Real estate transactions across the United States seem to be handled quite a bit differently than those in England. My meeting on Tuesday with Melvyn Danes, a very successful local real estate agent (called "Estate Agents" here), was extremely interesting and informative. We had a nice long chat over lunch and he has invited me into his office next week to see some of the nuts and bolts of how a transaction is handled. Melvyn spent quite a bit of time giving me a history of land ownership, through the ages, in England. I’ll delve into that a little more later, as time permits… probably after returning to The States.
As for current information, the primary difference I picked up in the marketing aspect of the business is that offices to do not cooperate with other offices in the sale of properties. By this I mean, what we know as the Multiple Listing Service does not really exist. If Melvyn has a listing, a potential buyer must work with him or someone in his office(s) to procur the purchase of that listing. Likewise, if Melvyn has a buyer interested in another offices listing, he cannot sell it to his buyer. That buyer must go to the listing agency office to procur the purchase. This is contrary to our concept of buyer agency, giving the buyers an option of who to work with based on who they think will most effectively represent their best interests. They do, however, have a liability insurance similar to our Errors and Ommissions, which covers them in case of legal problems arising from a transaction.
One major change coming into law in England in January of 2007 is the "Seller’s Information Packet" (SIP). This "packet" will be jam packed full of information about the subject house and property. When I meet with Melvyn next week I will request a detailed list of what will be included in this packet. But, it is my understanding, every possible known detail of the property history will be revealed (recorded and unrecorded). This information will include major things, such as history of ownership, the date of roof replacement, rewiring, replumbing… and also a history of such things as service to the furnace system and other more minor details. This information will be available to potential buyers.
Another major change, to coincide with the Seller’s Information Packet, is a required Home Inspection Packet (HIP), to be supplied by a registered home inspector. This report will be required before a property owner is allowed to even list their property for sale. This will be a very detailed report and will cost about 1,000 pounds (equivalent to nearly $2,000 US dollars). It is estimated the country will need about 7500 inspectors to fulfill the need, but only 1600 inspectors have registered so there is a serious shortfall anticipated. Obviously, this will slow down timely property transfer closings.
The SIP & HIP reports are anticipated to considerably increase the cost of doing business for the estate agents. This will, obviously, be passed directly to the sellers and buyers. Melvyn anticipated he may need to increase his fees by 100% to cover the additional time and resources required to meet these new laws. There will be an "introductory" period, starting next June, to phase in the implementation of these new requirements.
One additional comment that Melvyn made that surprised me was that nearly 30% of pending transactions fail before closing. There is a multitude of reasons, obviously, but I got to thinking that the very age of many of the homes being sold could be a major consideration. Under current ways of doing business, the home inspection is not done until after a Purchase and Sale Agreement is solidified. Perhas when the Home Inspection Packet report is provided upfront, the number of failed sales will decrease. This will allow the sellers to become aware of defects and correct them before entering into a sale agreement. It will also give the buyers more assurance that they are not buying a home that has undisclosed problems. In spite of the anticipated cost of time and money, I tend to like this trends. Without the benefit of scientific documentation, I often get the impression one of the reasons people want to sell their own home (For Sale By Owner) is that they don’t feel compelled to make all the required disclosures. Most of them don’t even know what the required disclosures are. This, however, is a topic for another day.
Those are my thoughts for now. Watch for future reports on this subject.
Cheers from the olde country!
Carol
P.S.: For a look at my personal blog, documenting our travels in England, please visit:
www.TreeDoctor.blogspot.com
source: Real Estate Business In England
Well, I’m back from vacation… back in the saddle, so to speak.
