UK Government puts the brakes on online estate agents

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  • October 15, 2007

When Tesco launched a property website allowing people to advertise their houses online for a fee of just £200 everybody thought it was a great idea, apart from the estate agents.

Over the past 10 years property prices in the UK have skyrocketed and estate agents, who charge a typical 2%, have had a massive increase in revenue. Most will simply take some pictures of your house, upload it to Right Move and pocket £4000 for a days work.

Tesco was the first big name to launch an alternative style of property website and pretty much guaranteed its success by uploading hundreds of thousands of properties, employing property experts and giving the site a big advertising budget.

Last week Tesco was forced to shut the site down after The Office of Fair Trading decided that is actually an estate agent and therefore must comply with the same laws as all the other estate agents. The decision was somewhat ludicrously based on the 28 year old 1979 Estate Agency Act.

The problem is that under the act Tesco would be liable for any inaccurate information its users write on their website, so if I lie and state my house has a swimming pool Tesco would be liable. Imagine if a buyer travels from abroad to see my amazing house only to find it’s a run down shell, Tesco would have to pay their travel costs and maybe additional compensation. Normally estate agents check the information before publishing.

Today we hear that Tesco might be entering the estate agency market with a revised service:

Whilst being an on-line estate agent was never our immediate intention we are so encouraged by the positive reaction from customers to Tesco’s entry into this market that we are now reviewing our business with a view to launching a new and exciting on-line estate agency service.

This would enable us to offer our customers personal advice on the sale of their home and give them access to the leading property portal websites which accept listings from estate agents but not from private sellers.

As a result customers would get their property in front of hundreds of thousands of potential buyers.

If they can get properties listed on Right Move for less than the estate agents charge the service will be a winner.

Patrick Altoft

About Patrick Altoft

Patrick is the Director of Strategy at Branded3 and has spent the last 11 years working on the SEO strategies of some of the UK's largest brands. Patrick’s SEO knowledge and experience is highly regarded by many, and he’s regularly invited to speak at the world’s biggest search conferences and events.

  • Ashley

    Having a little knowledge of the industry (i’m not an Estate Agent), i feel the comment about Agents simply uploading details to Rightmove and pocketing £4k commission is a little wide of the mark, particularly in light of the recent slight down turn in the market, making certain houses very difficult to ‘shift’.

    I’m astonished that Tesco fell into this trap, this was muted in industry press a fair while ago, for them not to realised the potential breach of regulations is interesting.

    On a side note, did you know Asda are trialling in-store Estate Agents in some of their UK stores?

  • Andy Etches

    I’d just like to clear something up. The OFT took this decision on people trying to sell a property privately online, not online estate agents.

    Online estate agents have to abide by the 1979 estate agency act and the 1991 property misdescriptions act, which Tesco in its old guise could not do.

    It will certainly be interesting to see what happens next year when Tesco re-launches in the market. Even though they will be a direct competitor to us, we welcome them into the market and hope they can help us change estate agency for the better.

    Andy Etches

  • Web Design Company

    Does this mean that the same will apply to Property portals such as Rightmove and Find a property as well? Does this mean that any forum or blog that allows users to post will be liable for mis information. what about the terms and conditions of the website. what if Tesco were to ask all property advertisers to accept liabilities prior to allowing them to add listings on their website. would acceptance to such terms shift this liability?

  • David Taylor

    Tesco launched a private sales site, not a full estate agency service. You have to be a member of the Ombudsman for Estate Agents to be a serious estate agent.

  • Steve Butt

    The idea of Tesco entering the online estate agency market is a clear indication as to where the market is going. Early adopters such as ourselves will benefit from the publicity and open discussions that will follow after they finally make their entrance. High street agents must be nervous and anxious to innovate as we have done.

  • Lee Park

    What needs to be remembered is that everyone has different buying habits and different needs. Some people will be happy to use an estate agent without a high street shop and others will feel more comfortable knowing that they can pop into their agents’ office when they’re picking up some shopping.

    What is good is the competition and choice. There was a time when people had to use a traditional bricks and mortar estate agent because that was the only option. But the Internet and trend of buyers searching online has afforded agents the opportunity of reducing overheads and passing on savings to clients. Of course these agents are known as Online Estate Agents.

    One thing I would say is this. Most Online Estate Agents, and this would include Tesco if they decided to relaunch, offer their services nationally. But in my experience, buyers and sellers like dealing with people that actually know the neighbourhood and can offer advice on local issues such as schools, transport, leisure facilities etc. And sellers usually want on-going advice regarding market conditions.

    How can an Online agent offer this type of service in London for instance if they are based in Manchester.

    That’s why my Online Estate Agency is still a fiercely local business.

  • Annie ( Property To Let ) Wagner

    Excellent blog this well done and I was really pleased to view : this it’s just what I needed to know.
    It’s taken me literally 2 hours and 05 minutes of searching the web to find (not really) 😉
    But seriously I am really interested in Real Estate normally and so I shall be very pleased to become a regular visitor

    See you soon

  • Dean Jacobs

    It is interesting that Tesco come up not only in the world of liberalisation of selling your home but also in the field of conveyancing where solicitors are concerned that Tesco Law will encroach on their perceived territory. The landscape for home moving is certainly shifting at the moment.

  • Harrogate Estate Agent

    The question of Online Estate Agents Vs Traditional Estate Agency with a high street window is not, in my opinion, the important question when determining what and who will prosper in the industry over coming years. Neither will be a success if they do not have the right people with the right skills and experience. Having run Dales & Shires Estate Agents in Harrogate and Leeds for two years I can proudly say we are selling very successfully and outperforming other agents in the region, without us having a high street window frontage. However this is a result of having the best staff, with the right attitude and skills, and putting in a lot of hard work for our clients. Online, Office Building or High Street… it takes a lot of elbow grease and experience to be the best in town.

  • Richard Saunders

    I think it’s about time some
    restrictions were put in place as some online estate agents are just plain terrible!
    I work for Martin & Co, so we can
    rely on our reputation and large business to help alleviate any problems, but
    some companies have a tendency to sneak in fees or contractual clauses which
    can be very difficult to get out of. I, for one, am glad that the tides are

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