Being responsive avoids conflict

One of Derby’s newest estate agents achieved 99.78% of the asking price, on average, for properties it sold in 2017.

Andrew Sanderson, director at AKS Residential, said: “This is a huge feat. On average across the country estate agents normally achieve 96-97% of asking price, meaning our sellers are thousands better off.

“From the start we have always focused on service and building relationships with clients rather than short term gain which is why so many customers recommend us.”

Due to the company’s growth, AKS Residential has launched a 24-7 manned telephone service which supports its team when they are busy with other callers and out of normal business hours.

Operated by Oberoi Business Hub, the call answering service ensures all enquires are dealt with in a swift manner.

Oberoi supports a number of businesses across numerous sectors, including estate agents. Kavita Oberoi OBE, who launched the hub in 2012, said her team knows how to manage and handle calls.

She said: “Andrew knows too only well a business can never afford to miss a call.

“Speed of response is absolutely business critical – people don’t like not being able to talk to someone on the phone or leaving answerphone messages.

“Furthermore, for urgent queries, we can transfer calls live to Andrew and his team. We run the service as if we are completely part of the business and have access to live diary movements so can leave callers with a clear expectation on when the call will be returned.”

Oberoi said she was pleased AKS Residential chose to partner with Oberoi Business Hub, in St Christopher’s Way, Pride Park.

She said: “Andrew wanted to use a locally based company rather than the large faceless organisations during his growth phase.

“When a company is unable to justify the cost of an additional resource but need it to support business growth, our service works out to be a cost effective alternative to the employment route.

“Our service is particularly invaluable to AKS outside of normal business hours, as that’s when people have a little more time to focus on searching or thinking about selling their house.

“We are now looking at further opportunities to support Andrew’s business from the extensive range of Oberoi Business Hub back office support services that we provide – one these being the use of our excellent meeting rooms at the Hub for his client meetings.”

While the responsiveness of the estate agent has helped increase sales, it is no doubt too that the speed of the response has resulted in good customer satisfaction and avoided disputes and complaints.

Clients prize responsiveness as one of the factors in dealing with estate agents and a quick response especially over traditional means such as the phone means higher customer satisfaction. Oberoi Business Hub has also reflected the idea that people do not want to be typing long emails and wasting time over problems, they merely want to call a number, hopefully speak to someone and get the problem off their chest – whether it may be rental related or on a broader spectrum, a complaint from a tenant.

A word of advice for estate agents. Imagine being stood up on a viewing. Imagine someone has rung you to arrange a viewing and when you show up no one is around and you have wasted your time. This is what the majority of clients report to feel when an estate agent does not deliver or live up to agreements, or not have some effective means of communication.

The success of AKS shows that being available, or a least, being seen to be responsive does put agents in a good light and projects good customer service. When a large part of being an agent is dealing with customers, good service could make the difference between retaining clients, or being locked down in disputes which take up too much time and eventually force you out of business.

A quick summary of what mediation entails

Mediation is a voluntary process in which the people involved in a dispute agree to sit down together with a neutral third party – the mediator – and discuss their mutual problem. They then work together, seeking a solution to the problem with which they can all live. Most often there are two people involved in a dispute, but there is no limit to the number that can be involved, or to who can attend a mediation to help resolve the dispute. While the mediator facilitates this process, the solutions that the people in the dispute come up with are entirely their own.

Mediation is voluntary because if someone absolutely does not want to attend a mediation, trying to force them to do so is unlikely to help in reaching resolution. You may have all kinds of misgivings about the party or parties with whom you are in dispute as you go into mediation, but essentially you must want to at least try to solve the problem. Mediation cannot work in any other way.

Generally, as the first step in the mediation process one party will contact the mediator expressing his or her desire to explore the options for mediation. If the dispute has reached a point where the parties are no longer in communication, most mediators are happy to speak to each person individually and confidentially, and to handle all contact in setting up the meeting between them if that facilitates the process. What the mediator cannot do is to force or coerce the other party to attend. All he or she can do is to talk to them and to explain the principles and processes of mediation, taking care to answer all their questions. Once the parties agree in principle to mediation, and before they’ve even sat down with the mediator, they are showing a willingness to resolve the dispute.

Mediation’s emphasis is on moving forward – not on looking back. Your dispute has got to where it is now and, however it got there, focusing on that part of the problem usually does not help anyone come to a resolution. Mediation’s purpose is to focus on the future and to progress on new terms with which everybody can live.

When you go to court, the focus is always on the past: who has been at fault, who has broken a contract, who has done something wrong, who has done what to whom. At the end of the court process a decision is handed down by the judge which attributes blame and prescribes a remedy. The court generally makes no attempt to give direction on how the parties should proceed in the future, and certainly does not want to involve itself in any ongoing supervisory role. This can be particularly difficult if the parties have to remain in any sort of relationship with each other such as in family cases or in cases involving relatives or work colleagues.

Mediation’s focus is on how to move forward and this is achieved by directing attention on how to solve the problem. It can also contain agreed terms for the future conduct of the relationship, if that is what the participants want.

Disputes in any context tend to generate a lot of bad feeling and high levels of stress. Have you ever been in a dispute with anyone? Most of us have. No matter how small the argument, feeling angry, unheard and misunderstood does not feel good, even if you are convinced that you are 100% in the right. Relationships of all kinds can be heavily damaged by dispute. The longer people remain in dispute with each other, the more they look for evidence to support their point of view in the argument and they therefore focus on the dispute. They fixate on this and focus all their energy on it to the extent that finding a workable and amicable solution that helps find a way out could not be further from their thoughts.

When people are in conflict, stress levels can rise sharply, and this is not healthy for anyone on either side of a dispute. Relationships outside the argument can also suffer when someone is very angry for such a very long time. When an amicable, acceptable resolution is reached, stress levels immediately drop and people feel much more positive and much lighter. A weight is lifted from their shoulders and the time and energy they once focused on the argument can now be used for things that are helpful and enjoyable to them.

Mediation is entirely confidential. This is another very important point and must be strictly observed by the mediator and by all parties to the dispute. Anything that is said or done in a mediation cannot be revealed to outside parties either during or after the mediation.

Mediation is also ‘without prejudice’. If your mediation is one of the few that is unsuccessful, and the decision is taken to proceed to court, whatever was said in the mediation may not be relied on in court by either party without the express permission of the party that made the statement. This means that if something new comes to light in an unsuccessful mediation, this information cannot be brought into the legal arena. Neither can the mediator be brought into the legal arena as a witness, save on the orders of a Judge.

The description of the mediation process as without prejudice means that anything said during the mediation cannot then be used as evidence in any legal proceedings which are being considered or already started. This allows parties to talk openly about options for agreement. Parties are able to suggest new and creative possibilities for agreement without jeopardising their chance to go (or to go back) to court if an agreement isn’t reached. A mutually agreeable outcome is often one which could not have been reached in court.

With the exception of family mediations, where some records must be kept, the mediator destroys all notes and information relating to the meeting apart from the agreements to mediate and the record of the attendees at the meeting. This further protects the confidentiality of all who attend as there is then no danger of any information falling into the wrong hands.

The voluntary and non-binding nature of mediation means that parties are not compelled to reach an agreement and options for an agreement can be discussed without binding themselves to a particular outcome. There is no consequence on the parties if they are unable to agree (other than financial loss where the mediation is self-funded). Mediated agreements are only binding if both parties wish them to be.

During a mediation, while the mediator assists and facilitates the process, the parties are responsible for generating options for agreement and the terms of any settlement reached. The mediator does not offer their opinion on the merits of either party’s case or seek to determine or impose any outcome. They do not make suggestions or recommend proposals for agreement (but may pass offers between the parties if requested to do so). Any agreement reached must be mutually acceptable to all parties and will have been created by them.

It is integral to the mediation process that parties are able to make informed choices, about what to propose by way of agreement and whether to reach a settlement. Mediators encourage parties to explore their positions so that any agreement reached can reflect their needs and interests. Mediators also encourage parties to consider the likely alternatives to reaching a mediated agreement to objectively assess any offer on the table. When a dispute involves legal rights and entitlements, parties should seek legal advice before commencing mediation. Parties may have a legal adviser present during the mediation (or available on the telephone), or be given the opportunity at the end of the mediation to consult a legal adviser before reaching a legally binding agreement.

Mediation invites parties to widen the potential options for agreement and explore new possibilities and ideas. Mediated settlements can be reached where direct negotiations have failed by getting the right people in the same room and breaking down barriers to communication. The time spent by a mediator encouraging parties to explore their own needs, as well as those of the other party, enables participants in mediation to make practical proposals. Such offers may have added-value as they may have huge significance to one party but can be provided with minimal inconvenience to the other. It may involve looking at previously unconsidered options and widening the options for agreement.

The Property Ombudsman offers free, impartial and independent service for the resolution of unresolved disputes between consumers and property agents. The scheme has been providing consumers and property agents with an alternative dispute resolution service for 27 years. A member agent signed up with The Property Ombudsman is obliged to adhere to a code of practice which consumers can take confidence from.

Reasons for investing in properties

A lot of mediation cases result from disputes between landlords who want to maximise their bottom dollar and spend as little as possible, and tenants who feel they are being pushed to do the landlord’s job of upkeeping properties because the landlords are not responsive enough. What makes someone want to invest in property in the first place if they are not prepared to invest time and money into maintaining it?

Cash Flow: Whether you buy with all cash or use today’s favorable financing with a low mortgage payment, positive monthly cash flow occurs when the monthly rent is greater than the monthly expense. This gives you a monthly income from your property investment.

Appreciation: Appreciation is the increase in the property’s value, which generally occurs over time and can also be increased by an investor who adds value to the property through repairs and/or enhancements. This is a great way to create equity in the property.

Depreciation: Even with an increase in the property’s value, the government allows owners a tax deduction on their property over its life span. This annual deduction is called depreciation which you can start taking when you have owned the property for at least one year. By taking advantage of depreciation, the cash flow you receive is protected so that you receive some or all of it tax free. If you are an investor with an income from another source such as a regular job, it can also protect all or some of that income from state and/or federal income taxes. Talk to an accountant to completely understand the full benefits of depreciation.

Tax Benefits: In addition to depreciation, an investor can usually claim the interest portion of his monthly mortgage payment as a tax deduction.

Leverage: Leverage is a very powerful reason for investing in property. If an investor uses 100% cash to acquire a house worth $100,000, and the house increases in value by $5,000 in one year, then the investor makes a return of 5% (assuming no other costs in this case). However, if the investor obtains 80% financing, only $20,000 cash would be required at the closing table, and a bank or other lender would loan the remaining $80,000 to acquire the property. Assuming the same $5,000 increase in value, the investor’s cash contribution of $20,000 would yield a 25% return on investment ($5,000 increase in value divided by the $20,000 investment) in the same one year period of time.

Using the above example, if the investor is able to net even a conservative cash flow of $200 per month, this will result in an additional $2,400 per year added to the increased appreciation. The return for the year would now be $7,400 ($5,000 appreciation plus $2,400 cash flow) and the return on investment would now be 37% ($7,400 divided by $20,000). Even if the property value remained stable with no appreciation, there would still be a positive return of the $2,400 in cash flow with a return on investment of 12%.

Considering these benefits in addition to the low interest rates for financing, you can see how easy it is to accumulate wealth and become a successful investor.

Other Reasons Why People Invest in property
Now let’s look at other reasons why people invest in property. First, let me ask you a very simple, yet provocative question: Why would you invest in property? Understanding the answer or answers to this question will help you along your investment career. Following are the most common answers I have heard during the course of my property career:

Freedom: Frankly, this is why most people start investing in property. They get star struck with the idea of riches that would give them the freedom to stop working for someone else. They may have a great job that they absolutely love that pays the bills, but they still want to achieve long-term freedom. They can see that by buying and holding cash flow properties over time (and sacrificing and delaying gratification), in five, ten or twenty years, they can have a pile of monthly cash flow and have gained the freedom they desire.

Control: Some investors I speak with want property in order to gain some degree of control over their financial lives because, let’s face it; we have zero control in financial investments outside of property investing. If you invest in the stock market or money market funds, you have no control over the return you will make. With property, there are things that you can do to control your return on investment as shown above.

Alternatives: Some investors will admit that property is nothing more than a portion of their overall investment portfolio. Perhaps they have divided their portfolio to include mutual funds, stocks, property, etc. Or they may be looking to achieve higher returns from their cash through active management.

Job Escape: A few investors look at property investing as a career, or a chance to own their own company. Others may look at property as a means to eventually replace the job or career they currently hate. Creating Value or Thrill of the Hunt: Many investors love the thrill of the hunt, chasing down a deal or cashing in on their last remodel. They pursue that addictive feeling and are always looking for the next rush or opportunity to turn an ugly duckling into a beautiful swan.

Options: After many years of property investing, I have come to realize that in the end people love investing in property because it has given them so many more options. They have the options to keep working their current job, to buy property as a full time career, to have the time and money to travel, etc. The more they invest, the more option doors are opened.

The Real Reason to Invest in property
People fall hard for the sexy pitch of earning freedom. Frankly, freedom is good but I think what people really want is options. That is why they keep working so hard to find the next deal, to find the next investor, and to keep building their growing portfolio. Some might think freedom and options are the same things. But freedom is more sustained while options are more temporary. But to me, freedom means that a person can stop doing something while options mean a person can do other things. I can tell you firsthand that having options is better than having freedom. I would say you get freedom first and then you build or acquire options.

Why moving house is stressful and how to manage it

A recent study found that over two thirds of adults would put moving house at the top of the stress list. The whole process of shifting from one property to property can cause stress levels to rise, catastrophically in some, and at least to some degree in others. It is not unsurprising of course. Imagine having to pack up all the items in your fridge, placing them carefully so they are not damaged in transit, then transporting them to be transferred in a different fridge elsewhere. The process of moving house is similar to that, but on a greater level. It may even involve transporting the fridge itself! The whole process of bundling your life’s possessions into little boxes and hauling them elsewhere to unpack can be a physically exhausting process.

Some people liken the whole process to military boot camp. You do physical tasks, for what seems like a menial purpose over and over again. Lift box. Put box in removals van. Lift next box. You could at least look at the positive side of things. In the whole process of moving house you could unearth a few lost items that you had forgotten about. Moving house involves excavating behind the settee, behind cupboards and may reunite you with old treasures.

Is it fair to say though, that the physical side of moving house is only the tip of the iceberg? The actual day is only one in the long run of things, a chain that starts with viewings, making offers, mortgage agreements in principle, conveyancing, exchange of deeds. Along the way there are various conversations to be had with estate agents, solicitors, the other party. All that increased workload has to be factored in the working day and fitted in somehow among the demands of work, because normal life can’t stop just because you are moving house … and in the midst of all that there is the constant thought of wondering if you made the right choice. But the most important trigger of stress could be said to be – amidst all that has been mentioned – the threat of a sale falling through. All the work and planning for moving house could be for nothing, and could be wiped out with a single phone call. Why do sales fall through? It could be your finances not adding up. It could be that the seller is in a chain and further up there has been some complication which has fallen back on you. Or it could be something as fickle as the seller trying to extract more money from you, using improving market conditions as an excuse. Or the seller may simply have decided not to move.

Of the above reasons, only one is within your control. When you commit to a purchase, your time and energies are placed in one basket, but this commitment to the buyer is not necessarily reciprocal. It is a bit like buying a lottery ticket with your last pound, and hoping the results will work in your favour. And the prolonged process of trying to live under that kind of umbrella can evoke underlying stress.

Moving house is also not just about moving properties. For some, it is also about a change of lifestyle especially if you are relocating from city to country or vice versa. A change in locations especially across cities may mean changes in relationships, your helpful neighbours in London may find it hard to make it to Bedford. Moving house may also mean moving jobs. The transitions between two different sets of lifestyles, and having to straddle between them for a few months, can similarly be difficult. And if you are moving into a property that needs renovating, there are more obstacles to life in the road ahead.

No wonder moving house causes stress. On one hand, it is the culmination of one process that started with looking for a new home. On the other hand, it is the start of a new stress process of a new lifestyle. And the actual move itself can be stressful.

But there are things you can do to alleviate the stress. You can never eliminate stress completely, but the sense that you have done all you can for the things within your control can give you some stability and peace of mind throughout the process. Get your agreement in principle in order before you make an offer. Make a list of moving companies in your area and services in the area you are moving to. And when you are looking for properties, choose an agent registered with The Property Ombudsman. This ensures that you have some avenue for redress in event of a complaint. You may not need it, but the feeling of being in control may help reduce the stress normally associated with moving.

Documenting Rights of Way

If you are buying a residential property, it usually seems straightforward enough. Check out the length of the lease or freehold, and other things like ground rent, and leave the rest in the hands of your conveyancer. Of course, if you are one of the growing many who are increasingly managing their own conveyancing, then yes, there are a few more things to look into. It is difficult with doing it the first time of course, as there are the normal uncertainties associated with learning something for the first time, but once you have done it there is the confidence and pride in knowing you’ll be saving yourself some money in solicitor fees, and a whole lot of time expense, in that you won’t have to be ringing you conveyancer for status reports because you are now the conveyancer!

 

Some may argue that the majority of decisions involving property purchases are all done before looking at the property itself. Questions like “Which area is it in?”, the council tax, parking restrictions if any, are the kind of questions that precede a purchase and which may even influence the decision to arrange a viewing in the first place. Some buyers, for example, would discount a property on the basis of the lack of off-street parking – which is fair enough. If you are considering about  purchasing a property on a busy road and learn that you would have to park your beloved car three streets’ and five minutes’ walk away the parking would make a difference enough for you to look into another property.

 

For some, off-street parking really makes a difference. Who would risk a precious car out on the road, or on another road out of vantage point? The availability of off-street parking in big cities also means the lack of a need to monitor parking restrictions in the area because you would be parking on your own land.

 

The property ombudsman was recently called to investigate a complaint against one of its member agents by a buyer who claimed to have been mis-sold a property by them.

 

The buyer had bought a property with vehicular access to the rear, adjoining two other properties he already owned. These latter two properties did not have parking facilities. Essentially it can be assumed that the buyer had bought the property with the intention to link all three together with parking facilities.

 

The issue did not revolve around the properties themselves, but rather the access to them, which the previous seller had assumed was via a common road; hence the buyer was somewhat surprised, perhaps slightly taken aback, to be informed that the road was actually part of a neighbour’s property and he did not have right of way over it.

 

The buyer raised the issue with the ombudsman because he felt that the estate agent had misrepresented the property.

 

The ombudsman’s investigation found that the estate agent had taken reasonable steps to ensure that the description of the property was accurate. The seller had assured the agent that the sales descriptions were accurate, and assured the agent about the access, so while the buyer ended up with a property which he, in all likelihood, would have to arrange access arrangements, it was not through any negligence on the part of the estate agent.

 

The scope of the ombudsman investigation did not extend to the seller himself, but only within the remit of whether the estate agent had been in any way at fault. Having gone through the company file the ombudsman was satisfied in the decision not to uphold the claim by the buyer.

 

Access to the property is a matter that the buyer should have raised with their solicitor in order to request documentary evidence before exchanging contracts.

 

A lesson to also take away is that if there are any grey areas where further investigation is needed, the details should not form part of the sales particulars until confirmed. In this area the ombudsman did not find against the estate agents because they had acted in good faith with assurances from the seller.

 

Also another lesson to take away: While in this case neither buyer or seller were doing their own conveyancing, if you are ever thinking of going down that route in the future, make sure to examine all areas carefully. The seller had been going up and down that road for forty years and had assumed a public right of way. Never assume anything!

 

Conduct due diligence before buying by auction

Buying a property by auction is a method that seemingly circumvents the long drawn out process of submitting multiple offers for a property, then waiting for the estate agents to get in touch with the sellers before returning with a counter proposal. Ever bought a property the common way before? You ring up various estate agents to be on their books, scour property websites, book an appointment for each potential viewing, second viewings for more attractive properties, submit a low bid, wait for the agent to get hold of the buyer, get back to you, and then repeat multiple times until a satisfactory bid is accepted. And that is not even half the tale. The problem is that in between the various stages, there can be significant time lags, some on your part, some on the agents, and some on the buyer. Some of these delays can be intentional, and some can be deliberate.

You might disagree with the last statement in the previous paragraph. Deliberate delays? By yourself?

Let’s give an example. Perhaps you have viewed a property and like it. You would want to make an offer to avoid another buyer snapping it up, but make an offer too soon and the agent and seller know you are keen. Your first couple of offers are likely to be rejected. Remember that the agent is working for the seller to get the best possible price, and not for you, and will keep pushing you back until he senses he has extracted every last pound from you. Your rate of response is an indicator of how keen you are on the property, and also a hidden signal of how much more you can go. Hence while you are eager to get hold of the property, you may feel it is wise to slow down any counter offers you make or any further contacts with the agent, to give them the impression that the property is not all that important to you. It is a way of making them sweat instead of you.

Of course, estate agents are wise to these antics – they themselves partake in it. When they say they will get hold of the seller right away, do you really think they are ringing the seller every twenty minutes until he picks up? More likely they will leave it until the end of the day, or tell you the next time you’ve rung that they haven’t heard back yet. They are deliberately introducing delay to make you get jittery and also to flush out your interest. And this is done to multiple buyers to extract the best property price. And in doing so, the best commission.

But in the process, a lot of time is wasted.

This is perhaps why a sale by auction draws so many. It is a scenario where all cards are on the table, all offers presented in public view – unlike a sealed bid process, where all cards are presented to the estate agent without any form of public scrutiny.

Buying by auction seems a simple enough progress. There are many ways to go about it. Before an auction takes place, all buyers view the property in order to ascertain a bidding strategy and the upper limits to which they will bid. It is important that a viewing be made as there are many things that can be gleaned away from the sales brochure. While agents are bound to market the property responsibly, they are looking to get a commission by sale and would of course market it in the most positive light. You cannot go by the sales brochure alone.

Potential buyers may make their interest known to the marketing agent, and their bid acts as a reserve.

On the day of auction, bidders either attend in person, or send a proxy to represent them in the auctions.

A property auction can be a strange scene. A room with some bidders in person, some on the phone with clients, the agents trying to draw prices towards or above the reserve. Sharks circling for the kill? Perhaps, but sharks would only come if there is food for the taking.

The importance of having viewed the property prior to auction cannot be stressed. The Property Ombudsman was recently called to resolve a dispute between a buyer and an agent.

The dispute centered around an auction property that had been incorrectly described as having two bedrooms instead of being listed as the one bedroom property that it was in reality. The error was only corrected at the last minute. The marketing agent found out only the night before and endeavoured to contact those who had submitted bids, presumably to get them to notify him of a withdrawal if they did not want to continue. At the property auction the property was clarified to be a one bed property, and as could be expected, the winning bid did not come from any present among the bidders. Instead it came from one the agent had received a prior written bid on.

The property ombudsman had to mediate between the “winner” who claimed the agent had misrepresented the property. It found that the buyer should have been aware of what was being purchased and done his own due diligence, but it also found that the agent should have made better attempts to get in touch with the buyer to ensure that the change in sales description was acknowledged.

The agent was asked to recompense the buyer to the tune of £750 but there was no compensation for the difference between the price between a two bed flat and a one bed flat.

Buying by auction presents conveniences but don’t be misled. There are responsibilities on the part of bidders and agents that arise as a result. If you are considering buying by auction, it goes without saying you absolutely must see the property before buying!

The UK’s quick house sale sector

On 18 April 2013, the OFT launched a market study looking at the UK’s quick house sale sector.

They wanted to find out whether this sector works well for consumers, whether any practices give cause for concern and, if so, how such practices should be remedied. They had also noted potential similarities with the sale and rent back sector and wanted to establish whether similar concerns arose.

Quick house sales can be beneficial to home sellers who want the certainty of selling their property relatively quickly, without trying to sell on the open market. There was concern, however, that some unfair trading practices may prevent home sellers from making informed choices when selling their home. In addition, there may be a disproportionate impact on vulnerable groups, such as those in financial difficulty who need to clear debts and/or avoid repossession, and older people.

Some trading practices may lead to sellers receiving not just a below market value price for their home, but a sum much lower than the amount the provider had led them to believe they would get.

Practices that gave rise to concern included:

•reducing the price offered at the last minute after the seller is financially committed to the transaction;

•making misleading claims about the value of the property or the level of discount to be applied to the sale;

•falsely claiming to be a cash buyer;

•unclear fee structures, for example, imposing an unexpected fee following an initial valuation, as a condition for progressing the service;

•inducing home sellers to enter into agreements that prevent them from selling to other buyers, with severe penalties for breach of contract.

The launch of the market study included a public request for information, seeking to hear from people with experience of this sector, including home sellers, providers, valuation experts, estate agents and debt advisors. They also carried out a survey of providers and held roundtables with providers and with a number of stakeholders. The information received helped them to build up a picture of the sector.

As part of their research they:

Analysed over 160 websites, for information about providers and to see their claims about the service they provide; and reviewed Companies House data, for company and officer information;

Considered 23 provider survey responses (out of 74 providers approached), and held a provider roundtable (attended by 13 companies), for more detailed information about providers and their practices, processes, business models and customer feedback;

Reviewed 111 public responses to their request for information, including 72 home seller complaints, plus follow-up telephone interviews with 20 complainants and analysis of other complaint data, to understand home sellers’ experiences and identify possible breaches of consumer protection law;

Engaged with stakeholders including government bodies, enforcers, consumer bodies and advice services, charities, professional standards organisations and trade bodies, for information that would inform their study;

Organised a roundtable workshop with consumer stakeholders to examine how the quick house sale process affects particular consumer groups and what good and bad business practice looks like;

and obtained HM Land Registry research, to provide data on properties bought and sold within a six month period, and conducted a survey of RICS surveyors, to help estimate the size of the quick house sale sector.

Quick house sale providers are businesses that offer to buy a property or find a third party buyer very quickly, but usually at a ‘below market value’ price.

The OFT have identified almost 120 such providers operating in the UK. It is hard to count them because some providers operate multiple websites. There are probably many more providers, particularly local ones advertising through the local media and by leaflet drops. Not all providers offer the same service:

•some buy properties direct from home sellers, either for resale or to let(when they do this, they refer to them in this report as ‘buyers’)

•some broker sales, that is they seek to introduce home sellers to third party buyers and may take steps around progressing a sale (when they do this, they refer to them in this report as ‘brokers’). Brokers can be instructed by either sellers or buyers, or both. When a prospective seller gives the go-ahead, a broker looks for a buyer from their list of investors, from quick house sale buyers and other contacts, or by advertising the property on the open market

•some identify home sellers and pass on details (or ‘leads’) to other quick house sale providers (they are sometimes called lead generators). Some providers buy some properties and broker the sale of others. Some lead generators may also sometimes broker.

How do providers profit from quick house sales?

•Most buyers try to resell the property as soon as they can for a higher price than the one they paid the home seller.

•Some buyers let out the property and receive a rental income (and sell later).

•Some brokers are paid a fee by the seller (like a traditional estate agent).

•Some brokers are paid a fee by the buyer.

•Some brokers agree a price with the seller and another price with the buyer, and receive the difference between the two prices.

•Lead generators receive a fee from the buyer or broker: a fee per lead (or batch of leads) and/or a referral fee if a deal goes through

From the upfront claims they make on their websites, most providers appear to be buyers.

However, from close examination of their websites and from what providers told us, they believe this may not be the case. Whether the provider is buying or brokering can have implications for both the speed of the sale and the discount on market value.

Brokers have less control over the purchase than buyers: they have to find a third party buyer, one who will pay at least the offer price, and one who can finance the deal quickly. There seems to be a greater risk that home sellers’ expectations might not be met. Home sellers should therefore seek extra assurances that brokers can deliver deals as promised before doing business with them.

Providers that fail to explain their services adequately to home sellers may be in breach of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) for misleading claims and/or omissions in particular. When providers broker, the OFT considers those activities are likely to involve estate agency work (as defined by the EAA), in which case they must comply with the requirements of the EAA and associated legislation.

The service on offer is one key feature to consider when looking at providers. Another is how the purchase will be paid for.

Quick house sale buyers or, in the case of brokers, third party buyers, may pay with cash funds that:

•are available immediately;
•will be freed up once another property is sold;
•will be raised from investors; or
•will be borrowed from a lender.

This too has possible implications for the speed of the service and the final offer price. A buyer with funds available immediately is likely to be in a better position to finalise a quick sale than one that needs to free up funds or secure finance. Problems with funding may cause both hold-ups and an attempt by the provider to renegotiate the sale price. Home sellers should ask questions to clarify whetherthe buyer can pay for the property and will have funds ready on time. Providers, to minimise the risk of a breach of the CPRs, should disclose how the buyer intends to pay for the property. Similarly, in order to minimise the risk of breaching estate agency legislation,brokers should not misrepresent the status of a prospective buyer, which would include their financial standing.

Lead generators are not really providers at all. They do not make deals with home sellers. They are themselves unlikely to be able to deliver either a speedy sale or a particular sale price because those things depend on buyers or brokers. They include them as ‘providers’ only because, from their upfront claims, they are currently hard to distinguish from buyers or brokers and will look like a provider to the home seller. What they actually do is an ancillary service. They attract interest from sellers and sell on the details to other providers.

Not all quick house sale buyers or brokers use lead generators, but some do. Lead generators must comply with the CPRstoo. Their claims, for example about their service, the speed of the quick sale, the offer price and the financial status of the buyer, must not mislead. Lead generators should also check whether they are engaging in any activities that fall within the definition of ‘estate agency work’ under the EAA. If they are, they will need to comply with the requirements of the EAA (and subordinate legislation) when they carry out those activities. If necessary, they should take independent legal advice on this matter.

Flying freeholds: possible arising disputes

Whether you are an estate agent, or seeing to buy a property, it is always a good idea to understand the terms you may encounter during the conveyancing process, not just so that it expedites the process – which, if you are a property hunter, means you spend less time talking to the solicitor who is charging you by the hour – but also so that there is common ground and understanding that prevents any issues at a later stage. It is more difficult to break away at the later stage of the buying process because you may feel you have already invested too much time and money already, and the pressures of time – if you need to have a property to move in to soon – may mean that you have to go along with the purchase even if you are not entirely with aspects of it. Another situation that may arise is that the mortgage lender may not be willing to lend, grounding the whole process to a halt. So while it may seem like a hassle to have to familiarise yourself with these new terms, it is a worthwhile investment

One term that may cause a fair bit of confusion is the term “flying freehold”. Many people assume this to be a case of the freehold of a building being transferable to another party, or having some sort of fleeting existence, but that is not the case. The term actually has some physical connotations. A flying freehold actually refers to a freehold of a property that overhangs another space. For example, if an apartment is built in an overhanging archway, that freehold does not cover the space below the dwelling. The apartment has a flying freehold. But this does not mean you should start getting your tape measure out and calculating the overhang area of guttering and drain pipes. The flying freehold element only refers to spaces which are habitable and space taken up by chattels are not usually considered.

Nevertheless, if you have any doubts our concerns about the possibilities of a flying freehold you should notify your conveyancer so that this can be checked out fully at the start of proceedings. It is also a good idea to mention this to your mortgage lender. It demonstrates to everyone that you are on the ball and proactive!

As an estate agent, it is a good professional practice to inform the buyer if a flying freehold does exist. Yes, while you may argue that the estate agents have an obligation to the seller more than the buyer, it is professional to mention this to the buyer if they are not aware of it, as they will certainly want to investigate it. It would save you time and money down the line and avoid the situation where a potential buyer withdraws or their mortgage lending falls though. And if you do sell a property with a flying freehold, the buyers may come back to you in future if they decide to sell, simply because they know you are thorough in your approach, and, well, you have sold the property before and know it well!

Solicitors, or more accurately in this case, conveyancers, need to be mindful of the possible scenarios that flying freeholds may entail. If you are purchasing a property with a flying freehold, a conveyancer should advise you both on the difficulties which may arise. For example, some mortgage lenders may not lend on a flying freehold. And you must certainly always find out who should bear the responsibilities of repair or how they are divided, as this is almost always an issue that will arise in time. And even if getting a mortgage is not a problem, for example, if you are a cash buyer, a conveyancer should inform you about the existence of flying freeholds simply because while you may think you are relatively unaffected by it, it may affect a future buyer who may have difficulties getting a mortgage for your property, or have reservations about buying it. Your purchase of a flying freehold property may make it harder for you to sell in the future. Enough said, don’t hide your head in the sand, or leave it to the conveyancer or mortgage lender. Knowledge is power!

For a flying freehold to exist, part of the freehold property that is being bought must overhang part of another person’s freehold property, and the overlapping area must be of a significant size, allowing for habitation. In some properties, such as semi-detached ones, this scenario may be fairly common. For example, part of the bedroom of one house may be sited above the lounge of a neighbouring house. A more common example is seen in properties where a room is built on an arch that allows a road through for parking at the rear of the property. If the area that overhangs is a space merely limited to chattels such as drain pipes or guttering, then the property is not said to have a flying freehold; conveyancers speak of these as having a right of ‘eavesdrop’.

But what if you live in a block of converted flats, where one property entirely sits directly on top of another?

If all the owners in the block collectively own the freehold, then the property is said to be a leasehold property with a share of freehold. The flying freehold principle does not apply, but nevertheless, the mutual obligations of property owners mentioned below may still do.

Flying freehold properties have mutual obligations to each other. The upper property should have a right of support from the lower one, while the lower property should enjoy a right of shelter from the upper one. If you live in a semi-detached house where one bedroom is directly over your neighbour’s lounge, then you have responsibilities to maintain your property so that it does not have any impact on your neighbour’s. Your floor is your neighbour’s ceiling, in the overlapping area, and if you do not maintain your own roof, causing your floor to flood, then your neighbour’s ceiling will be adversely affected too. Any major works that you carry out within your own property, for example, for example, in replacing floorboards must also not adversely affect your neighbour or the value of his property.
If you purchase a property with a flying freehold then you also have responsibility to the area under it, particularly with regards to maintenance.

If you have a property that has an area overhung by your neighbour’s property, then while your neighbour has the flying freehold, you have what is known as the creeping freehold. Your obligations to your neighbour above are the same as your upstairs neighbour’s obligations to you. You should not do anything within the confines of your property that will jeopardise your neighbour’s.

Estate agents and conveyancers should always advise buyers on these obligations at the outset to avoid any misgivings or disputes in the future between affected parties.

Most parties with flying or creeping freeholds usually work things out amicably but sometimes relations may sour and lead to dispute.

If the property you have is overhung by your neighbour, are you entitled to go into your neighbours’ property to carry out works? And if such works are enforced, are you entitled to recover the cost from them?

A landmark case regarding flying freeholders was the case of Abbahall v Smee (2002). The property owner with the flying freehold allowed it to fall into a state of disrepair, thereby affecting the property below. Loose masonry was falling onto the public thoroughfare below, affecting visitors to the ground floor property.

The court ruled that the owner of the property with the flying freehold had responsibilities to the party below, although the costs of the roof repair to the flying freehold property were borne in a 75/25 split by both parties as they would equally benefit from the repair.

If your property overhangs another, the Access to Neighbouring Land Act 1992 allows you legal provisions to go to your neighbour’s land to carry out repairs to your property. Of course, a simple word with your neighbour and mutual understanding is usually enough without having to apply for a court access order. But if you have to go the legal route to carry out repair, you will probably have to indemnify the other owner against any loss, damage or injury.
Perhaps a lesson to learn is that if you are buying a property with a flying freehold, or any property for that matter, make sure you can get along with the neighbours!

And what do mortgage lenders make of flying freeholds? Their view of it varies. Some lenders will avoid lending on such properties, while others will consider it only if the overlapping area falls under a certain percentage of the whole property. Some lenders will lend only if there is flying freehold indemnity insurance. Either you or your conveyancer should inform the mortgage lender of the existence of a flying freehold as soon as possible.

A flying freehold property is perhaps best thought of either as one whose structural integrity is dependent on another property, or where that overhangs another property in a way that has bearing on it. Either way, there are implications that property buyers, conveyancers and mortgage lenders should be aware of!

Considering a Quick House Sale?

We often run into temporary signages promising quick house sales. While this is a eye-catching solution to those who need to sell their property fast, wish to avoid dealing with solicitors, or cannot afford to hang around for what seems like prolonged periods waiting for details to be finalised, it is advisable best to be cautious – after all, everything has a catch, a string attached somewhere.

In a quick house sale, a business (provider) offers to buy the property or find a third party buyer very quickly. In return, the seller usually accepts a ‘below market value’ price for their home.You should think carefully before opting for such a sale. These top tips should help you when deciding whether you really need or want a quick house sale. If you decide to go ahead, they will help you to choose a provider, spot the things that could go wrong, and understand how to prevent problems.

1. Consider all your options
There may be more options than you think. They might help you to keep your home if you don’t want to sell or to sell at a better price.

2. Take time to find out about the process
What are the pros and cons? How does it compare to alternatives such as using a normal estate agent or negotiating with your lender? Will a quick house sale provider suit your specific needs?

3. Look for the services that work best for you
Not all providers are the same, so look at what different ones can offer. Don’t accept their claims at face value. For example, if the provider says ‘completion in days’ or ‘we pay close to full market value’, ask how often they do this.

4. Check out providers’ credentials
If providers say they have signed up to a code of practice, redress scheme, or are regulated by an official body, check this for yourself. Also check to see what protection the code of practice, redress scheme, or regulation offers you.

5. At each stage, make sure you have the information you need to make informed choices
If you don’t understand something, ask the provider for answers and don’t proceed unless you are happy with them.

• Who is buying the property?
• How will they pay?
• Is there proof that they have funds available?
• When will the sale happen?
• Who is valuing the property and how?
• What is the offer price? Will this change? If so, why?
• If the survey is given as a reason fora reduced offer, ask to see it.
• What fees and charges will you have to pay? Will you have to pay them even if you don’t go ahead with the sale?

We would advise choosing providers who offer you the information listed above without having to be asked for it.

6. Never accept verbal information or promises
Always get the provider to put them in writing.

7. Don’t be pressured into a decision you are not comfortable with
For example, the provider should not require you to use a particular solicitor.

8. Before you sign any agreement, read it carefully and obtain independent legal advice if you are at all unsure

Do you understand what you’re being asked to sign and its implications? Don’t sign an agreement unless you know what you are agreeing to. Also, never be shy about negotiating on price.

9. Watch out for long tie-ins

Be wary about signing any agreement that ties you to the provider for a longer time than you are happy with. If you want a speedy sale, question why a quick house sale provider would need an agreement for more than four weeks.

10. Be honest and accurate when answering questions
Giving incorrect information or leaving important things out is likely to be uncovered later and may cause hold-ups and even reductions in the offer price. In some cases the sale may even fall through.

11. Don’t commit to the sale until surveys and legal checks have been carried out, you have a final offer in writing and you have independent legal advice

Be cautious of making major financial commitments, or other decisions you might regret if the sale did not go through as expected.10. Be honest and accurate when answering questionsGiving incorrect information or leaving important things out is likely to be uncovered later and may cause hold-ups and even reductions in the offer price.

If you are still unhappy, you can:

• Talk to Citizens Advice. They providefree, confidential and impartial advice.Visit www.adviceguide.org.uk or call the consumer helpline on 08454 04050612.

12. What if things go wrong? If you are not satisfied with the provider’s service, tell them and give them a chance to investigate and resolve your complaint.

• If the complaint is about the provider’s advertisements, report the matter to the Advertising Standards Authority. Visit www.asa.org.uk or call 020 7492 2222
• Report the matter to your local Trading Standards Service
• Consider whether to take your own court action if you feel the provider may have: breached the contract, used an unfair term or misrepresented something that was important to your decision to sell to, or through, them. You should obtain legal advice first.

The Dispute Resolution Process

What is the purpose of The Property Ombudsman service?

It is a dispute resolution service between consumers and property agents. The advice offered by the property Ombudsman is free, impartial and independent.

Property agents are encouraged to sign up with the property Ombudsman for various reasons. A membership with it shows an agents’ professionalism in the sense that they are committed to the professional standards, thereby increasing the customer’s confidence in them.

In the event of a dispute, the ombudsman service saves both property agents and customers time and money through the cost of legal fees and legal procedure. The advice is free. And the fact that the infrequent aspects of disputes are taken up by the Ombudsman means that agents are free to concentrate on the real aspects of their business, in marketing, maintaining, renting and selling property.

Complaints Procedure
As one of the terms of membership, property agents have to have some formal complaints procedure in place for customers who may be dissatisfied with their work for some reason. This procedure must of course be in writing and should not only explain how customers can file a complaint, but also that if they are dissatisfied with how it has been investigated, they can take their complaint on to the Ombudsman. It goes without saying that this procedure must be made available to the complainant upon request.

The Code of Practice detailed by the terms of membership has specific timescales for complaints resolution that estate agents must adhere to. In the event of a dispute the Ombudsman will use these established timescales for reviewing if complaints have been dealt satisfactorily by the agent.

When a complaint is received by an agent, the person receiving it should make some form of acknowledgement so there is a record that the complaint has been noted at the property agent’s. It gives a “start date” from which resolution can begin.

If a complainant has been made either by telephone or in person, a record including important details such as the date and time must be noted. At this point the complainant should be provided with a copy of the in-house complaints procedure.

If the complaint has been made over the phone, this copy of the complaints procedure should be sent to them.

If the complainant has visited to make the complaint in person, a copy should be given to them immediately.

At this stage the emphasis is on recording issues formally, so that at a later stage there is no ambiguity over the nature of the complaint, or what was said by whom.

In both cases property agents should request that the complaint be put formally in writing, giving the name of the individual to whom the complaint should be addressed, so that the matter can be promptly investigated. An acknowledgement of the written complaint should be despatched within three days, while the timescale for an investigation and for providing a full response should be within fifteen working days.

If the latter timescale is unable to be met, then the complainant should be provided an estimate of how long it would take for the investigation to be complete.

It is a good practice that complainants have to file their complaints in writing. Not only does this provide a record of the specific issues they are seeking redress over, so that the property agents and – if necessary – the Ombudsman can investigate, it also is a way of ensuring that the complainants are clear themselves over the particular issues that have led them to complain in the first place. In addition, the work of having to formally file a complaint is a way of ensuring that the matter is one of signifcance.

What can count as a complaint?

A complaint could both be over a belief of inaction or malpractice. This means a consumer can make a complaint over something they believed a property agent should have done but didn’t, or one in which the action was wrong. For example, a tenant could make a complaint over property repairs that were promised but have yet to happen. Or the same tenant could make a complaint if repairs to a property were not up to standard.

Any complaint received should be treated seriously even if the property agent’s general feeling is that is has no weight. The complaint must be dealt with in accordance to the above procedures, and the agents must remember to follow procedure.

Property agents must remember to request that verbal complaints are put to them in writing.

A complaint should be dealt with by a senior member of staff who was not directly involved in the transaction. This ensures that there is no bias in the investigation. If the matter remains unresolved after fifteen days, another review should be sent up the chain to the Managing Director or Senior Partner or Principal. Similarly, this person should have had no previous involvement to ensure impartiality in the process.

But what about the case of practitioner firms, where one person runs the whole show? The sole practitioner must clearly state to the complainant and later the ombudsman (if the matter is subsequently referred) the level of their involvement in the matter to ensure that the level of impartiality is set out from the onset.

 

In some cases, property agents may wish to make some financial recompense towards the complainant to make restitution in the matter. The goodwill offer should always be appropriate to the matter, as an offer that is desultory only serves to inflame tensions.

The Ombudsman always encourages quick resolutions of disputes, because it is a positive process from which both parties can move forward. This does not mean, however, that the Ombudsman always encourages financial recompense. But in cases where complainants file a dispute because of work not done, or not up to standard, a goodwill offer to make good the matter may be a more healthy way forward for both parties, rather than be dragged into legal matters where the time and energy spent trying to apportion blame and responsibilty may outweigh the size of the claim.

If the complainant accepts the goodwill offer in full and final settlement of all complaints, the Ombudsman will consider the matter closed and settled.

However, if a complainant does not acceptable the goodwill offer, either because it is not appropriate to the size of the matter in dispute, because he or she feels that the property agent has not addressed the complaint fully, the matter can be referred to TPO. It some cases where both parties indicate a willingness to settle, but are finding difficulty in reaching a settlement, the Ombudsman may be able to mediate, subject to the approval of both parties. Neither party has to accept this, and in this instance the complaint will proceed to a formal review.

 

If – in the initial instance – TPO is contacted before complainant gives the property agent a chance to resolve their problem in accordance with their complaint procedures, TPO will refer them back to the agent to give them a chance to resolve the matter first.

After fifteen working days, the investigation should be complete and a final viewpoint letter should be issued to the complainant. The purpose of this final viewpoint letter is to provide a written statement which clearly expresses the property agent’s final view on all the complaints raised, and should include mention of any goodwill offers made.

Additionally, it should make the complainant aware that they may refer the matter to TPO if they feel the matter has not been resolved. The final viewpoint letter from the agent should also advise complainants of the timescale for bringing a complaint to TPO.

The final viewpoint letter is a first summative stage of the complaints process. And while it is a summary of the interactions between property agent and complainant, it can be said to form the starting point of TPO’s investigation, if the matter is passed up the chain. It would be easier for TPO, hence, to see that a final viewpoint letter has the date when the complainant has completed the in-house complaints procedure, and what the agent tried to do to clarify the issues considered under that procedure. It should also advise the complainant of subsequent options.

The final viewpoint letter should be headed as such, so it is clear to the complainant that they have completed the procedure, and if they wish to pursue the matter further, they have to go to TPO.

If fifteen days are not enough for the property agent to investigate the complaint, and if progress in the investigation has not been forthcoming, the Ombudsman can take up the complaint even without a final viewpoint letter.

 

The assumption so far in the above is that the complainant is a tenant and the dispute is against the property agent for work not done or work not done to an acceptable standard. But the fault may not necessarily always be entirely of the property agent. Sometimes a complainant, the tenant, may file a complaint but a dispute may have arisen directly or indirectly of certain actions, such as when the tenant has not paid fees such as rent. In cases where there are outstanding fees, the Ombudsman will make the complainant aware that legal action for recovery is possible and within the legal rights of the property agent, and the Ombudsman will suggest that the fee, or any uncontested part of it, is setlled on a “without prejudice” basis.

If property agents are considering legal action to recover fees under a contract, the Ombudsman may either escalate the case for review before the court date, or suspend the review pending the court decision. In the latter case, any subsequent review will only deal with aspects of the complaint not determined by the court, as the Ombudsman does not override and cannot override any matters dealt with by the court.

Property agents need to submit a copy of their company file, which contains certain documentation commonly used to review complaints is listed here. These are confidential and are not released to the complainants, unless the Ombudsman feels copies of relevant documents not previously seen by the complainants may be necessary for them to understand the reasons for his decision – in which case, it is legal for the complainant to see the relevant information.

Upon review, if the Ombudsman supports the complaint, property agents have 14 days to either accept, or appeal the decision. During this time property agents may appeal if they consider that there is a significant error in fact or new evidence that will have a material effect on the decision can be produced.

Both agents and complainants will be informed of the result of any further consideration.

The complainant is given 28 days in which to accept, not accept or make their own representation.

If the Ombudsman does not support the complaint, the complainant will first be contacted in writing about the proposed decision, and given 28 days to produce significant new evidence with bearing on the case or show there is a significant error in fact in the judgement.

The Ombudsman will consider any further representation and if the complainant accepts the proposed decision it becomes legally binding. But if the complainant does not respond to the proposed decision any award will then lapse and the case will be closed Nevertheless, complainants will be free to pursue their complaint elsewhere, but, the Ombudsman’s decision will no longer valid and cannot be used to support any further action.

For those who are new to the property ombudsman service, it is akin to a small  claims tribunal for matters around property.

The property ombudsman aims to mediate between smaller disputes outside of the court, thereby resolving them more quickly and freeing up court time.

Even though the property Ombudsman may make recommendations for awards up to twenty-five thousand pounds, the  average compensation figures were around three to six hundred pounds.