producing the survey results, the data for this

3.2

3.3

3.4

3.5

OFT1140b | 9

particular firm was weighted in order for it to represent the correct number of branches. All other responses in the analysis were unweighted.

Table 3.1: Regional breakdown of survey respondents

Solicitor estate agents invited to participate* Number of responses from solicitor estate agents

Estate agencies invited to participate

Number of responses from estate agencies 108 34 117 19 66 132 106 49 47

Response rate 9% 5% 4% 5% 6% 6% 9% 5% 6% 6% 7% 7% 6%

East of England 1217 East Midlands 669 London 2844 North East 368 North West 1085 South East 2119 South West 1245 West Midlands 920 Yorkshire And The 775 Humber England total 11242 Wales 526 Scotland 593 Northern Ireland 326 Total 12687 * this chart includes some solicitors that do not

678 39 25 1133 34 22 798 participate in estate agency work

Estate agency background information

3.6 On average the individual estate agents that completed the questionnaires had been involved with estate agency for 22 years. Only a small proportion (six per cent) of estate agencies reported that their branch was a franchise. Less than a fifth (18 per cent) of the estate agent branches had been established in the last five years. Twelve per cent had been established between five and 10 years, 25 per cent between 10 and 20 years, and 45 per cent over 20 years.

3.7

3.8

OFT1140b | 10

3.9

On average each responding branch had four full-time equivalent employees3 (FTE) on 31 April 2009. This was down from five on the same date in 2008 and six in 2007. Estate agents were asked about the area over which they offered most of their properties for sale. On average estate agents in England sell properties that are close to their branch, with 55 per cent of them being within five miles. In Scotland, Wales and Northern Ireland estate agents mostly offered properties for sale that were within 10 miles of their branch4 as shown in Table 3.2. Only three per cent of estate agents typically marketed properties further than 10 miles from their branch.

3.10

Table 3.2: Area over which properties typically offered for sale
UK (798) within 1 mile of the branch within 2 miles within 5 miles within 10 miles more than 10 from branch England (678) Wales (39) Scotland (59) Northern Ireland (22)

5% 18% 51% 23%

6% 19% 55% 18%

0% 3% 38% 55%

3% 14% 25% 49%

0% 5% 23% 68%

3%

2%

5%

8%

5%

Full time equivalent employment is a measure that accounts for variation in the number of hours per week worked by employees. For example two employees that work part time (20 hours per week) equate to one full-time (40 hours per week) equivalent employee.
4

This result is significant at the 95 per cent confidence level.

OFT1140b | 11

Activity levels and profitability

3.11 In 2009 responding estate agents made an average of 20 property appraisals per month. This was unchanged from 2008, but below the 2007 figure of 28. In 2009 responding agents made an average of five sales per month. This was unchanged from 2008, but down from nine per month in 2007. Forty per cent of responding estate agents made a profit in 2009. This was up from 31 per cent in 2008, but down from 86 per cent in 2007.

3.12

3.13

OFT1140b | 12

Market factors
3.14 Estate agents were asked to state the importance of factors attracting sellers to their agency rather than their competitors' agency (Chart 3.3). The most prominent factor, with 73 per cent of responding estate agents stating that it was 'very important', was local reputation. Quality of service and access to property portals were also rated very highly, with 57 per cent and 53 per cent of estate agents respectively stating them to be 'very important'. Focusing on just those estate agents in Scotland, the Solicitors' Property Centre was rated 'highly important' by 44 per cent of respondents. National reputation (nine per cent), willingness to negotiate on fees (nine per cent) and the number of sales listings in local papers (six per cent) were among the factors considered least important, all of which being rated 'highly important' by less than 10 per cent of responding estate agents.

Chart 3.3: Importance of factors to attract sellers to agency

Very Important 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Local knowledge of the market Trade association membership Number of for sale boards Competency of staff National reputation Local reputation One stop' shop Willingness to negotiate on fees Access to property portals High profile internet presence Number of potential buyers registered Quality of service Property valuations Competitive fee levels Access to the SPC* Office location Own website

Important

Moderately important

Of little importance

Unimportant

proportion of estate agents

Base: 798 Estate agents, *results shown for Scottish estate agents only (59 estate agents)

OFT1140b | 13

Number of sales listings in local papers

3.15

Estate agents were asked to provide their opinion of the potential barriers they would face in the first year if they were to set up a new estate agency business. As shown in Chart 3.4, attracting sufficient sellers and establishing a reputation were the most significant barriers, with 57 per cent and 55 per cent of estate agents respectively considering these to represent a 'substantial hurdle'. Of the barriers asked about, estate agents viewed the cost of IT and office equipment and finding a suitable location to be among the less sizable barriers with 27 per cent and 18 per cent respectively regarding these as 'small hurdles'.

Chart 3.4: Importance of barriers to setting up an estate agency

100% 90% proportion of estate agents 80% 70% 60% 50% 40% 30% 20% 10% 0%
Promotional costs Finding a suitable location Attracting sufficient buyers Attracting sufficient sellers Finding suitably qualified staff The cost of office space The cost of office equipment Staff training costs Staff wages Establishing reputation

5 Substantial hurdle

1 small hurdle

Base: 798 Estate agents

3.16

Other potential barriers mentioned by estate agents included difficulties obtaining finance and cash flow problems, often due to the length of time between setting up an agency and receiving first revenues. Most of the responding estate agents (60 per cent) expected that it would take two years from the point of establishing a new estate agent business to make a profit (Chart 3.5). Most respondents (68 per

3.17

OFT1140b | 14

cent) from Northern Ireland, however, estimated that it would take three years to generate a profit.5

Chart 3.5: Estimated time taken to generate profit if new estate agency set up
First year 80.0% proportion expecting to make profit 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% .0% UK (797) England (676) Wales (40) Scotland (59) Northern Ireland (22) Second year Third year Fourth year Fifth year Longer

Base: as indicated in chart in brackets

3.18

Estate agents were asked to rate the importance of various factors used to advise sellers on the price at which their property should be put on the market. Comparisons with similar properties were identified as the most important factor (Chart 3.6) with nearly three quarters (73 per cent) of responding estate agents viewing them as 'very important'. Knowledge of recent local sales (64 per cent) and experience of the local market (58 per cent) were also seen as 'very important' by most estate agents. Among the factors that estate agents indentified as being the least important for property valuation

This finding is statistically significant compared to England and Wales at the 95 per cent confidence level, but not Scotland.

OFT1140b | 15

was the size of the property, with eight per cent regarding this 'unimportant', online valuation tools (15 per cent), and the Energy Performance Certificate (65 per cent).

Chart 3.6: Factors determining prices of properties marketed

Very important 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Size of property (by meters squared) Extrapolation from original purchase price Your knowledge of recent local sales Your knowledge of the local area Experience of local market Unique or individual selling features Comparisons with similar properties Web searches for similar properties Your knowledge of potential buyers The Energy Performance Certificate The vendor's opinion Online valuation tools

important

Moderately important

Of little importance

Unimportant

Base: 798 Estate agents

3.19

proportion of estate agents

Another factor mentioned by estate agents that determined the price at which the property was marketed was the speed at which the seller wanted to secure a buyer for their property. When comparisons with similar recently sold properties were used for appraisals when pitching for business, seven per cent of responding estate agents said this was 'very often' or 'often' shared with prospective sellers.

3.20

OFT1140b | 16

Estate agency fees

3.21 Table 3.7 below shows the frequency of use of different fee structures offered by estate agents. The far most common arrangement, used in three quarters of cases (75 per cent), was the payment of a percentage of the final property selling price if the property is sold. The next most common agreement, used in just over a fifth of cases (21 per cent), is a flat fee, payable only if the property is sold, which does not vary with the final property selling price. Other types of fee, for example a percentage based on the original asking price, were used in one per cent of cases or less.

Table 3.7: Fee structures and frequency

Fee arrangement type A percentage of the final property selling price, payable only if the property is sold A percentage of the original asking price for the property, payable only if the property is sold A flat fee stated in s, that does not vary with the final property selling price, payable only if the property is sold A flat fee stated in s, that is payable upfront whether or not the property is sold A flat fee stated in s, that is payable upfront, with an additional fee (either flat or percentage based) payable only on completion Proportion

75%

1%

21%

0%

1%

Base: 798 Estate agents. Note: the frequencies do not add to 100 per cent as estate agents were asked to provide estimates where data was unavailable.

3.22

Some estate agents provided additional information regarding their fee structures, including:

OFT1140b | 17

a minimum fee where overall charges were based on a percentage of the property price a sliding scale for percentage based fees, with larger percentages charged where higher sale prices were achieved, and initial marketing charges that were non-refundable if the property were withdrawn from the market - all of the estate agents that stated this were based in Scotland.

3.23

Under the most common fee agreement, where a percentage of the final selling price was payable upon sale, responding estate agents on average charged 1.6 per cent when acting as a sole agent6 in 2009. This was unchanged from 2008 and 2007, indicating that fees of this type have been relatively stable over the last two and a half years.

This represents the average standard fee when the property is being sold exclusively by the responding agent, and is not representative of fees charged under a multiple agency agreement where more than one agency is marketing the property.

OFT1140b | 18

3.24

Chart 3.8 shows a breakdown of how this most common type of fee varied between the UK countries. The average charge in England in 2009 was 1.6 per cent, above that in Wales (1.5 per cent), Scotland (1.1 per cent) and Northern Ireland (1.1 per cent).7

Chart 3.8: Sole agency average percentage fees in UK countries

2007 2008 2009

1.8% 1.6% average sole-agency standard fee 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0%

England (676)

Wales (40)

Scotland (59)

Northern Ireland (22)

Base: as indicated in chart in brackets

3.25

Responding estate agents estimated that in the first half of 2009 over a quarter (28 per cent) of clients successfully negotiated a fee below that offered as standard. Estate agents were asked to identify reasons why it might cost more for them to sell a more expensive property (in this example a property of 500k compared to 150k). Chart 3.9 below shows the proportion of estate agents that agreed that the specified reasons listed increased the cost. The most common, with three quarters of estate agents (75

3.26

This result is statistically significant at the 95 per cent level. The difference fees in Wales compared Scotland and Northern Ireland is also significant at the 95 per cent level.

OFT1140b | 19

per cent) agreeing that it increased cost, was that a more tailored service was required for more expensive properties. Seventy-three per cent also agreed that the type of marketing required for more expensive properties was more costly, and two-thirds (66 per cent) agreed that more marketing was required. Less than a third of estate agents agreed that there were likely to be more viewings for more expensive properties.

Chart 3.9: Reasons why more expensive properties cost estate agents more to sell
proportion of estate agents that identify factor 80% 70% 60% 50% 40% 30% 20% 10% 0% More tailored service required The type of More More Lower Likely to be None of the marketing marketing customer demand for more above needed is is required interaction higher value viewings more is needed properties for higher expensive with sellers value of higher properties value properties

Base: 798 Estate agents

3.27

Other reasons given by estate agents why more expensive properties cost more to sell included: the need to accompany a higher proportion of viewings viewings taking a greater length of time, and

OFT1140b | 20

more expensive properties typically being involved with longer chains.

Estate agency services

3.28 Chart 3.10 shows the proportion of responding estate agents that offered particular services to sellers when selling a property for them and whether they were included in the standard fee or available at additional cost. Seventy per cent of responding estate agents provided sellers with E-mail/SMS text contacts to enable communication of information during the sales process. Nearly half (49 per cent) of estate agents provided floor-plans of the property being marketed within their standard charge, while a further 14 per cent charged extra (the remaining 35 per cent did not provide this service). Over four-fifths (82 per cent) of estate agents provided glossy brochures of the property being sold. Of these 40 per cent were provided within the standard fee, with the remaining 60 per cent involving an additional charge.

Chart 3.10: Services offered to sellers by estate agents

Built into standard charge Available at extra cost Not available

proportion of estate agents offering service

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

E-mail/SMS contact details for sellers to contact EA

Floor plans

Glossy brochure

Prices shown per square metre

360 degree tours online

Base: 798 Estate agents

OFT1140b | 21

3.29

Estate agents were asked if they allowed their sellers access to online records relating to their property sale. Nearly two-fifths (39 per cent) of responding estate agents offered online access to communication made after an offer had been made, 37 per cent offered feedback after viewings and 37 per cent offered details of all offers made.8 As can be seen from Chart 3.11 the vast majority of responding estate agents offered these online information sources without additional charge, with one per cent or less charging extra in each instance.

Chart 3.11: Provisional of online transaction information

proportion of estate agents providing online details of service Built into standard charge Available at extra cost Not available

100% 80% 60% 40% 20% 0%

Communications after offer

Base: 798 Estate agents

3.30

Aside from selling properties, estate agents commonly offer other related services. As shown in Chart 3.12, almost four-fifths (78 per cent) of responding estate agents also offered letting services. Nearly two-thirds (65 per cent) also sold new development properties where

Estate agents are required promptly to provide written details of all offers received except those which a client has told them in writing need not be passed on.

OFT1140b | 22

Interest by potential buyers

All offers made

Feedback from viewings

Viewings arranged

Promotional activity

their client was a developer rather than a private individual selling their own home. 14 per cent of responding estate agents also said that they offered a buying agency service, where they acted entirely on behalf of a buyer purchasing a property from another party. Eight per cent of estate agents offered none of the specified additional services.

Chart 3.12: Additional services offered by estate agents

proportion of estate agents offering service 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Properties to buy and selloutside the UK Residential property sale by auction Buyers agency services Letting New development properties None of the above Commercial property sales

Base: 798 Estate agents

OFT1140b | 23

Contract types
3.31 The majority of properties (67 per cent) were offered on a sole agency contract. Fifteen per cent of properties were offered on a sole selling rights contract. The remaining contract types shown in Chart 3.13 together accounted for the remaining 15 per cent.

Chart 3.13: Contract types used for property sales

70% proportion of clients using agreements 60% 50% 40% 30% 20% 10% 0% Sole agency Sole selling rights Multiple agencies Joint agency Joint sole agency

Base: 798 Estate agents

OFT1140b | 24

3.32

The proportion of responding estate agents offering a 'ready, willing and able purchaser' clause9 was relatively similar across all contract types, from 31 per cent for sole agency to 25 per cent for multiple agency (Chart 3.14).

Chart 3.14: Proportion of estate agents offering 'ready, willing and able purchasers' clause by contract type
proportion of estate agents offering 'ready willing and able' purchaser clause 35% 30% 25% 20% 15% 10% 5% 0% Sole agency Joint agency Joint sole agency Sole selling rights Multiple agencies

Base: 798 Estate agents

3.33

In cases where a joint sole agency agreement10 was used, 95 per cent of estate agents stated that they made the seller aware of the commission being paid to the third party estate agent.

Where the seller has to pay the estate agent if they find a buyer who is prepared and able to buy the property and exchange unconditional contracts (even if the seller withdraws from the sale and unconditional contracts are not exchanged).
10

A joint sole agency agreement exists where more than one estate agency agrees to share a single commission from the sale of a property.

OFT1140b | 25

3.34

Estate agents were asked to state the typical period of time that clients were contractually bound to their services. Twenty-two per cent of estate agents had no minimum contract period (Chart 3.15). 34 per cent of estate agents had contracts lasting less than 12 weeks, and 41 per cent had contracts lasting between 12 and 20 weeks. Three per cent of estate agents had contracts that lasted more than 20 weeks.

Chart 3.15: Length of typical contract binding sellers to estate agents' services
proportion of clients bound to typical contract periods 30% 25% 20% 15% 10% 5% 0% no minimum <4 weeks >4 - <8 weeks >8 <12 weeks >12 <16 weeks >16 <20 weeks >20 <24 weeks > 24 weeks

Base: 798 Estate agents

Marketing properties
3.35 Estate agents were asked how often they used a selection of marketing activities to sell properties. As can be seen from Chart 3.16, the internet plays an important part in this area, accounting for the top two most frequently cited actions: 93 per cent of estate agents 'very often' used their own branch internet site to market properties, and 92 per cent 'very often' used property portals. In Scotland 58 per cent of estate agents 'very often' used Solicitors Property Centres. Some more

OFT1140b | 26

traditional approaches were still used 'very often' by a high proportion of estate agents, such as contacting their own pool of potential buyers (86 per cent) and erecting 'for sale' signs (82 per cent). The use of press advertising was focused on local publications with high proportions of estate agents 'rarely' or 'never' using national publications such as national property magazines (88 per cent), national newspapers (83 per cent) and national general magazines (92 per cent).

Chart 3.16: Activities used to market/sell properties

proportion of estate agents using activity Very often Often Sometimes Rarely Never

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Your own branch internet site

Solicitors Property Centre*

Property portal site(s)

Open/show days for specific homes

National property magazine

Local property magazine

A group internet site

Local general magazine

Local newspapers

For sale signs

National newspapers

General mailshots

Base: 798 Estate agents. *results shown just for just those estate agents operating mainly in Scotland

Contacting own pool of possible buyers

OFT1140b | 27

National general magazine

Auction

3.36

Those estate agents that stated that they used internet property portals were asked to estimate the proportion of eventual sales that originated as a result of advertising through this channel. As can be seen from Chart 3.17, a relatively high proportion of estate agents (30 per cent) estimated that 20 - 30 per cent of sales originated from portals. Thirty-seven per cent of estate agents that used portals thought that over 50 per cent of their sales originated from this source.

Chart 3.17: Proportion of sales originating from property portals

proportion of sales inititally generated by portals 35% 30% 25% 20% 15% 10% 5% 0% Less than 1% 6 % to 10% 1% to 5% 11% to 20% 21% to 30% 31% to 40% 41% to 50% 51% to 60% 61% to 70% 71% to 80% 81% to 90% 91% to 100%

Base: 760 Estate agents that sometimes advertise on property portals

OFT1140b | 28

3.37

Of the portals used, estate agents stated how important they considered each to be. As shown in Chart 3.18, Rightmove was considered the most important property portal, with 79 per cent of responding estate agents viewing it as 'very important' and a low proportion (13 per cent) stating that they did not use it. Two more portals, Primelocation (14 per cent) and Findaproperty (13 per cent), were rated as 'very important' by more than 10 per cent of estate agents. In Scotland, Solicitors Property Centre portals were considered 'very important' by 48 per cent of estate agents, which is equivalent to the percentage of estate agents in Scotland that considered Rightmove to be 'very important'.

Chart 3.18: Importance of individual internet property portals

Very important 100% 90% proportion of estate agents 80% 70% 60% 50% 40% 30% 20% 10% 0% Rightmove Propertyfinder Primelocation Findaproperty PropertyLive Fish4homes An SPC portal* Globrix Quite important Somewhat important Not important Don't use

Base:

760 Estate agents that sometimes advertise on property portals. *results for Solicitors Property Centres' Portals are shown just for those estate agents that mainly operate in Scotland (46).

OFT1140b | 29

Experience of sales process

3.38 Chart 3.19 below shows the average time taken, for successful transactions, from an offer being accepted on a property to completion in 2007-09. In 2009 most properties (52 per cent) sold in 11-14 weeks. In 2007, 31 per cent of properties sold within eight weeks, compared to 20 per cent in 2008 and 26 per cent in 2009.

Chart 3.19: Average time taken to sell properties, 2007-09

proportion of properties taking specified time to sell 2007 2008 2009

30% 25% 20% 15% 10% 5% 0% 1 to 4

5 to 6

7 to 8 9 to 10

11 to 12

13 to 14

15 to 16

17 to 18

19 to 20

Over 20

weeks

Base: 798 Estate agents. Chart based on un-weighted data.

3.39

Estate agents were asked to identify the party most often responsible for delays when they occurred. Buyers' solicitors11 were most frequently recognised as being to blame for delays, with almost a third of estate agents (31 per cent) identifying them as the most common

11

It should be noted that delays perceived to be due to a solicitor may be caused by the slow provision of required information from, for example, local authority searches, the seller or the buyer.

OFT1140b | 30

cause of delay (Chart 3.20). Thirty per cent of estate agents reported that 'someone else in the chain' was most often liable for delays (although, this category does not stipulate the cause of the delay in the chain, which may have been due to one of the parties in the other categories, for example, solicitors or lenders). Other common causes of delays were the buyers' lender, and the sellers' solicitor, highlighted by 17 per cent and 12 per cent of estate agents respectively. One per cent of estate agents stated that sellers were mainly to blame for delays and no estate agents said that their own estate agency office was ever responsible.

Chart 3.20: Parties most often responsible for delays

proportion of estate agents stating main cause of delays 35% 30% 25% 20% 15% 10% 5% 0% Local search providers Someone else in the chain Your branch The buyer's lender The buyer The buyers' solicitor The HIP/HR provider The sellers' solicitor The seller

Base: 798 Estate agents

OFT1140b | 31

3.40

Forty-three per cent of estate agents stated that 21-30 per cent of property transactions failed subsequent to an offer being accepted by the seller in the first half of 2009 (Chart 3.21). In 2007, 46 per cent of estate agents reported that less than 20 per cent of transactions fell through. The equivalent Chart for 2008 was 36 per cent and 47 per cent for the first half of 2009.

Chart 3.21: Property transaction failures subsequent to an offer being accepted by the seller
2007 2008 2009

50% 45% proportion of estate agents 40% 35% 30% 25% 20% 15% 10% 5% 0% Fewer than 10%

11% to 20%

21% to 30%

31% to 40%

41% to 50%

51% to 60%

61 to 70%

71% or more

proportion of sales falling through

Base: 798 Estate agents

OFT1140b | 32

3.41

The main cause identified for property transactions falling through after an offer has been accepted by the seller was reported to be 'problems elsewhere in the chain', with 32 per cent of estate agents stating that this was 'very often' or 'often' the reason. The buyer not being able to secure a mortgage was the second most common reason, with 21 per cent of estate agents reporting this to occur 'often' or 'very often' (Chart 3.22). Four per cent of estate agents indentified that the buyer changing their mind was 'very often' the reason for sales falling through. Three per cent stated that the buyer changing their mind due to survey or search results was 'very often' the reason for transaction failures.

Chart 3.22: Reasons for property transactions not being completed

Very often 100% 90% proportion of estate agents 80% 70% 60% 50% 40% 30% 20% 10% 0%
Lender refused buyer finance due to survey Seller refused buyer's proposal of lower offer Buyer changed mind Problems elsewhere in chain Buyer change of mind due to survey Conveyancing uncovered legal problems Buyer refused seller's demand for higher offer Seller changed mind Insufficient buyer finance

Often

Sometimes

Rarely

Never

Base: 798 Estate agents

OFT1140b | 33

Ancillary / third party services

3.42 The majority of responding estate agents could provide a number of ancillary services, either in-house or via referral to providers with which they had an established relationship, as shown in Chart 3.23. Ninetyfour per cent of estate agents could provide financial advice (41 per cent in house and 51 per cent via referral), 95 per cent could provide surveying services (35 per cent in house and 60 per cent via referral), 96 per cent could offer HIP/HR provision (30 per cent in house and 66 per cent via referral) and 98 per cent could provide legal services (18 per cent in house and 80 per cent via referral).

Chart 3.23: Provision of ancillary / third party services

can provide in-house can refer customers to provider with which EA has a relationship

90% 80% proportion of estate agents 70% 60% 50% 40% 30% 20% 10% 0%

Financial advisor

Surveyors

HIP/HR provider

Solicitors

Insurance provider

Search provider

Lender

Base: 798 Estate agents

OFT1140b | 34

3.43

Those estate agents that offered ancillary services, either in-house or via referral, were asked how frequently their clients used these services (Chart 3.24). Almost two-thirds (65 per cent) of clients opted to use the in-house or referred to service for HIP/HR provision, with the equivalent proportion for solicitors being 44 per cent, search providers 35 per cent and financial advisors 34 per cent.

Chart 3.24: Proportion of clients using ancillary services provided inhouse or via referral
proportion of customers using inhouse/referred service 70% 60% 50% 40% 30% 20% 10% 0% Solicitors / Conveyancers (769) Surveyors (733) Insurance providers (491) HIP/HR providers (750) Search providers (435) Lenders (228) Financial advisers / Mortgage brokers (724)

Base: as indicated in chart in brackets

OFT1140b | 35

3.44

Those estate agents that had established relationships with third party providers of ancillary services were asked if they received a referral fee or commission from each type of third party provider. Chart 3.25 shows the proportion estate agents that received payments from providers of each type of service. Nearly half (49 per cent) of estate agents that referred clients to a third party solicitor received a referral fee or commission from the solicitor. The equivalent proportion for insurance providers was 42 per cent, 40 per cent for financial advisors, and 31 per cent for HIP/HR providers.

Chart 3.25: Proportion of estate agents receiving referral fees or commission from third party service providers
proportion of estate agents receiving referral fee / commission 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Solicitors (770) Insurance providers (492) Financial advisers / Mortgage brokers (725) HIP/HR providers (751) Surveyors (734) Lenders (405) Search providers (436)

Base: Estate agents that referred clients to third party service providers, as indicated in chart in brackets

3.45

Those estate agents that received commission/ referral fees from third party service providers were asked, within given ranges, to provide details of the average amounts received for a typical transaction on a 200,000 property. Table 3.26 shows a breakdown of the fees received from each type of service provider.

OFT1140b | 36

57 per cent of estate agents received less than 150 from solicitors, and 38 per cent in the range of 250-299 nearly all (93 per cent) of estate agents received less than 100 from surveyors most received less than 100 from HIP/HR providers (87 per cent) and search providers (91 per cent) 64 per cent received less than 150 from financial advisors and 27 per cent between 150 and 300. Eight per cent received over 300, with three per cent receiving more than 500 nearly four-fifths (79 per cent) received less than 50 from insurance providers.

OFT1140b | 37

Table 3.26: Average commission/referral fee received from third party service providers
Solicitors / Conveyancers Surveyors HIP/HR providers Search providers Financial advisers / Mortgage brokers Lenders Insurance providers

Fee received 0-49 50-99 100-149 150-199 200-249 250-299 300 -349 350-399 400-449 450-499 More than 500 Base 9% 20% 28% 2% 2% 38% 0% 0% 0% 0% 0% 288 56% 37% 5% 2% 0% 0% 0% 0% 0% 0% 0% 84

47% 41% 11% 1% 0% 0% 0% 0% 0% 0% 0% 283

57% 35% 4% 0% 0% 4% 0% 0% 0% 0% 0% 23

15% 26% 23% 13% 10% 5% 2% 2% 0% 1% 3% 351

79% 8% 4% 3% 2% 1% 0% 1% 0% 0% 2% 104

Base: Estate agents that received fees from third parties. Figures for lenders not shown due to low base.

3.46

Estate agents that received commission/ referral fees were asked whether they typically made their clients aware of this, and if so

OFT1140b | 38

whether they informed them of the value. Over two-thirds (71 per cent) of estate agents that received commission from insurance providers did not typically share this information with their client, while 18 per cent made their client aware of the fee, but not the amount, and 11 per cent informed their client about the fee and its quantity, as shown in Chart 3.27. 3.47 Nearly half of estate agents that received fees from search providers informed their clients of its existence, while a further four per cent also informed them of the amount. Half (52 per cent) made their clients aware of fees received from HIP/HR providers, while a further 12 per cent also informed them about the amount. Over half (53 per cent) informed their clients of the size of fees received from solicitors. A further 28 per cent of estate agents informed their client about the existence of the fee, but not the amount. Over half (57 per cent) made their clients aware of fees received from surveyors, while a further 10 per cent also informed them about the amount. Nearly all (92 per cent) informed their clients of both the existence of fees received from lenders and the amount.

OFT1140b | 39

Chart 3.27: Proportion of estate agents revealing referral fees or commission from third party service providers
proportion of estate agents revealing referral fees / commission Typically, we tell them we receive referral fees, and the amount Typically, we tell them we receive referral fees, but not the amount Typically, we do not tell them we receive referral fees

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Insurance providers (104)

HIP/HR providers (283)

Surveyors (84)

Solicitors / Conveyancers (288)

Base: Estate agents that received fees from third parties, as indicated in chart in brackets

Search providers (23)

Financial advisers / Mortgage brokers (361)

OFT1140b | 40

Lenders (37)

3.48

Four-fifths (81 per cent) of estate agents stated that the in-house provision of ancillary services accounted for 0-10 per cent of their profit in 2008. Fourteen per cent said that they accounted for 10-50 per cent of their profit, and five per cent that they accounted for over 50 per cent of their profit (Table 3.28). Nearly all (93 per cent) of estate agents claimed that less than 10 per cent of their profit was attributable to the referral of ancillary services to third parties. Six per cent said that they made 10 - 30 per cent of their profit from referrals, and one per cent said they made more than 30 per cent.

Table 3.28: Proportion of estate agent profit accounted for by inhouse ancillary services and third party referral fees
Proportion of estate agents Proportion of profits attributable to ancillary services 0-10% 11-20% 21-30% 31-40% 41-50% More than 51%
Base: 798 Estate agents

In-house 81% 6% 4% 3% 2% 5%

3rd parties 93% 5% 1% 1% 0% 0%

OFT1140b | 41

Complaints, enforcement and licensing

3.49 All of the responding estate agents stated that they were a member of a trade association or professional body. Chart 3.29 below shows the proportion of estate agents that belonged to each of the specified organisations. Eighty three per cent of responding estate agents stated that they were members of the Property Ombudsman (formerly the Ombudsman for estate agents), and 63 per cent that they were members of the National Association of Estate Agents.

Chart 3.29: Proportion of estate agents belonging to trade associations or professional bodies
proportion of estate agents being members of scheme 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% The Property Ombudsman National Association of Estate Agents Royal Institution of Chartered Surveyors Guild of Professional Estate Agents Solicitor's Code of Conduct

Base:

798 Estate agents, Note: Sums to more than 100 per cent as estate agents may be members of more than one body.

OFT1140b | 42

3.50

The majority of responding estate agents (68 per cent) stated that they received no complaints from sellers in the first half of 2009. Two per cent received three or more complaints from sellers over the same period. Nearly all (89 per cent) responding estate agents stated that they received no complaints from buyers in the first six months of 2009, and two per cent that they had received three or more. Chart 3.30 shows the proportion of estate agents that received various numbers of complaints from buyers and sellers.

Chart 3.30: Proportion of estate agents receiving complaints from buyers and sellers
proportion of estate agents receiving number of complaints 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2007 2008 2009 no complaints 1 complaint 2 complaints 3 complaints >3 complaints

Base: 798 Estate agents

OFT1140b | 43

3.51

Chart 3.31 shows what typically happened to complaints that were received. A third of complaints from sellers (36 per cent) and buyers (33 per cent) were resolved by the receiving branch. A following third of complaints from sellers (32 per cent) and buyers (33 per cent) were resolved by the estate agents' head offices. A fifth of complaints from sellers (20 per cent) and buyers (22 per cent) were dropped by the complainant. Six per cent of sellers' complaints and seven per cent of buyers' complaints were sent to the Ombudsman/professional scheme for resolution. One per cent of sellers' complaints were resolved at the small claims court.

Chart 3.31: Outcome of complaints made to estate agents

Seller 40% proportion of complaints 35% 30% 25% 20% 15% 10% 5% 0% Resolved by your branch Resolved by your head office Sent to Ombudsman/professional scheme for resolution Dropped by the complainant Resolved at small claims court Buyer

Base: 398 estate agents that received complaints

3.52

Estate agents were asked to identify the qualifications or skills relevant to providing estate agency services that their staff possessed. Table 3.32 shows the proportion of estate agents that stated that their staff had the specified types of qualifications and skills.

OFT1140b | 44

3.53

Good communication/ people skills were most commonly stated, with 88 per cent of estate agents reporting that their principals and 90 per cent that their other staff possessed these. Forty-three per cent of estate agents said that they required their principals to pass an exam following internally-provided training, and 37 per cent of estate agents stated that this was required of other staff. Twenty-six per cent said that their principals had basic training by professional bodies (21 per cent for other staff), and seven per cent said that their principals had a Certificate of Practising Estate Agents (three per cent for other staff). On average responding estate agents reported that their principals undertook 26 hours of training per year and that other staff undertook 28 hours.

3.54

3.55

OFT1140b | 45

Table 3.32: Proportion of estate agents with staff possessing relevant skills and qualifications
Principals Good communication/people skills Basic knowledge of estate agency Negotiating skills IT/computer skills Typing skills Marketing Management skills Internally-provided training without exam pass required Internally-provided training with exam pass required Level 3 Technical Award in Sale of Residential Property Basic training by professional bodies Advanced training by professional bodies Foreign languages Certificate of Practising Estate Agents NVQ level 2 NVQ level 3 Level 5 Diploma in Residential Estate Agency
Base: 798 estate agents

Other staff 90% 89% 83% 87% 78% 53% 39% 66% 37% 28% 21% 8% 7% 3% 7% 6% 2%

88% 87% 86% 78% 53% 71% 84% 55% 43% 28% 26% 23% 6% 7% 3% 4% 3%

OFT1140b | 46

3.56

Estate agents were presented with a number of statements and asked to state their level of agreement/ disagreement with them. The results are presented below: 93 per cent of estate agents agreed that buyers should be obliged to validate that they have means to purchase properties before putting forward offers 93 per cent of estate agents agreed that their branch always makes sure that buyers realise they are acting for the seller 91 per cent of estate agents agreed that they always check to make sure the prospective buyer will have sufficient funds to buy at the agreed price 89 per cent of estate agents agreed that the regulations need updating to address new estate agency models (for example, internet-based estate agents) 83 per cent of estate agents agreed that there is a need for positive licensing of estate agents 82 per cent of estate agents agreed that possible visits from Trading Standards Officers ensure that they comply with the law 76 per cent of estate agents agreed that the sanctions for estate agents who break the law are strong enough 71 per cent of estate agents agreed that self regulation (for example, The Property Ombudsman (TPO) Code) provides sufficient protection for consumers 64 per cent of estate agents agreed that there is a need to provide more guidance on the law to estate agents

OFT1140b | 47

52 per cent of estate agents agreed that there is a need to provide more guidance to consumers about their rights when buying and selling homes 52 per cent of estate agents agreed that estate agents should provide more information to their customers on the home buying and selling process 50 per cent of estate agents agreed that all estate agents are aware of their legal obligations 48 per cent of estate agents agreed that there should be financial penalties on the seller or purchaser for unnecessary delay after a sale is agreed 45 per cent of estate agents agreed that buyers often think the estate agent is acting on their behalf 44 per cent of estate agents agreed that given the introduction of the Consumer Protection from Unfair Trading Regulations 2008, the Property Misdescriptions Act 1991 is no longer needed 41 per cent of estate agents agreed that online estate agents (estate agents that do not have a physical branch location) compete with their branch 36 per cent of estate agents agreed that estate agents should be obliged to disclose the level of commission/benefits received from services offered to buyers (not just the existence) 34 per cent of estate agents agreed that individuals offering their own home for sale (For Sale by Owner or FSBO) compete with their branch, and 24 per cent of estate agents agreed that all estate agents comply with their legal obligations.

OFT1140b | 48

3.57

At the end of the questionnaire estate agents were asked if they wished to add any additional comments. The common themes that emerged from the responses given are outlined below: HIPs were the most common subject, being mentioned by 10 per cent of all responding estate agents. The general attitude towards HIPs was negative, with criticism focusing on the cost and time taken to prepare HIPs, and the perceived lack of benefit three per cent of estate agents stated their support for the introduction of positive licensing two per cent of estate agents expressed the need for an arrangement to financially commit buyers once they had made a successful offer, with some suggesting a bond/deposit that is non-refundable following subsequent withdraw of the offer one per cent of estate agents considered that enforcement of existing legislation needs to be stronger one per cent of estate agents noted that they were at a competitive disadvantage to rogue estate agents that ignored the requirement for a HIP and could therefore market properties more quickly one per cent of estate agents expressed the need for a minimum qualification to be necessary in order to operate as an estate agent, and one per cent of estate agents put forward the view that the present stamp duty system causes problems, particularly for properties valued close to the thresholds.

OFT1140b | 49

ANNEXE 1: COVERING LETTER

Dear Sir or Madam OFT Home Buying and Selling Market Study - Online Survey As you may be aware, we are taking a comprehensive look at the UK market for home buying and selling. You can find more information about our Study at: www.oft.gov.uk/homes. As part of this Study, we are inviting all UK based estate agents to complete an online survey. Your input to this survey will inform the outcomes of the Study and could have important implications for your industry. The survey is designed to be completed at branch level. We only need one response per branch and estimate that it will take about 30-60 minutes to complete. We will not identify individuals or individual businesses should we use responses in any publication. If you do not have exact figures please provide a best estimate. The online survey form can be found at: www.oft.gov.uk/easurvey Full instructions for completing the survey are provided at the start, as well as contact details if you have any queries while completing the form. You will be able to stop and start between questions as you wish, using the logon details which are as follows: Username: <<username>> Password: <<password>> The deadline for completing the survey is 5pm Monday 7 September (although early responses would be appreciated). Thank you very much in advance for taking part.

Yours faithfully

OFT1140b | 50

ANNEXE 2: SURVEY QUESTIONNAIRE

Welcome to the OFT Home Buying and Selling Study Estate Agency Questionnaire The scope for the market study, along with other related information, can be found on the home buying and selling web page on the OFT website. We only require one response from each estate agency branch. We will not identify individuals, branches or businesses should we use responses in any publication. Our disclosure policy can be accessed below. The questionnaire asks for some numerical information relating to: numbers of branches and employees, property appraisals, property listings, property sales, branch profits, fees, contract types, completion times, reasons for transaction failures, referral fees and complaints. It may be useful to have this information to hand before completing the survey. However, if you do not have exact figures please provide a best estimate. There are a maximum of 56 questions but, depending on your responses, you may be asked fewer. We have piloted this questionnaire with estate agents, and it should take around 30-60 minutes to complete. If you wish to complete the survey in more than one session please press the 'stop' button. Your progress will be saved as far as the last fully completed question, and you will be returned to your current position in the survey when you log back in. Please complete the questionnaire by 5pm on 7 September 2009. Thank you for taking part! Assistance If you have any queries, please contact Darren Eade on 0207 211 8534 or by e-mail at: darren.eade@oft.gsi.gov.uk If you are experiencing technical difficulties with completing the survey online please contact Gregory Haigh on 0207 211 5886, or by e-mail at: greg.haigh@oft.gsi.gov.uk If Greg or Darren are unavailable, please contact the team at: homebuyingandselling@oft.gsi.gov.uk

OFT1140b | 51

Disclosure policy: please note that we may choose to refer to comments received in response to this questionnaire in our report on this study. In deciding whether to do so, we will have regard to the need for excluding from disclosure, so far as practicable, information relating to the private affairs of an individual whose disclosure the OFT thinks might significantly harm the individual's interests or commercial information relating to a business which the OFT thinks, if published, might significantly harm the legitimate business interests of that undertaking (confidential information). If you consider that your response contains such information, that information should be marked confidential information and an explanation given as to why you consider it is confidential. The Office of Fair Trading (OFT) must reserve the right to disclose any information provided by you (including confidential information) in accordance with sections 170 and 240 243 of the Enterprise Act 2002 where it considers such disclosure to be appropriate. Subject to the considerations set out above, the OFT may choose to put information provided by you to third parties, such as other Government Departments, other contributors to this study and/or consultants engaged by them, for the purpose of facilitating the carrying out of this study. The OFT is also bound by the Freedom of Information Act 2000 (the FoIA). Where a person makes a request in accordance with the FoIA the OFT may have to disclose whether it holds the information sought and the information itself (including confidential information). The FoIA contains exemptions (including one which may exempt confidential information) and the OFT will not have to make those disclosures if an exemption applies. If you consider that any information you provide may be exempt from such disclosures you should say so and explain why. Similarly, to the extent that information you provide constitutes personal data under the Data Protection Act 1998, the OFT will process such data in accordance with that act.

OFT1140b | 52

Guidance for completing the questionnaire You may like to print out this page and have it nearby as you complete the questionnaire. Stakeholders have told us that experience can vary substantially at a local level and we have therefore deliberately targeted this questionnaire at estate agency branches, rather than Head Offices, so that we can gather views and information on the market at a local level. Branch-level responses will be more valuable to the study's findings and we strongly encourage these. Where we use the term estate agent (or EA) we mean all types of estate agency work - whether the business is traditional high street agent, the estate agency element of a mixed sale and letting, agents trading solely over the internet, or the sale of homes through auction. For Scotland the term estate agent also covers Solicitor Estate Agents. The survey covers sales and purchases of homes in the UK and does not include commercial properties or rentals/letting. Please use the 'Prev' and 'Next' buttons on the survey (not your browser's 'Back' and 'Forward' buttons) to navigate, otherwise your answers may not be stored. If you wish to complete the survey in more than one session please press the 'stop' button. Your progress will be saved as far as the last fully completed question, and you will be returned to your current position in the survey when you log back in. If your internet connection fails during completion of the survey, the system may require you to wait ten minutes before you can login again. Your progress will be saved as far as the last fully completed question, and you will be returned to your current position in the survey when you log back in.

OFT1140b | 53

About you Please complete the following contact details 1. Your business' name: 2. Your job title: 3. How long have you been involved in estate agency (to the nearest year)? 4. Your email address: 5. Your telephone number: 6. Focusing now on the branch for which you are responding, is the branch a franchise? yes no 7. What is the name of the estate agency business operating from the branch? 8. Town/city: 9. Postcode: 10. Does your branch mainly handle sales in: England Wales Northern Ireland Scotland

OFT1140b | 54

11. How long has your branch been established in its current locality? Less than one year 1 to 2 year 3 to 5 years 6 to 10 years 11 to 15 years 16 to 20 years 21 to 30 years 31 to 40 years 41 to 50 years 51 years or more

OFT1140b | 55

12. How many full time equivalent employees did your branch employ on the following three dates? (If necessary please provide estimates.) Please enter the number: 1 April 2007 1 April 2008 1 April 2009

13. How many residential property appraisals (excluding lettings) did your branch undertake in... (If necessary please provide estimates.) Please enter the number: 2007 (1 Jan to 31 December) 2008 (1 Jan to 31 December) 2009 to date (1 Jan to 1 June)

OFT1140b | 56

14. How many residential properties did your branch market/list in (If necessary
please provide estimates.)

Please enter the number: 2007 (1 Jan to 31 December) 2008 (1 Jan to 31 December) 2009 to date (1 Jan to 1 June)

15. How many residential properties did your branch sell in... (If necessary please
provide estimates.)

Please enter the number: 2007 (1 Jan to 31 December) 2008 (1 Jan to 31 December) 2009 to date (1 Jan to 1 June)

OFT1140b | 57

16. Did your branch make a profit or a loss (in relation to estate agency and related legal work) in the following years: Profit 2007 (1 Jan to 31 December) 2008 (1 Jan to 31 December) 2009 to date (1 Jan to 1 June) Loss

Competition with other Estate Agents 17. Over what area does your branch typically offer properties for sale? Most properties are within 1 mile of the branch Most properties within 2 miles Most properties within 5 miles Most properties within 10 miles Most properties more than 10 miles distant

OFT1140b | 58

18. Which of the following factors do you think are most important in attracting home sellers to use your estate agency services rather than those of your competitors? Unimportant Competitive fee levels Willingness to negotiate on fees Property valuations/market appraisals High profile internet presence Local knowledge of the market Quality of service 'One stop' shop (that is provision of services like HIPS, conveyancing etc) Number of 'for sale' boards Office location Of little Moderately Very Important importance important important

OFT1140b | 59

Number of sales listings in local papers Number of potential buyers registered Local reputation (including word of mouth) National reputation Own website Access to major property portals Access to the Solicitors' Property Centre (in Scotland) Competency of staff Membership of trade association / professional body for example NAEA, RICS, OEA, Law Society of Scotland

OFT1140b | 60

Entering the market 19. If you were to set up a new estate agency business starting with one branch, which of the following would be the most substantial hurdles to overcome in the first year? 1 small hurdle Finding a suitable available location The cost of buying/leasing the office space The cost of IT and other office equipment Finding suitably qualified staff Staff wages Staff training costs Promotional costs Establishing reputation and winning business from existing local estate agents 5 substantial hurdle

OFT1140b | 61

Attracting sufficient sellers Attracting sufficient buyers

20. Using your experience as a guide, how long after opening an estate agency business would you expect it to be able to make a trading profit? First year Second year Third year Fourth year Fifth year Longer

OFT1140b | 62

21. How important are the following factors when advising potential sellers what price a property should be put on the market? Unimportant Your knowledge of recent local sales Your knowledge of potential buyers registered with you Your knowledge of the local area (that is location of schools, leisure facilities, etc) Comparisons of property with recently sold similar properties The Energy Performance Certificate rating/or fuel bills for the property Experience of local market for such properties Size of property (by meters squared) Of little Moderately Very Important importance important important

OFT1140b | 63

The vendor 's opinion on the property 's value Web searches for similar properties in the location Extrapolation from original purchase price, where known Online valuation tools Unique or individual selling features of the property

OFT1140b | 64

22. Please specify which online valuation tools you use and why: 23. Where you use comparisons with similar recently sold properties, how often do you show these to prospective sellers when pitching for their business?* *As
a guide, please consider: 'Rarely' to mean in less than 25 per cent of cases, 'Sometimes' to be in 26-50 per cent of cases, 'Often' to be in 51-75 per cent of cases and 'Very often' to be in 76-100 per cent of cases.

Never Rarely Sometimes Often Very often

OFT1140b | 65

24. Broadly, for what proportion of your vendors did you agree the following types of fee in 2008 (if not applicable enter '0 ') Note: please do not enter '%' signs Proportion of clients (%) (0 - 100) A percentage of the final property selling price, payable only if the property is sold A percentage of the original asking price for the property, but payable only if the property is sold A flat fee stated in s, that does not vary with the final property selling price, but is payable only if the property is sold A flat fee stated in s, that is payable upfront whether or not the property is sold A flat fee stated in s, that is payable upfront, with an additional fee payable only on completion

OFT1140b | 66

25. If you offered a sole-agency contract, what was your standard fee before negotiation (that is the fee you first quoted potential clients as a percentage of the final selling price of the property, for example 1.8 per cent), in the following periods: N.B please do not enter '%' signs Please enter the number (for example 1.8%) 2007 (1 Jan to 31 . December) % 2008 (1 Jan to 31 . December) % 2009 to date (1 Jan to 1 June) % .

26. Please estimate the proportion of clients that entered into a sole agency arrangement with you that were able to successfully negotiate a fee that was lower than your standard fee in... Note: please do not enter '%' signs Please enter the number (for example 1.8%) (0 - 255) 2007 (1 Jan to 31 December) % 2008 (1 Jan to 31 December) % 2009 to date (1 Jan to 1 June) %

OFT1140b | 67

27. Which, if any, of the following explain why it may cost more to sell a higher valued property (for instance one valued at 500,000 in comparison to one valued at 150,000)? Please select all that apply. More marketing is required The type of marketing needed is more expensive Lower demand for higher value properties Likely to be more viewings for higher value properties More customer interaction is needed with sellers of higher value properties More tailored service required None of the above

Your services 28. In addition to estate Agency services, which of the following services do you offer? Please select all that apply. Residential property sale by auction Letting/private rental/property management services (as an alternative to selling or buying) Buyers agency services (that is to help buyers locate, negotiate on and buy residential property) Commercial property sales New development properties Properties to buy and sell in countries outside the UK None of the above

OFT1140b | 68

29. Do you offer any of the following services to vendors who choose to sell through you? Built into standard charge Floor plans Glossy brochure Prices shown per square metre 360 degree tours online E-mail/SMS text contact details for sellers to contact you Available at extra cost

Not available

OFT1140b | 69

30. Do you allow your vendors to access records online for their property of: Built into standard charge Promotional activity / advertising Interest shown by potential buyers Viewings arranged Feedback from viewings All offers made Communications after they have accepted an offer Available at extra cost

Not available

31. Do you offer seller or buyers any other innovative services? If so, please describe below and explain whether they are standard or at extra cost...

OFT1140b | 70

Contract Types 32. Broadly what percentage of clients sign up to the following types of agency agreement? Note: please do not enter '%' signs Proportion of contracts (0 - 100) Sole selling rights % Sole agency % Joint agency % Joint sole agency % Multiple agencies %

33. ...and do they usually include a 'ready, willing and able purchaser' clause? yes Sole selling rights Sole agency Joint agency Joint sole agency Multiple agencies no not applicable

OFT1140b | 71

34. Where you have a joint sole agency agreement contract, do you make sellers aware of how commission will be shared with the other estate agent(s)? Yes No N/A

35. What is the typical period of time clients are contractually bound to use your services? (including notice period) No minimum period Up to four weeks More than 4 weeks but less than 8 weeks More than 8 weeks but less than 12 weeks More than 12 weeks but less than 16 weeks More than 16 weeks but less than 20 weeks More than 20 weeks but less than 24 weeks More than 24 weeks

OFT1140b | 72

Marketing properties 36. How often do you use the following to market/sell properties? *As a guide, please consider: 'Rarely' to mean in less than 25 per cent of cases,
'Sometimes' to be in 26-50 per cent of cases, 'Often' to be in 51-75 per cent of cases and 'Very often' to be in 76-100 per cent of cases.

Very often Often For sale signs General mailshots Contacting own pool of possible buyers Open/show days for specific homes Local newspapers Local general magazine Local property magazine National newspapers National general magazine National property magazine Your own branch internet site

Sometimes Rarely

Never

OFT1140b | 73

A group internet site Property portal site(s) Solicitors Property Centre Auction

37. You indicated that you make use of property portals to promote your properties, what proportion of eventual sales do you think were initially generated as a result of advertising through this channel? Less than 1 per cent 1 per cent to 5 per cent 6 per cent to 10 per cent 11 per cent to 20 per cent 21 per cent to 30 per cent 31 per cent to 40 per cent 41 per cent to 50 per cent 51 per cent to 60 per cent 61 per cent to 70 per cent 71 per cent to 80 per cent 81 per cent to 90 per cent 91 per cent to 100 per cent

OFT1140b | 74

38. Please indicate the portals that you advertise on and rate their importance: Don 't use Rightmove Propertyfinder Findaproperty Primelocation Fish4homes Globrix PropertyLive A Scottish Solicitors' Property Centre portal Not Somewhat Quite Very important important important important

OFT1140b | 75

Experience of sales process 39. For successful transactions, how long on average did it typically take from offer being accepted to completion in the following periods... (If necessary please
provide estimates.)

9 to 11 to 13 to 15 to 17 to 19 to Over 1 to 4 5 to 6 7 to 8 10 12 14 16 18 20 20 weeks weeks weeks weeks weeks weeks weeks weeks weeks weeks 2007 (1 Jan to 31 Dec) 2008 (1 Jan to 31 Dec) 2009 to date (1 Jan to 1 June)

OFT1140b | 76

40. Where there are delays, who in your opinion is most often responsible for them?Your branch The seller The buyer The buyer's lender The HIP/HR provider The buyers' solicitor/conveyancer The sellers' solicitor/conveyancer Local search providers 41. What proportion of transactions fail, in your experience, subsequent to an offer being accepted by the seller? Please provide estimates for the last 3-year period. Fewer 11% to 21% to 31% to 41% to 51% to 61 to than 20% 30% 40% 50% 60% 70% 10% 2007 (1 Jan to 31 Dec) 2008 (1 Jan to 31 Dec) 2009 to date (1 Jan to 1 June) 71% or more

OFT1140b | 77

42. In your experience how often are the following the reasons for transactions not being completed despite an offer having been made by the buyer and initially accepted by the seller?* *As a guide, please consider: 'Rarely' to mean in less than 25 per
cent of cases, 'Sometimes' to be in 26-50 per cent of cases, 'Often' to be in 51-75 per cent of cases and 'Very often' to be in 76-100 per cent of cases.

Very often Often Insufficient finance/ buyer cannot get mortgage Buyer change of mind due to survey or search results Lender refused buyer finance following survey results Buyer changed mind for personal reasons Seller changed mind for personal reasons Buyer refused seller 's demand for higher offer Seller refused buyer 's proposal of lower offer Conveyancing uncovered legal

Sometimes Rarely

Never

OFT1140b | 78

problems Problems elsewhere in chain

Ancillary/3rd Party Services 43. What relationships if any, does your branch have with the following providers of services to home buyers and sellers? Please select all that apply. Can provide these services in-house (that is our business/ group owns the service provider) Solicitors / Conveyancers Surveyors HIP/HR providers Search providers Financial advisers / Mortgage brokers Lenders Insurance providers Can refer customers to providers with No Answer whom we have an established relationship

OFT1140b | 79

44. Broadly, what proportions of customers choose to use your services or the services to which you refer them (to the nearest 10 per cent)? Note: please do not
enter '%' signs

% of consumers using services to which we refer them (0 100) Solicitors / Conveyancers % Surveyors % HIP/HR providers % Search providers % Financial advisers / Mortgage brokers % Lenders % Insurance providers %

OFT1140b | 80

45. If customers choose a third party you refer them to, does your business earn a referral fee from the third party? Please select all that apply: Solicitors/Conveyancers Surveyors HIP/HR providers Search providers Financial advisers / Mortgage brokers Lenders Insurance providers None of the above

OFT1140b | 81

46. On average, for a typical transaction on a 200,000 property, what total referral fees/commission would you receive from third parties? More 0- 50- 100- 150- 200- 250- 300 350- 400- 450than 49 99 149 199 249 299 -349 399 449 499 500 Solicitors / Conveyancers Surveyors HIP/HR providers Search providers Financial advisers / Mortgage brokers Lenders Insurance providers None of the above

OFT1140b | 82

47. Do you tell customers that you will receive referral fees/commission? Typically, we do not tell them we receive referral fees Solicitors/Conveyancers Surveyors HIP/HR providers Search providers Financial advisers / Mortgage brokers Lenders Insurance providers None of the above Typically, we tell them we receive referral fees, but not the amount Typically, we tell them we receive referral fees, and the amount

OFT1140b | 83

48. Broadly, and in total, what proportion of your profits for 2008 were accounted for by the ancillary services referred to in the previous questions (solicitors, surveyors, HIP providers etc)? More 11-20% 21-30% 31-40% 41-50% than 51% No Answer

0-10%

Provided inhouse Provided by third parties

Complaints, enforcement and licensing 49. If your business is a member of a trade association or professional body, please indicate which codes your business is required to comply with: (please select all that apply) Royal Institution of Chartered Surveyors Solicitor's Code of Conduct The Property Ombudsman (formerly the Ombudsman for Estate Agents) National Association of Estate Agents Guild of Professional Estate Agents None of the above

OFT1140b | 84

50. How many complaints did you receive in the following periods... (If necessary
please provide estimates.)

From sellers 2007 (1 Jan to 31 December) 2008 (1 Jan to 31 December) 2009 to date (1 Jan to 1 June)

From buyers

51. For 2008, broadly what happened to complaints you received from sellers or buyers? What proportions of complaints were Seller % (0 - 100) Dropped by the complainant Resolved by your branch Resolved by your head office Sent to Ombudsman/professional scheme for resolution Resolved at small claims court Buyer % (0 - 100)

OFT1140b | 85

52. What qualifications or skills relevant to providing estate agency services do your staff possess? (Please tick all that apply.) Principals Internally-provided training with exam pass required Internally-provided training without exam pass required Basic knowledge of estate agency Good communication/people skills Typing skills IT/computer skills Foreign languages Marketing Negotiating skills Management skills NVQ level 2 NVQ level 3 Level 3 Technical Award in Sale of Residential Property Other Staff No Answer

OFT1140b | 86

Level 5 Diploma in Residential Estate Agency Certificate of Practising Estate Agents Basic training by professional bodies Advanced training by professional bodies

53. Broadly, how many hours training do your staff undertake in a typical year? Hours training Principals Other Staff

OFT1140b | 87

54. To what extent do you agree with the following statements? Strongly Strongly Agree Disagree agree disagree
There is a need to provide more guidance to consumers about their rights when buying and selling homes Buyers often think the estate agent is acting on their behalf Our branch always makes sure that buyers realise we are acting for the seller Online estate agents (that is estate agents that don 't have a physical branch location) compete with my branch Individuals offering their own home for sale (For Sale by Owner or FSBO) compete with my branch All estate agents are aware of their legal obligations All estate agents comply with their legal obligations There is a need to provide more guidance on the law to estate agents Estate agents should provide more information to their customers on the home buying and selling process Consumers are more likely to experience problems when using internet-based estate agency models than traditional high street estate agents

OFT1140b | 88

The regulations need updating to address new estate agency models (for example internet-based estate agents) Given the introduction of the Consumer Protection from Unfair Trading Regulations 2008, the Property Misdescriptions Act 1991 is no longer needed Self regulation (for example the OEA/TPO Code) provides sufficient protection for consumers Possible visits from Trading Standards Officers ensure that we comply with the law The sanctions for estate Agents who break the law are strong enough Estate egents should be obliged to disclose the level of commission/benefits received from services offered to buyers (not just the existence) We always check to make sure the prospective buyer will have sufficient funds to buy at the agreed price Buyers should be obliged to validate that they have means to purchase properties before putting forward offers There should be financial penalties on the vendor or purchaser for unnecessary delay after a sale is agreed There is a need for positive licensing of estate agents

55. Are there any other issues or comments you would like to add?

OFT1140b | 89

56. Would you be willing to be contacted by the Study Team to explore the issues in more detail? yes no

OFT1140b | 90