Time for Tesco?


Neil Simpson is a former Personal Finance Journalist of the Year and the author of the Buy-to-Let Investor column in Financial Mail on Sunday. He is a keen property investor and writes about buy-to-let online as well as for a variety of publications including City AM.

So, estate agents are up in arms over Tesco’s move on to their turf. The supermarket has announced plans for its own DIY home-sales service. You pay a flat fee of £199 get a board to put outside your property and a slot on its website. Then you do all the viewings and negotiations yourself. If it comes off you can save thousands of pounds in agents’ fees. Agents charging, say 2 per cent commission will take £6,815 out of a £290,000 sale once VAT has been added into the equation, for example. It makes that £199 Tesco fee suddenly look ridiculously cheap.

Little wonder that the agents are so determined that Tesco should fail. But I’m not sure that it will. I started writing about private house sales nearly eight years ago when a company called Property Broker set up a website for DIY adverts. Everyone who used the service raved about it. Even then they hadn’t had any problems valuing their properties before listing them (a task estate agents say only they can perform accurately). Today of course valuations are even easier because there is so much online information on what your neighbours paid and what all the houses in the street are on for with other agents.

The initial users of Property Broker, and rival firms like HouseWeb, were also relaxed about writing their own property descriptions. Measuring a room really isn’t rocket science. And the online agents give plenty of space to personalise listings by including more details of local transport links, cool shops and bars in the neighbourhood, which rooms get the sun and so on.

Finally there is the issue of viewings. Agents say it’s unsafe as well as poor practice for owners to do these themselves. But if you’re sensible then you’re unlikely to hit any problems. I’m sure lots of single people only do viewings when they have a friend around. And potential buyers probably like being able to ask questions to the existing owner rather than going through a third party.

Sealing the deal and pushing it through shouldn’t be harder with a DIY sales site either. Just get your solicitors in touch with those of your buyer and they take over. Like I say, the people I’ve spoken to over the years certainly didn’t feel they needed any extra hand-holding at this stage.

Tesco’s move probably couldn’t come at a better time for many sellers. If the market is starting to slow then it’s more important than ever to keep as much of your equity yourself, rather than paying a big slice to an estate agency. What it needs is to get plenty of properties on its books fast so that it is worth using for buyers and sellers alike. In that respect the attacks from estate agents have probably been pretty useful – it’s all been good publicity after all.

Having said all this I’m no rabid anti-estate agent figure. I’ve always thought that buy-to-let investors in particular need to have great relations with local agents. If they know you are serious about investing and can move fast if required then you can be among the first to view any new instructions. I also like the fact that the likes of Foxtons now have specific ‘investment’ divisions to cater to our part of the market. In the near future though I wonder if the smart money will be buying properties through agents and selling them through private DIY sites. Either way, Tesco is likely to carry on making waves for some time yet.

Everyone’s set to go re-mortgage crazy for the rest of the year as all those low rate two year deals from 2005 come to the end of their terms.

And there’s a new warning for anyone planning to take out a new two year deal as a replacement: it might not last quite as long as you had hoped. When we took a look at the latest deals on the Mail on Sunday recently there was a big difference between the end dates on a selection of deals which all had the same two year label. If you are one of the last people to apply for a deal that has been on offer for some time then watch out. Several months of the two year term may have expired before you loan comes through. So instead of getting 24 fixed monthly payments you may only get 22 – or less if there are real delays with your application.

When high booking and other fees are taken into account this can make a big difference in terms of the overall cost of your loan. So make sure your broker checks the small print for you so you know what you are signing up to. And make sure you keen transferring that end date to every new diary so you re-mortgage in time when it expires. Variable mortgage rates are now at a six year high. Paying them even for a couple of months while a new deal comes through will be an expensive mistake.