Well we would say that wouldn’t we!
But this article from a leading barrister is telling
Ian Rees Phillips, of 6 Pump Court chambers, know that there are a lot of unhappy sellers. Mr Rees Phillips, there is “always the potential danger” for hybrid agents to face legal action because of “mismatched incentives”.
Mr Rees Phillips said that hybrid agents are incentivised by charging to list a property, whereas the vendors’ interest is usually to want the best possible price.
He said: “In a ‘traditional’ commission-based model, these two interests would be aligned, but that is not the case for hybrid agents
“Agents traditionally defer the whole of their fee until the end of the transaction, and it is contingent on achieving a sale.
“With the hybrid model, the agent’s incentive is to list. If, after having sold and moved, a vendor came to believe that their interests had been ill-served, perhaps because the property had been seriously under-valued, then they could bring an action.
In his opinion, Mr Rees Phillips notes: “In short, the online agents’ commercial interest is not to sell properties, but just to list them, and in that circumstance, it is easy to imagine a scenario where conflicts of interest or profits at principal’s expense could occur – for example, once the property is listed, there is no incentive for the agent to do any work in selling the property that a ‘traditional’ agent would do, such as following up on inquiries, consulting existing potential purchasers about new properties for sale and so on.
“It has to be the case that this would have a marked effect on the conversion metric from listing to sale when compared to a traditional estate agent.
“If, however, the online has no interest in the price that the property sells for (as it has already been paid its flat fee) there is a conflict between the agent’s desire to get a sale and the vendor’s desire to achieve the best price, which could easily lead to properties being sold at an under-value to the detriment of vendors.”
His opinion concludes: “The mismatch in interests and incentives between principals and online agents, given the bare ‘incentive to list’ [on the part of the online agent] might mean that the fundamental nature of the relationship is likely to tend towards breach of fiduciary duty given the competitive nature of the estate agent marketplace.”