It is four years in February since I bought my house. I’ve not had a letter, email or phone call from the estate agent since they handed over the keys to my house.
In that time, we’ve had another child and despite having four medium sized bedrooms I’m concerned as to whether the house remains appropriate.
We’re also concerned about the secondary schools, and although our daughter was only four when we moved in here, I gather the local state school is poor. My estate agent did not discuss with me that in due course the house may no longer meet my needs.
My estate agent was a likeable enough chap, I’m not sure of his qualifications but his appearance was smart, he was enthusiastic and his tie was fastened with a knot of such majestic proportions it would make a professional footballer jealous. We didn’t have a debate about who was more qualified than who, as I don’t care about his qualifications anymore than I care about the qualifications of the guy who washes my car, or delivers my groceries – there’s a limited space for negative outcomes.
When considering which agent would be responsible for dealing with the sale of my old property, I used principally only one criterion – who I felt I trusted. Price didn’t really come into it. I’ve spent so much time telling clients and prospective clients that price isn’t everything that I believe it. Unlike a lot of financial planning advice, it was simple for the agent to quantify the value he would add (a higher selling price).
I’m aware that cost is pretty irrelevant when you consider an agent charging 1 per cent of a property that sells for £200,000 is patently worse value than the agent who sells the same property for £210,000 but charges 2 per cent. I have no way of predicting this so need to have faith that they’re acting in my best interest. In financial advice, in a world of variable performance; cost is about the only certainty.
I didn’t haggle, and wouldn’t want a special deal. After all, if he has two identical properties on his desk, for example mine and my neighbours, and I’m paying 1 per cent, with my neighbour paying 2 per cent, I’ve misaligned my interests with his, and potentially given an unnecessary conflict of interest.
I didn’t ask for other opinions, I didn’t check websites, most of the agents would bear the cost of an initial meeting and that gave me the chance to ‘take them for a ride’ and see how we got on. I looked at a few websites, and clearly most couldn’t touch those on the ‘Right Move’ service, but I know big is not always best and went for a local firm who knows our area. At most I was bound into a three month contract, and, unlike most financial advice, if I didn’t get the service I wanted there was no cost or other disincentive to move after three months.
Meeting with the estate agents gave me a chance to compare their propositions, and despite the various nuances and assurances each gave me that they were ‘different than other agents’, it seemed simple to me as a layperson: they’d sell my house, ideally find me a new one, then manage the process.
It may seem obvious to some, but there are other significant differences between IFAs and estate agents:
Few agents (apart from letting agents) are in the fortuitous position they can build a business which offers a recurring service that we value enough to pay for.
Selling a house is traumatic, and choosing an agent does require a great deal of trust, but does anything else come close to the advice we give; dealing with an individuals entire worldly wealth – and outside of this – discussing their hopes and ambitions, worries and concerns, their health and familial relationships?
Much of the ‘risk’ of the purchase of this property has been passed to someone else – the solicitor for the conveyancing, the surveyor for the structural soundness. I have zero comeback on the estate agent for the suitability of my home initially, let alone on-going. As a financial planner with no long stop I have a potentially infinite liability for the services and products my clients buy; outsourcing has little effect on this – I’m responsible for the DFM, Platform, etc.
Unlike our world, if an unscrupulous agent does rip their clients off (I’m not imaginative enough to think how this is possible) other agents don’t have to pay levies to bail out the crook.
Any professional worth their salt aims to provide a valued service, and to build trust in what they do. But comparing an IFA to an Estate Agent is no more meaningful than a comparison with any other professional service. The cost, risk and regulatory burden of running an IFA practice is high: and rightly so, we have more power and responsibility than most other professions, and should be sensitive to this.
Alistair Cunningham is financial planning director at Wingate Financial Planning