MortgagesMar 12 2014

What it takes to be a real estate agent

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But is it as easy to become an estate agent as this fact might imply? What qualifications do you need? What costs are involved in setting up an agency? And what legislation and rules must you comply with?

In the UK today, you do not need any formal qualifications to become an estate agent. Obviously qualifications such as GCSEs will set you in good stead with potential employers, but it is not a legal requirement to have a qualification related to the practice of estate agency.

Hence there is often a sense of “anyone can become an estate agent”, and it is hard to set yourself apart from the crowd.

Clearly, having an understanding of property matters is important, as is a basic understanding (at least) of consumer law, marketing, sales and negotiating skills. But to highlight professionalism to customers, a recognised professional qualification is recommended. This not only provides the technical knowledge needed to operate in a competitive market, but gives confidence to your customers, your staff, and to yourself.

The National Federation of Property Professionals Awarding Body offers a range of respected and well established estate agent qualifications suitable for both established agents and those wishing to become agents. These qualifications not only boost your credentials as an estate agent, but are also set at the required level of qualification accepted for membership of the National Association of Estate Agents.

When setting up an estate agency, there are many costs to be aware of. It is almost impossible to estimate the exact amount of financial backing estate agents need, as much of it depends on the size of the office and chosen location, particularly for those planning to set up in London.

The cost of renting an office will be one of the biggest expenditures. Even if one chooses to set up in a relatively low-cost area, remember that estate agents will probably be looking to rent in a high footfall area, which is likely to be expensive. The cost of premises does not end there – agents will also be footing the bill for utilities such as electricity, gas, water, and internet/phone, as well as furnishing/decorating costs. Security, safety measures and business insurance should also be budgeted for.

Prospective agents also need to think about employees’ salaries. Online recruitment company Totaljobs.com estimates that the average salary for an estate agent is £32,500 a year, and those in charge need to take a salary as well. In turn, these employees will be adding expenses such as petrol costs and company phone bills. Another major expenditure for agents is advertising and publicity; spreading the word and attracting business. This includes office window, website, For Sale boards, and other forms of advertising. The cost of brand awareness can even affect items such as the paper used for letters, which will need a letterhead incorporating the company logo.

Before setting up an estate agency, there are two measures that people need to take:

• Register with an independent redress scheme. This means that if a customer’s complaint has not been resolved by the agency, they can take it to the ombudsman the agent is registered with. There are only two to choose from: The Property Ombudsman scheme or Ombudsman Services: Property. This requirement is derived from the Consumers, Estate Agents and Redress Act 2007.

• Register with the Office of Fair Trading for anti-money laundering purposes. This is a legal requirement of the Money Laundering Regulations 2007. Incidentally, as of April this year the OFT is being disbanded and their responsibilities will pass to HM Revenue & Customs.

In addition, there is a plethora of regulations that agents need to comply with – and it is important for agents to be knowledgeable about these in order to show clients they are committed to upholding high standards. The two key acts are the Estate Agents Act

There is often a sense of “anyone can become an estate agent”, and it is hard to set yourself apart from the crowd.

The Consumer Protection from Unfair Trading Regulations 2008 is also important; it is a developing area of law, having replaced the Property Misdescriptions Act 1991 (repealed in October 2013). The OFT has produced specific guidance on this legislation to assist estate agents.

Other relevant regulations and statutory instruments include:

• Cancellation of Contracts Made in a Consumer’s Home or Place of Work, etc. Regulations 2008

• Town and Country Planning Act 1990

• Business Protection from Misleading Marketing Regulations 2008

• Health and Safety at Work Act 1974

• Disability Discrimination 1995

• Data Protection Act 1998

Failure to comply with these laws can result in being banned from working as an estate agent. The law also decrees that if you are an undischarged bankrupt you cannot run your own estate agency (but you can be employed as an estate agent), and furthermore, individuals that are in receipt of a banning order issued by the OFT cannot work for or run an estate agency.

In conclusion, it is indeed reasonably easy to become an estate agent. You do not require any formal qualifications, and as long as you have sufficient funds and comply with the relevant legislation, setting up your own estate agency is relatively simple (to be successful is another matter)

To prove the ease of setting up an agency, in 2004, consumer organisation Which? started trading as Cheatem & Ripoff in just 24 hours with only £143, and even attracted some customers. (Although this would now take slightly longer as they would have to register with an independent redress scheme under the Consumers, Estate Agents and Redress Act 2007, the point is still valid.)

However, just because agents can do the bare minimum to become an agent, it does not mean they should. In an industry plagued by stories of rogue agents, it is imperative to prove that they are a professional, credible agency.

Rachel Escott is part of the communications team at the National Association of Estate Agents