WIREDGOV

The OFT has today published four research reports undertaken as part of its market study into home buying and selling. These comprise a survey of estate agents, a survey of trading standard services and both qualitative and quantitative consumer research.

Evidence from the research suggests that consumers are increasingly open to alternative methods of buying or selling a home. While the large majority of sellers used a traditional estate agent, more than a third initially considered selling privately, using an online estate agent, or selling at auction. There is a marked increase in interest in online estate agents relative to our previous survey in 2004.

Consumer satisfaction with the services provided by estate agents has improved - 88 per cent of both buyers and sellers were satisfied with the service provided by estate agents, a higher level of satisfaction than five years ago (72 per cent of buyers and 74 per cent of sellers). The majority of consumer complaints in the sector are about the individual buyer or seller on the other side of the transaction or their solicitor, rather than with the estate agent involved.

One of the surveys asked Trading Standards about enforcement action against estate agents. On average, 24 per cent of estate agents were found not to be complying with the relevant regulations on the first visit from Trading Standards officers.

The research also covered the question of fees received by estate agents on services provided to buyers such as referrals for mortgages, surveys, legal advice and other services. On average, estate agents made recommendations about the providers of such ancillary services to 65 per cent of buyers and 36 per cent of buyers took up these recommendations and went on to use at least one of these services.

Most buyers said that the estate agent had described the options available for taking third party services, but did not push them - the majority (82 per cent) did not feel that they had received a 'hard sell'.

In the home buying and selling process, estate agents represent the seller. When asked whose interests they felt the estate agent from whom they bought their property was representing, 53 per cent of buyers felt that the estate agent was working equally on behalf of them and the seller, 40 per cent felt that the estate agent was working mostly on the seller's behalf, while six per cent felt that the estate agent was working mostly on their behalf, as a buyer.

Nineteen per cent of buyers said they had experienced a purchase falling through after they had made an offer that the seller had accepted - the most common reason for a sale falling through was another buyer made a better offer, followed by the buyer withdrawing after a survey showed problems with the house, and problems elsewhere in the chain.

Heather Clayton, OFT Senior Director of Infrastructure, said:

'This is important research which updates the available evidence about the process of buying and selling a home and current and future developments in the sector. For example, it shows the enormous potential for new internet-based business models in home buying and selling.

Our final report will look at, among other things, how new ways of buying and selling a home may develop in the future, whether there is scope to improve consumer protection enforcement, consumer awareness of potential pitfalls in the process and ancillary services sold by estate agents.'

The OFT intends to publish the study in early 2010. Today's reports are available on the Home buying and selling market study page.

NOTES

1. The consumer surveys were carried out by GfK NOP Social Research. The Estate Agent and Trading Standards Services surveys were carried out by the OFT.

2. The OFT launched its market study into home buying and selling on 25 February 2009. See press release 19/09.

3. The study is taking a comprehensive look at the market for home buying and selling services. It is considering: competition on price and quality between service providers, principally estate agents; the prospects for entry by new business models, including Internet-based models; whether the existing regulatory framework provides the right balance between protecting consumers who are buying or selling a home and ensuring that the market remains open to competition and innovation; the relationships between estate agents and other service providers such as mortgage brokers, surveyors, solicitors and other professional advisors.

4. OFT market studies are carried out under section 5 of the Enterprise  Act 2002 (EA02) which allows a market-wide consideration of both competition and consumer issues.

5. Market studies involve an analysis of a particular market with the aim of identifying and addressing any aspects of market failure from competition issues to consumer detriment and the effect of government regulations. Possible results of market studies include; enforcement action by the OFT; a reference of the market to the Competition Commission; recommendations for changes in laws and regulations; recommendations to regulators, self-regulatory bodies and others to consider changes to their rules; campaigns to promote consumer education and awareness; a clean bill of health.

6. The OFT is unable to provide advice or resolve individual complaints for consumers. Consumers can seek advice from Consumer Direct (tel: 08454 04 05 06, www.consumerdirect.gov.uk).