Friday 20 April 2018

Estate agents were 'plucking prices out of the air'

For anyone who still doubted the need for a publicly-available register of house prices, the events of April 2008 provided the clinching argument.

The revelation that certain unscrupulous estate agents were knowingly providing inaccurate prices made it inevitable that this information would have to be made publicly available.

During the property boom of the Celtic Tiger years there had been frequent reports that some estate agents were exploiting the lack of price transparency in the housing market to their own advantage.

While most of these reports were anecdotal they were heard with sufficient frequency to suggest that there was a serious underlying problem.

With most houses in the established suburbs being auctioned rather than sold by private treaty, the asking prices quoted by sellers' estate agents were in many cases wildly shy of the eventual selling price.

This led to frequent complaints from would-be purchasers who argued that, by quoting such unrealistically low asking prices, the estate agents were gulling them into incurring expenses such as surveyors' fees for houses that they couldn't possibly afford.

While asking prices were certainly a problem, estate agents were able to argue that, with the market rising so quickly, they could be no more than their educated guess of what the selling price might eventually be.

Bubble

However, no such defence could be made for what happened next. By the spring of 2008, it was clear to everyone that the housing bubble was rapidly deflating. Clear to everyone except estate agents, that is.

They continued to assure us that we were experiencing a "soft landing" and that once the "correction" was complete the good times would roll once again.

While the precise sequence of events has never been definitively established, it seems that some estate agents provided the newspaper property supplements with sale prices for houses which they knew to be well in excess of the actual prices for which they had been sold.

When these prices were published, irate buyers contacted the newspapers to point out the error.

When the matter was investigated, it became clear that these were not isolated incidents with the property editor of one newspaper describing the misreporting of prices as being "endemic".

"Reported prices were simply being plucked out of the air. Many were as much as 20pc off the mark. What was going on was fairly shocking," said the editor at the time.

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