The education game

In every country there are occupations that are looked upon more favourably than others, and other jobs that are less so. One of these jobs is teaching. In countries such as those in the Far East, teachers are held more in high regard than in the West. But what is the reason for this disparity?

The underlying reason for this is to examine the role of education in society. In countries where teachers are highly respected, it is because education provides a perceptible means of livelihood in the future. If you study hard and get good grades, you are in a better position than others to land a job. In job markets where competition is strong, it would be to the employer’s benefit to recruit the most qualified person for the job. Which is why education is key, and those involved in the dissemination of information, however small a snippet, are valued and looked up to. Every small nugget of information could make a half mark difference in an exam paper.

To imagine the difference this half mark could make, look at it from a different perspective. If you were a basketball player, you would rather be described as six feet tall instead of five eleven. Or seven feet instead of six eleven. That extra tiny bit pushes you to a new category altogether. The same goes for education. Miss the cut off for an A grade, and your future might take a different turn altogether.

The competition for work, higher education and jobs means that increasingly students are not only out to get the best tutors and get into the best schools, they are also looking towards getting more extra curricular activities and skills to promote themselves. The Piano Teacher Muswell Hill website reports that more people are taking up piano lessons and other skills in other to be not only more marketable for jobs, but to attract high-competition universities into offering them places! Be like Muzio Clementi, who was not only a pianist, a piano maker, but also a editor and composer! (read more about this from the Piano Teacher N4 page).

There have been lawsuits between education providers and students – students sued universities when they believed the teaching to be inadequate, leading them to get poor grades. These sorts of disputes are likely to only to increase in the future as competition heats up – mediating parties will (hopefully) continue to be more demand.

Changing social practices

Would you expect to go into a supermarket, be charged a debit amount, and then have the value of your purchases added up and the original amount debited refunded to you? Amazingly, this is what some supermarkets in the Far East have been doing. If you for example came to one of these such supermarkets, you would be greeted with a turnstile at the entrance, whereupon you would have to tap a credit card to operate the barriers for entry. And after you had done the shopping for the day or the week, you would pay separately for the items you had purchased. And just before you exited the store, you would be credited with the amount taken from you in the first place. It sounds a bit like a sort of entry tax, except that you are not charged for the entry. The money is only held temporarily until you leave the store.

If it sounds like an over-complication of matters, it is. Why would any supermarket want to charge you for two separate amounts – the entry fee and then the purchases? It would make their books so complicated with entries that were only temporary. And it throws a lot of extra burden to the shopper, in having to ensure that they got their “entry fee” returned in the first place. Why do it?

Supermarkets have resorted to this to reduce the incidences of shoplifting. The idea in charging a small fee of entry is to discourage petty theft by making it uneconomical to enter a shop to shoplift. A thief would be charged an entry fee on demand, and would have to steal quite a significant number of goods to make up for it. And then there is an entry fee to reclaim, and a card which can be traced.

It is such a good idea, on paper, that some fuel service stations in the UK trialled it at petrol stations to stop fuel theft. Drivers are charged a refundable pump fee, then top up their car and pay for the fuel, before claiming their refund – this prevents fuel theft at the pump by drivers driving off the forecourt without paying. The subsequent cost of lost revenues and lost police time spent investigating may mitigate for the cost in implementing such new measures.

When you are buying a property, once you are past a certain stage in the process you cannot pull out – that is the same intention behind these changing processes. They prevent conflict from arising. We already make downpayments as commitments in other areas of life. When you buy on ebay, and pay through paypal, you have paid for an item before receiving it. If you intend to take up piano lessons, usually you have to pay in advance for a term’s lessons. This is a commitment to lessons, and to guarantee the teacher’s time.

A new means of payment at the supermarket may result in changing social practices in the future – who knows? There may be initial resentment to it, but perhaps in the future it might prevent conflict and result in earlier mediation between parties.

Achieving a balance

You can imagine the reaction by firefighters tackling a blaze at B&M retail store in Clifton Moor, on a warm summer’s evening and in full firefighter equipment. They had been battling the fire for a long time (the building burned to its shell) and it took a long time to put out the fire. Some of the crew walked over to McDonalds to see if they could get a free drink – not that emergency services automatically think they qualify for benefits, but because the crew do not carry money when they are battling fires. And why not, you may ask? Without sounding silly, paper burns and you want to avoid that obviously.

Metal melts or at least gets hot, and no one wants a pound shaped coin on the bottom part of their torso. The emergency services had given their lives battling to bring the blaze under control, after hours, and what happened? Not even the offer for a drink by one of the largest corporations. It worked out all right for the emergency crew, which had a lady and young man pay for their sixteen teas and coffees, but it should not have had happened. McDonalds offered to reimburse the lady who had paid for the drinks, but unfortunately the PR damage has already been done.

What happens when you have a disagreement? It should have some form of mediation or mediating party. Unfortunately in this instance the mediating party who should have been there – a McDonalds store manager – did not choose the right option; or at least was unaware. (But how could you be unaware of firefighters in their gear walking in your store? It’s not like they changed into jeans during their “break” – if you can call it that – while rotating crews on shifts.) This shows the need for adequately trained mediating parties.

Finding a balance that meets all parties can be difficult. You can see this in other fields like music too. The Spanish guitarist Joaquin Rodrigo’s music involves two parties – guitar and orchestra – and while on the face of things it may be difficult to find a resolution, he successfully did and the result was a harmonious one, successfully mediating the needs between the two and balancing the outcome. (You can learn about Rodrigo from this post from the Manor House piano teacher website.)

The lesson to learn perhaps can be seen in this – try to get a successful balance by going to someone trained to achieve one. Don’t let the outcome be one of failure in the public eye!

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.