This caught my attention this week. An 88 year old man has been conned by an estate agent. The agent based in St John’s Wood sold the gentleman’s house for £999,999 (just below the 5% stamp duty threshold). The house was in fact worth £1.8m. The agent sold it to his brother-in-law, a property developer.
The good news is that the agent was caught. The sale was rescinded and the house sold for £1.8m to another party. Unfortunately the seller died and the legal battle with Bargets, the estate agency, cost c.£100,000. Bargets settled out of court for c.£75,000 and never admitted guilt. The individual agent is still employed at the agency.
Now this is an appalling story and it must be said that most agents do not behave in such a manner. However, some agencies do have a reputation for having “questionable” ethics. Indeed even if you are dealing with one of the very good estate agencies there is no accounting for the odd “bad apple”. A rogue agent will normally be weeded out but not necessarily before they caused damage.
Of course, I have to point out that there is not a profession in the world where you will find no crime. Solicitors are regularly disbarred, policemen arrested for corruption and accountants for fraud. It is a simple fact that human nature dictates that we do not live in an entirely honest world. Indeed you would have to be naive to think so.
Fortunately the majority of us are honest. But what I find particularly galling about this story, aside from the obvious, is the total lack of accountability. The fine for the agency is particularly feeble and the agent in question is still in his job. His illness is unfortunate but that is irrelevant in my view.
It is a simple fact of life that if you are accountable, you will not be as committed to a task or responsibility and more likely to commit fraud. What then is the disincentive for the agent in question or indeed other agents of less than honest intention to stop such parties? Unfortunately this lack of accountability pervades too many facets of the U.K. today- as another example just look to the politicians’ expenses scandal.
Ultimately, it does not matter if you are buying or selling a home, it is vital that you ensure that you are receiving accurate information from a reliable source. Although I never sell properties, I do manage the sale of my clients’ properties. I always ask at least three different agencies to value the property. This isn’t just to protect from fraud. In some cases, I have had situations where there has been an enormous spread in valuations. Quite simply some agents do get it wrong.
When buying a property I also provide my clients with plenty of examples of similar properties that have sold in the area to justify my valuation. My clients trust my opinion but they are intelligent, successful businesspeople and investors, so it is important that they can make an informed decision. Trust and reputation alone are not always enough- Bernie Maddof proved that.
This does not mean that you should be scared of buying a property in London. Billions of pounds worth of property is bought and sold each year without incident. However, you do not want to be one of the unfortunate few who make an expensive mistake. You must ensure that you have access to the right information and a team of reliable and experienced advisors who will ensure that you make an astute acquisition.