In the UK the vast majority of property sales are made using estate agents.  People looking to sell their home will use estate agents to advertise and attempt to find a buyer for their property.  At the same time individuals searching for a new home will commonly visit their local estate agent.  What is the purpose of estate agents and what are the benefits of using them?

The first stage in the sale of any property is to set a valuation.  This is a crucial step in being able to find a buyer for the home.  Most estate agents are able to carry out property valuations or at least able to find a professional to perform the valuation on their behalf.  Valuation professionals can obtain qualifications from the Royal Institute of Chartered Surveyors or from the National Association of Estate Agents.  When valuing the property the price needs to be set at an amount low enough to attract a buyer but also sufficiently high the home seller isn’t losing out.

Once the property has been valued the next role of the estate agent is to advertise the property.  The agent will begin by creating promotional material for the home.  This will involve compiling a description of the property that will include photos, measurements and floor plans. 

Attracting buyers for the property through advertising is the most important role of the estate agent.  To receive high levels of interest in the home the advertising must be of a good quality and should be targeted to reach the appropriate potential buyers.  The type of advertising that is appropriate will vary according to factors including price and location.  Typically the home will be advertised using traditional methods such as newspapers as well as more recent methods including the internet.

If the estate agent has been successful with the advertising of the home then the next stage will be to arrange viewings.  Most estate agents will prefer to conduct the viewings themselves although some will leave this to the home owner.   Different agents will have their own style of conducting viewings but whatever the approach the aim will be to achieve a sale.

As can be seen estate agents play an important role in property sales.  As well as the services already listed some estate agents will offer other services including providing the recently introduced Home Information Pack (HIP).

Definitions of terms commonly associated with mortgages and property ownership in the UK.

Added to Loan

The costs borrowers incur when arranging a mortgage.  Usually refers to expenses such as arrangement and administrative fees.

Administration Fee

A fee charged by some mortgage lenders to cover the costs of setting up the mortgage.

Annual Percentage Rate (APR)

The yearly rate charged on a loan required by law to be shown to borrowers.  The APR includes the interest rate and other fees charged on the mortgage.

Arrears

Borrowers are said to be in arrears when they have either not made their mortgage repayments in time or if they have not paid the correct amount.

Base Rate

Set by the Bank of England the base rate is the lowest percentage amount of interest lenders can charge.  Interest rates on loans are set at an amount over the base rate decided according to the level of risk involved.

Capital and Interest Mortgage

A common type of mortgage where the monthly repayment made by the borrower includes a repayment of both the capital borrowed and the interest charged.

Capped Rate Mortgages

A combination of a fixed rate and a variable rate mortgage.   In a capped rate mortgage although the interest rate can change it will never rise above a certain level.

Cash Back Mortgage

In a cash back mortgage the lender will pay ‘back’ to the borrower a percentage of the amount borrowed.  This lump sum payment is made on completion of the mortgage.

Conveyancing

Conveyancing is the legal process that must be completed for the transfer of ownership of the property to take place.  Conveyancing work is usually performed by solicitors.

Credit Reference Agency

An organisation that collates information on the borrowing records of people in the UK.  This information is used by lenders when setting up credit agreements.

Deferred Interest Mortgage

A type of mortgage in which the full rate of interest is not paid in the first few years of the agreement.  The deferred interest is added to the amount borrowed and is repaid over the rest of the mortgage term.

Endowment Mortgage

An endowment mortgage is a type of mortgage where the property buyer makes two monthly payments; one into a life assurance (endowment) policy and the other to the mortgage lender to cover interest payments.  At the end of the loan period the mortgage is paid off in one lump sum.

Equity

The difference between the value of a property and the amount remaining to be paid on the loan (mortgage) secured against it.

Exchange of Contracts

One of the final stages in the transfer of ownership of a property.   In the exchange of contracts the buyer and seller both sign a contract committing to completing the sale.

Fixed Rate Mortgages

In a fixed rate mortgage the interest charged is set for a certain period of time and does not vary with changes to the base rate.

Land Registry

The Land Registry is the government department responsible for maintaining and updating the ownership records of all properties in England and Wales.

Local Search

Part of the conveyancing process, local search refers to an application to the local authority for information relating to a property.

Negative Equity

Negative Equity is a situation where mortgage repayments on a property are for a higher amount than the actual value of the home.  This means that the home owner has paid or will pay back more than what the property is worth.

Re-mortgage

A term for when a home owner replaces their existing mortgage with a new mortgage agreement.  Remortgaging is common for people looking for better rates of interest, lower repayments or a different type of mortgage.

Stamp Duty

A tax on property transactions paid by the buyer of the home. 

Variable Rate Mortgage

The most common type of mortgage agreement where the lender sets an interest rate that will change according to variations in the base rate.

An explanation of terms commonly associated with buying and selling homes in the UK.

Bridging Loan – a bridging loan is a short term loan taken out to bridge the gap between buying a new home and selling an existing property.  The loan bridges the gap between the sale of the two homes in the housing chain and eases the completion of the purchase.

Chain – the property chain refers to the sequence of sales that must take place before an individual property transaction can take place.  Since most people selling their home will also be buying a new property there can be a chain of buyers and sellers each dependent on each other.  If one buyer or seller drops out the whole chain may collapse.

Completion – completion in property sales refers to the point when contracts have been exchanged and ownership of the property has been legally transferred.

Conveyancing – conveyancing is the legal process that must be completed for the transfer of ownership of the property to take place.  Conveyancing work is usually performed by solicitors.

Endowment Mortgage – an endowment mortgage is a type of mortgage where the property buyer makes monthly payments into a life assurance (endowment) policy.  At the end of the loan period the mortgage is paid off in one lump sum.

Energy Performance Certificate (EPC) – the Energy Performance Certificate is a document showing the current energy rating of a property as well as suggested ways in which the energy rating could be improved.  The EPC is a compulsory part of the Home Information Pack.

Estate Agent – a professional who acts on behalf of a person selling their home to find a buyer for the property.  The estate agency service includes valuing the home, advertising and arranging viewings.

Fixed Fee Estate Agent – fixed fee estate agents a new type of property agent that offer to sell homes for a fixed fee.  An alternative to traditional estate agents that set their fees at a percentage of the value of the home being sold.

Gazumping – a common practice in property sales where the seller of the home accepts one offer to buy the property but later rejects it to accept a higher offer by another buyer.

Home Information Pack (HIP) – recently made compulsory in the UK the Home Information Pack contains a series of documents relating to a property being sold.  The HIP is designed to assist potential home buyers by making important property information available at an early stage.

Land Registry – the land registry is a government office that stores records of land ownership.  Updates to the registry are typically performed by solicitors who register new owners of a home.

Negative Equity – a situation where the mortgage being paid on a property is of a higher amount than the actual value of the home.  This means that the home owner has paid or will pay back more than what the property is worth.

Repayment Mortgage – a type of mortgage where monthly repayments cover both interest and capital so that the amount outstanding will gradually decrease until the mortgage is fully repaid at the end of the agreed term.

Stamp Duty – a government tax charged when a property is sold.  The actual rate of taxation will vary according to the value of the property.

Title Deeds – the title deeds are documents showing the past and present ownership of a property.