The property industry in the UK has no barriers to entry, and therefore, you can be an agent simply by owning a mobile phone. And many do. This is in contrast to the US, where the buyer and the seller both have brokers; and the industry is highly regulated. The commissions payable are typically 3% on either side, both from the buyer and seller. Here, the most you typically pay is 2.5% if you’re a seller. Having an agent for a buyer is lesser known in the UK. Usually, they charge according to the rarity of the deal, the discount, and their ability to secure it.
Because there are no barriers to entry, sometimes you end up having the most ludicrous conversation with agents. There are those who try to load up the commission, with no underlying reason. They try to justify it by saying, for example, that there are many in the chain to get the deal done. One agent told me he has ten mouths to feed in the office! These are the kind of justification given for the enhanced commission request. Recently, I had one agent who claimed he had a buyer for a deal we have. He wanted a commission of £200K. I mentioned to him that the top agents in central London don’t charge this amount, and asked him what the reasoning was for this level of fee? Apart from him claiming he has a buyer, he didn’t have a reason to give me.
Often, they do not even have the knowledge or expertise to execute a transaction. In many cases, it is not as simple as agreeing the deal. There will be issues which come out of the woodwork, whilst the deal is being transacted, which will need to be resolved. It takes experience, which is born of having successes, and a few failures, to be able to identify deals, and know which ones are to be avoided. By appointing someone to act for you in regards to purchasing a property, you inherit their experience, knowledge and flaws. From identifying what is a deal today, in comparison to market values; and which areas are going to grow strongly in the years to come; to being able to see through deals with issues.
It’s rare you get deals handed to you on a plate. Focusing on these, may well eclipse buying a deal just because it’s discounted on day one; especially if it’s a buy and hold deal. You may get a discount. But if it doesn’t grow much over the next five years, you may have been better off buying something at market rate, in an area which is set to rise strongly.
Agony Agent is here to help!
Q: A member of my family wants to rent my BTL. Should I still use an agent?
A: When you rent your buy to let property to family members you will find yourself in an odd situation. On one hand, you have a well known tenant lined up. On the other hand, you also have a customer that might take advantage of you.
Renting to people you know, can sometimes get a little awkward. For example, a family member might expect to move in with no deposit. However, if you allow this, this will be your first wrong move! Yet, if you ask for it, and they translate this into you not trusting them, things can get hairy.
If your family member / friend is a bit short on the rent, but has just purchased a new TV, how will you raise this issue? Or, if circumstances change, and they can’t pay any of the rent, how will you face the issue of evicting them?
I would suggest, that it is best to use an agent, as this keeps your family / friends at arm’s length.
Clean Living, Clean Thinking
It is a miracle to behold. I look at the world and think that it is only exactly as it is because of trillions upon trillions of micro-decisions made by billions upon billions of people over millennia. Every decision that has been made emanated from a thought. And where did those thoughts come from? Consciousness. And as I look at the world, I see success and failure from the global level down to each and every person. All results come from some kind of action, and actions come from thoughts. Thoughts, in turn, come from consciousness. And it is the clarity and cleanliness of our thoughts which, in part, governs our individual destiny.
Think of it like playing golf. Any expert golfer will tell you that most of the work of the golfer is done before s/he stands at the tee off; and that the pre-swing preparation is also crucial. The moment the club is raised behind the golfer, the fate of the ball is more or less set.
My experience is that the same goes for business. If my life practices are in order, then my consciousness is clean and well-ordered, thus inspiring good thinking; and the actions and results follow suit.
We all know that Providence, Lady Luck, Serendipity and so forth, all play their role in determining the outcome. Therefore, the upside of maintaining an excellent state of consciousness is that not only does it enable me to achieve more, but it also means that when life does not go according to my plans, I am better placed to deal with such uncertainty.