A property developer has slammed sales agents for ‘artificially inflating property prices’ as she reveals the poor practices she has experienced and witnessed from sales and buying agents .
Lauren Atkins, chief executive of property development and investment firm The Malins Group, said regulation was needed in the agency industry because there was not enough protection for buyers and sellers.
She says the primary goal of many residential real estate agents is to maximize their own earning potential and there is nothing in place to stop them.
Atkins said real estate agent today“Large companies actively encourage cross-selling. In addition, their net result benefits from the artificial inflation of real estate prices, created by residential agents.
“I’ve seen residential agents ‘talk about the market’ for decades. This artificial price inflation has played a big role in the exponential increase in real estate prices. Of course, many real estate developers actively encourage the artificial maximization of sale prices.
“But personally I think that’s shortsighted because real estate outperforms all other asset classes over time anyway. I don’t see a place to drive people out of the market and limit the ability younger generations to access the property ladder.
This comes after his own failed sale despite no contact from his own agent.
She said: “Having undertaken thousands of property transactions, over decades in the industry I have developed quite a thick skin towards estate agents.
“However, it is the unregulated residential sector that never fails to shock, and I have seen people’s lives affected time and time again by bad practices. Successive governments have talked about it. We really need to see some action.
“Last week it happened to me. I was told that the person buying my house was about to exchange contracts on another property, also sold by the agent I had appointed. Despite the fact that I was their client, I only discovered by accident that contracts had been issued on another property.
She complained directly to the agent.
But Atkins said the Consumer Protection from Unfair Trading Regulations 2008 do not protect consumers.
She suggests there should be a legally enforceable code of practice for the sector, minimum entry requirements for agents and a move to an agent solicitor model similar to Scotland’s.
Atkins added, “Most unqualified agents view their buyers as clients, with no understanding of agency law, let alone property law. These disciplines are understood by qualified members of the Royal Institution of Chartered Surveyors.
She added that she had recently seen a buying agent recommend an offer level on a property that was nearly £1million more than two previously accepted offers.
Atkins said: ‘I highly doubt the customer was told he was paying way too much and believed he was paying a fair price. The buying agent secured a higher commission.
“This practice impacts more than the customer, as these inflated prices subsequently set benchmarks in the market for all future transactions. A real estate newbie overpaying based on the word of an unscrupulous buying agent has artificially inflated the price that future buyers will pay per square foot in this area.