Property Buying Agents - are they worth it?
Updated: Nov 18, 2022
Secret property deals being thrashed out behind closed doors have been going on since the time of ‘wattle and daub’. It’s only been in the last 20+ years that the idea of hiring a property expert has become mainstream.
Channel 4's property programme Location, Location, Location, presented by Kirstie Allsopp and Phil Spencer was first aired in May 2000 and commercialised the activity to the mass market. Discreet property sales used to be confined to super-rich homeowners in central London who did not want their house viewings or financial information made public.
Now the practice of buying through a property search agent, off-market has become mainstream. Also, one in ten houses in Britain have been sold 'on the QT' this year, according to recent research.
And it’s not just restricted to London. Those looking for second homes, property investments, land, or whole buildings are turning to those with the contacts. In the five years before the pandemic the average home sold off-market achieved £1.2 million. However, the growth in off-market transactions has increasingly been driven by lower-priced properties. This year the average discreetly marketed home changed hands for £858,000, according to research.
This practice isn't just restricted to buying and selling. In the last few months, the residential rentals market has reached fever pitch, with tales of video viewings, long queues to view 'open houses', competitive bidding, and gazumping rife. No wonder an increasing number of individuals are seeking to avoid the fray by using property search agents to wade through the masses.
An estimated 84,630 homes were sold off market in Britain in 2020. Instead of being promoted via glossy brochures or online listings these sales were sealed after being viewed by just a few carefully selected buyers plucked from the 'black books' of property professionals.
This year off-market sales are at a four-year high, with almost one in ten homes in Britain and one in five in London selling this way, with those costing £1 million or more, are most likely to be traded under the radar. One senior agency says that 7.1 per cent of its sales in the past year were off market.
However, in some parts of the country and in some price bands agents say that almost everything is selling behind closed doors. It’s reported in the £15 million-plus country market the vast majority, about 14 out of 18 deals, last year were done privately. The 'agent only' website LonRes, where brokers who want to share anonymous details of off-market properties, says it has £1.5 billion worth of off-market homes listed in central London.
Notting Hill in west London is tipped by most agents to be the hottest of the hot London markets right now, with homes backing on to communal gardens most sought after and most likely to change hands away from the glare of publicity.
In North London, Hampstead looks to be the most popular village for those wanting private estates and close to the park.
In Southwest London, Putney, with its large Edward square fronted homes, close to Putney Heath, Barnes Common and a short drive-up Roehampton Lane to Richmond Park with its 2,500 acres of Parkland is in demand. Richmond is a close second!
Buyers who jumped to the country from the COVID outbreak are missing being closer to London and are now looking closer to the capital for easy access and good schooling.
Locations such as Tadworth in Kingswood on the North Downs in Surrey being the most popular (Epsom College is a 10-minute drive away and named top independent school in the country), followed by Esher, Weybridge, Cobham, Windsor and Ascot also being in demand.
Off-market sales have been common worldwide. In Los Angeles they’re known as “whisper listings”. In Britain sellers seeking privacy will invite only a select few — some bound by non-disclosure agreements — to view their homes via buying agents. Vendors selling quietly prefer using buying agents. The reasons can be varied, but mostly it is to do with privacy, with few celebrities or business owners wanting either to advertise their floorplans and household contents or to draw attention to divorce, death, or debt.
Most don't want a deluge of buyers, some who will be window shopping, peeking into their private lives with no intention of buying and ultimately gossiping around the dinner table with friends.
Buyers who employ property search agents tend to be the first through the door. They are considered genuinely serious, having paid a registration fee to employ the buying agent, a fee on the acquisition purchase price, and KYC and AML checks carried out, and wanting to keep their search private to avoid competition from others in the market and in some horrible scenarios, their friends!
We're also still seeing a hangover to the COVID pandemic, with some sellers not wanting people with Covid wandering around their sitting rooms. They want to allow as few buyers in as possible so therefore rely on quality and qualified buyers from buying agents for privileged access.
In the past, quietly putting out the word that you would sell to the right buyer was a good way of testing the price before you went to open market. Now, though, most off-market homes are selling before they get anywhere near an estate agent’s window.
It is particularly difficult to know whether you are paying over the odds on truly private deals in which an owner is selling direct, without the aid of an agent or adviser. Some many buyers forget that Estate Agents are there to sell and will always push the pricing envelope to maximise the vendors profit. Having someone working for the buyer checking on pricing can save hundreds of thousands of pounds and in some instances, millions!
Seasoned property buyers, those who have been in the property industry for over 25 years are few and far between and are hugely sought after.
They are usually in their 50's, have families themselves so can relate to that market, can produce an enviable contact book, with relationships from Chairmans and Managing Directors of Estate Agents, Hedge Fund Managers, Pension Funds and Senior Private Bank Executives.
These well healed professionals know each other personally, prefer to trade amongst themselves, mitigating the risk of client confidentiality and quietly go about their business without fuss and with a measured non-partisan approach to the real estate market. They can sniff out properties that otherwise might never come to market and are often the first person an estate agent will call to tip off about an upcoming sale. They can also approach possible sellers directly, bypassing estate agents. You might see it as paying a premium, although others would argue that part of the value is not to have to bid against four or five other people and risk gazumping before the contract is exchanged. Long standing clients will use these buying agents for other services too, including concierge services, alternative asset investments, and for the UHNW's, security services.
In the world of KYC & AML checks, which all buyers, and sellers, will need to adhere to at some point during a property transaction, be prepared to supply the relevant documentation when signing up to a property search agent.
This exclusive club is well worth the investment. It’s tailored to fit you. Buying agents advise buyers on price, comparable evidence, demographics, market trends and projected capital growth. They can also help with schooling and will negotiate on property deals and help to push through the selling process.
They will have an excellent list of conveyancers who will be proactive on the legal process, always on call, and will advise, through their contacts, on the essential aspects of insurance.
Agent fees range from 1.5 to 3 per cent, with the busy buying agents requiring a retaining fee upfront - this is usually refunded on the final commission account. Not all buying agents are equal, though; you need to check that they are registered with The Property Ombudsman, the Information Commissioner’s Office for data protection and HM Revenue & Customs for anti-money laundering checks.