When the BBC’s Panorama programme reveals it’s about to broadcast a big expose about the estate agency sector, those in the industry start to squirm. However not on this occasion.

What unfolded in the programme was that Connells was found to be conditionally selling products to buyers, and Purplebricks had at one point been overvaluing properties to win business, but then incentivising staff to get guide prices reduced.

The rest of us shrugged our shoulders and carried on, after all we’ve all known these dubious practices for years. But the programme did raise questions about how some estate agencies are being run.

Firstly, let’s tackle conditional selling. This is where Connells staff at one branch had been pushing buyers to take their in-house mortgage or legal services, which they would make money on the back of.

As a result staff would endorse – to greater effect – buyers who used their services and sidelined buyers who were not, even if they offered more money. This resulted in vendors potentially losing out on better offers.

Overvaluing

The next issue was overvaluing. This practice is arguably more commonplace, as agents vie to get owners’ instructions to sell by granting them the stars.

However, the next step by Purplebricks was more dubious, as they then directly incentivised staff to get the guide price down with the owner, having secured the business.

Aside from breaking various industry codes and the potentially the law, the practices were unethical, lacked moral fibre, but most importantly did not look to be in their clients’ best interests, which is what estate agency is all about.

Frontline agents

I do not blame the individual frontline estate agents because they were only ‘following orders’ and the predictable result of an estate agency businesses being too focussed on targets and key performance indicators.

When you introduce a business target to highly motivated sales agents, they will push the whole way to make it happen.

However, this then means that you are often no longer looking in client best interests nor motivated to do so, as your office and personal targets take precedence, especially when there is a financial incentive involved.

Cheap service

The other issue is that when your estate agency brand offers a cheap service, they must make up the shortfall in figures elsewhere – what exactly did people expect?

For example, Purplebricks offers to sell your home for free. They make up this deficit by getting money from buyers and sellers for using a range of in-house services linked to mortgages, conveyancing, energy suppliers and even comparing broadband deals. So Purplebricks are less of an estate agency and more of a financial referral operator, but often at the expense of the public.

The Connells Group is the largest estate agency in the UK and everything its estate agents do is closely monitored by those at head office who read spreadsheets all day.

Hazardous

But argets are a hazardous route [to success] in estate agency, primarily because so many ‘influencers’ are beyond an individual estate agent’s control including solicitors, surveyors, lenders, councils and buying chains to name the key ones.

Sometimes you are unable to short-circuit these, as you are relying on third parties. Trying to then push for a target that is unrealistic from the outset, will only lead to figures (financial incentives in this instance) getting skewed.

Estate agency is a people business –  and we deal in emotions, not spreadsheets. But I would like to thank Connells Group and Purplebricks for making the rest of us look so good.

Alex Goldstein is an independent bespoke property consultant in Yorkshire and London (www.alexgoldstein.co.uk).

Main pIc credit: Alex Goldstein