Presented by: GfK NOP Social Research Your contact person: Alison Palmer Deputy Manging Director (Qualitative) Pho

Appendix A GfK NOP Social Research Home Buying and Selling Consumer Research Qualitative Research Report 12th May 2009 Presented by: GfK NOP Social Research Your contact person: Alison Palmer Deputy Manging Director (Qualitative) Phone: +44 (0)20 7890 9000 Fax: +44 (0)20 7890 9744 E-mail: alison.palmer@gfk.com Ref: 452079/2409

This report was prepared for the Office of Fair Trading by GfK. The views expressed are those of the authors and do not necessarily reflect the views of the Office of Fair Trading. All verbatim quotations used in this report reflect respondents’ views and are illustrative of the findings of this research.

Research overview, objectives and management summary 1 2 Qualitative method and sample 3 Context of research 4 The buying and selling journey 5 Professionals Agenda 6 Service issues Moving forward 7

Research Qualitative objectives Overall, to understand consumer experience of the residential property buying and selling process in the UK as a precursor to a quantitative study of the market And in addition to: • investigate consumer awareness of protection frameworks; • identify possible conflicts of interest in the process; • investigate whether consumers are prepared to consider alternative routes to buy or sell a property. In particular to: • explore the service provision elements of the process; • understand the high and low points within the process for consumers; • look at the use of and satisfaction with professionals; • review the extent to which consumers shop around during this process.

Research Method Five focus groups were conducted across the UK –with respondents from rural, suburban and urban locations LONDON Southern England STOCKPORTNorthern England CARDIFFWales BELFASTNorthern Ireland ABERDEENScotland Each focus group lasted two hours and contained eight-nine participants All fieldwork was conducted by Alison Palmer, Josephine Hansom and Kathryn Hall of GfK NOP during May 2009. Fieldwork took place between April and May 2009 This document summarises the views of buyers and sellers interviewed during the research process and does not represent the opinion of GfK NOP or OFT.

Research Method A series of 20 semi-structured depth interviews with buyers and sellers These interviews form the basis of individual case stories of the consumer’s experience of the buying / selling journey Respondents were recruited from a broad range of locations within England, Scotland, Wales and Northern Ireland Each semi-structured interview lasted three quarters of an hour to one hour, with eight taking place face to face and the remaining twelve being over the telephone

Participants Sample The sample included a spread of home buyers and sellers: First-time-buyer Consumers who were buying a property for the first time. Buying + Selling Consumers who were both buying and selling a property at the same time. Buying or Selling Consumers who were either buying or selling a property, but not for the first time. In addition, participants were drawn from a spread of ages, gender, socio economic grades, life stages and size/value of property – from one bed flats to four+ bed houses.

Participants Recruitment Participant selection based on answers to a screening questionnaire Participant characteristics • bought or sold after April 2007; • solely or jointly responsible for making decisions about the purchase/sale; • buying/selling for own personal use, not buy-to-let. A specialist recruitment agency was employed to identify participants using a free-find method (via their contacts and snowballing). All: A good spread of participant types across all locations was achieved.

May 2008 Context of Research The financial climate May 2008 Impact of the financial climate: • reduction in consumer activity – more people waiting before buying, some renting in between sale and purchase; • recent purchasers facing or in negative equity; • speculation about state of the housing market, for example, Welsh participants felt that the market was over the worst, Aberdeen participants thought to be outside general Scottish market forces because of oil industry, while the English and Northern Irish participants noted continuing uncertainty. April 2008 The current financial climate has impacted severely on the housing market. Still viewed as being in a state of flux.

Context of Research The financial climate '[We found buying and selling] difficult because of the market. We didn’t know if it was going up or down. When I got my house on the market (…) the valuations were all over the place. We didn’t really know. Estate agents didn’t seem to know either.' (London) 'I understand that there is less people buying. Prices aren’t massive. There are still offers being made and there are still properties going for silly money but rather than ten people chasing it there is maybe only three or four.' (Aberdeen)

The buying and selling journey Overview Three distinct types of journey: Open to recommendation, guided by family / professionals, unsure about process, relatively straightforward process as less time-sensitive. First-time-buyer Timing crucial as more susceptible to delays due to chain. Factors that added complexity to the process included families moving and individuals relocating. Buyers and sellers experienced the most complex journeys as they were navigating two processes simultaneously. Buyer & Seller Sold property and rented due to UK market uncertainty or sold abroad and moved to UK, became appealing to sellers as no chain, increased flexibility – experienced consumers. Buyer only / Sold in advance The following flow diagrams give a high level summary of how consumers reported their contact with service providers during their buying and selling journeys

The buying and selling journey:  England, Wales and NI

The buying and selling journey (as expressed by consumers) Buying (England, Wales and NI) Think about finance & obtain mortgage * Look for property/ find property Solicitor IFA or Bank direct A few seek a mortgage in principle Apply for mortgage on basis of specific property Finalise mortgage IFA or Bank direct Internet and Estate Agent Surveyor * Some of the sample did not seek external finance, for example, downsizers Make offer

The buying and selling journey (as expressed by consumers) Selling (England, Wales and NI) Some negotiate fees with estate agents Solicitor Internet Estate Agent Property viewings Get general idea of price of property Offer accepted (generally via estate agent*) Potential purchasers make offer on property Select estate agent Market valuation(s) of property Market property HIP/EPC prepared where required Estate Agent Estate Agent Solicitor Estate Agent Surveyor * There were one or two examples where estate agents were not used

The buying and selling journey:  Scotland

The buying and selling journey (as expressed by consumers) Buying (Scotland – without an estate agent) Look for property/ find property Think about finance & obtain mortgage * IFA or bank direct Solicitor in principle Apply for mortgage on basis of specific property Finalise mortgage IFA or bank direct Internet, SPC or EA Solicitor Surveyor (if offer legally binding) Surveyor (if offer made subject to survey) * Some of the sample did not seek external finance, for example, downsizers Make offer

The buying and selling journey (as expressed by consumers) Selling (Scotland – using a Solicitor Property Centre) Solicitor Negotiate directly with potential purchaser or refer to solicitor Approach solicitor for valuation and preparation of schedule Get general idea of price of property Show round potential purchasers Accept offer Internet Solicitor Go to sealed bids only if three+ interested parties Solicitor Solicitor puts on SPC website

The buying and selling journey  The Scottish System • Buyers /sellers in Scotland seemed happier on the whole that their system was fair, transparent and timely: • greater involvement of individuals throughout the process, via the solicitor who acts on their behalf; • decisions about negotiating prices and setting a date for final offers, were mutually agreed with their solicitor; • individual buyers/sellers felt empowered to carry out their own price bargaining; • these were mostly, but not all, experienced consumers; • Some younger, first-time-buyers were also keen to negotiate having seen their parents do it; • timeline from beginning of the journey to completion can be very short if all goes to plan (weeks not months); • legal penalties for defaulters means greater security in achieving a positive outcome; • this was also cited by participants in other regions as best practice; • recent introduction of HRs with survey, would reduce need for multiple surveys and potentially speed up the process.

The buying and selling journey (as expressed by consumers) The Scottish System cont. According to consumers the use of a solicitor for property buying/selling had both advantages and disadvantages: ADVANTAGES Highly trained in legal affairs Abides by professional guidelines Feeling that if you can’t trust your solicitor, who can you trust? DISADVANTAGES Not property experts, may not have valuation knowledge Might be spread too thinly at times when market is very buoyant Appear to delegate to less well trained staff for aspects of transaction whilst charging at the same rates. Increased use of the Internet by Solicitors’ Property Centres has resulted in a more dynamic approach to the marketing of properties in Scotland - making it easier to identify properties in any given area, thereby opening up the customer base for sellers

The buying and selling journey  The Scottish System cont. 'The difference [between England and Scotland], is that here legally the people are in charge.' (Aberdeen) 'If the buyer backs out, and you then can’t sell the house for the same amount, you know you can sue that person for the difference.' (Aberdeen) Advantages 'You get seven days cooling off [in Scotland, after making an offer] and after that, that’s it – you’re buying it, and they’ll take you to court if you don’t. So you don’t get silly offers (…) maybe they could do that [in the rest of UK].' (London) 'In Glasgow there is a law that you can’t get gazumped (…) which should be put in here.' (Stockport)

The buying and selling journey  The Scottish System cont. 'You will never get a property expert [if you use a solicitor]. If you want an expert you will pay for a chartered surveyor to do a survey (…). Solicitors are not going to stand there and put their hands on their hearts and say that is a good property or a bad property because they are not the experts.' (Aberdeen) Disadvantages

The buying and selling journey:  HIPs, HRs, EPCs

The buying and selling journey  HIPs Majority of research participants bought/sold before HIPs/HRs/EPCs became legal requirement • Knew little about them other than what they had heard in the press. • Overall negative feeling about them; • additional cost to seller; • unnecessary additional paperwork; • no tangible benefit to buyer as they would want to buy because they liked the property and would commission own searches etc. and so the HIP would be irrelevant. HIPs (England and Wales)

The buying and selling journey  HIPs 'They just use the information that I could have easily found myself (…) It didn’t exactly set the world on fire. To be honest, I found it pointless.' (Cardiff) 'There was about sixty pages in there and I thought ‘aghhh!’' (Cardiff) 'Complete waste of time. They tell you very little about anything really.' (Belfast)

The buying and selling journey  HIPs 'The problem is if you’re selling a cheaper house, it’s a bigger chunk of the price.' (London) 'It did open up my eyes a bit. I was a first time buyer and it did tell me what I can do [with the property], what I can’t do. General stuff like that.' (London)

The buying and selling journey  EPCs (England, Wales, Scotland and NI) • Knew little about them but some recognition of energy rating format when prompted (similar to that used with white goods). • Not viewed as a document that would sway a buying decision. 'In hindsight, I think after buying my house I would have appreciated something like that [EPC] because with it being in a terrace… and it’s an old house, so there’s no insulation.' (Belfast) 'I think if I was buying a property which has had a HIP I’d be more influenced by what the valuation said rather than how energy efficient it is (…). As long as the value stacked up and also there was no subsidence and stuff like that – that’s what would determine whether or not I would go ahead and buy a property.' (Cardiff) '[The HIP Assessor] said the only thing you could do differently to make your apartment more efficient is have energy saving light bulbs. So I said ‘right, ok, thanks’ and we had to pay three hundred odd pounds for that.' (Stockport)

The buying and selling journey  HRs (Scotland) • Not much known about HRs apart from press comment. • General feeling that they may speed up process as HR contains an independent survey. Leading to fewer offers made ‘subject to survey’ as is the case now. • Some noticed that they were currently available with the property details on the Solicitors’ Property Centre website. 'The reality of buying the house is that it is based on subjective feeling and emotion, and whether you can see yourself in the house (…) and I don’t think that you can actually capture that in reports.' (Aberdeen) 'The Home Pack seems to be a lot of work (…) and it doesn’t seem to have much bearing on (…) selling the house.' (Aberdeen)

Professionals Trust Solicitors were trusted most as they were seen as qualified professionals Solicitors IFA Professionals viewed as essential to the journey Conveyancer Surveyor Estate agents were subject to the most distrust amongst participants who questioned the value-for-money, transparency and the service they were receiving Estate Agents Participants’ perceptions of professionals: Professionals who are ‘qualified’ or personally recommended = More trusted. Professionals without industry guidelines= Less trusted.

Professionals Trust '[Solicitors] do [conveyancing] day to day. It is their job and we have figures in mind that we are willing to pay and we just left it to them to do their job kind of thing and they came back to us and we have got jobs ourselves to do, so just let them do the work. I was happy for them to do that.' (Aberdeen) '[Within the buying process] you are out of control. You’ve just got to let the professionals do what they do.' (London)

Professionals Trust 'I sent them off and said ‘right do me a costing and tell me how much it will cost to go with you.’ I had three different solicitors (…). I ended up going back to the one I had used before because they were forty quid dearer, but I had a relationship with them and over you know, whatever it was, eighteen hundred quid overall to buy and sell with your solicitor. I think that was worth it.' (Stockport) 'It is trust isn’t it? What would put me off using a one stop shop [for house selling/buying] is if I didn’t feel comfortable and that they didn’t really know what they were doing and whether they were looking out for me. Sometimes if you have a relationship already then it gives you an element of trust and comfort doesn’t it? That they would be looking out for you.' (Aberdeen)

Professionals Surveyors in buying process Think about finance & obtain mortgage Look for property/ find property Surveyor (for example, Home Buyers Survey) in principle Apply for mortgage on basis of specific property Finalise mortgage Surveyor (valuation of property) Make offer

Professionals Surveyors in selling process Negotiate fees with estate agents Property viewings Get general idea of price of property Offer accepted (generally via EA*) Potential purchasers make offer on property Select estate agent Market valuation(s) of property Market property HIP/EPC/HR prepared where required Surveyor * There were one or two examples where estate agents were not used

Professionals Surveyors • Not everyone commissioning independent surveys:* • relying on valuation survey done by lender; • new build buyers relying on builder/developer; • consumers in Wales and Northern Ireland less likely to commission an independent survey. • Selection of surveyor deemed a low priority: • viewed as an accountable profession; • local reputation paramount. • When commissioning independent survey, several routes were identified: • recommendation by friends/relatives; • recommendation by IFA, estate agent, solicitor; • very little shopping around; • little choice according to some consumers as few surveyors in local area; • large local firms held sway. * Most properties were bought/sold pre HIPs/HR

The buying and selling journey  Surveyors '[I spoke] to the estate agent and I said ‘do you know anybody that is a surveyor?’ and they said ‘well, we always recommend this bloke’ and there was no compulsion and I said ‘fair enough’ and I went and looked at his fees and they looked alright and so I went with him.' (Stockport) 'I chose my surveyor because he was a pal of my uncle.' (Stockport) 'I got mine from the estate agency as I wasn’t really concentrating on that [surveying]. I was concentrating on other things so I went for the easy option.' (London)

The buying and selling journey  Surveyors 'It is more fashionable now to do the survey after [making an offer] and everybody is doing that subject to survey, so that means that people don’t have to go through the expense of the survey if they ended up not successfully purchasing the property.' (Aberdeen) 'I am very distrustful, but I would accept a survey and I wouldn't get another one. I would just take it as it is if it was from a licensed surveyor.' (Aberdeen)

Professionals Estate Agent in buying process Think about finance & obtain mortgage Look for property/ find property in principle Apply for mortgage on basis of specific property Finalise mortgage Estate Agent Estate Agent Estate Agent Make offer

Professionals Estate Agent in selling process Negotiate fees with estate agents Estate Agent Property viewings Get general idea of price of property Offer accepted (generally via EA*) Potential purchasers make offer on property Select estate agent Market valuation(s) of property Market property HIP/EPC/HR prepared where required Estate Agent Estate Agent Estate Agent * There were one or two examples where estate agents were not used

Professionals Estate Agents • Most participants in England, Wales and NI bought and sold using an estate agent. Where used in Scotland the role was the same: • act as an intermediary between parties (that is, communicate offers); • provide a marketing service for sellers; • provide an introduction service for buyers. • Estate agents had a poor reputation in all locations: • lack of trust – many customers suspected that estate agents do not always behave professionally or honourably. However, they found this hard to prove because of lack of transparency in the process; • poor communicators; • sales oriented, not customer focused; • the service offered by estate agents varied / was not consistent across suppliers, making it hard for customers to compare and contrast various estate agent service offers. • Criteria for selecting estate agent when selling – not in any order as often a mix of reasons identified: • percent fees charged; • property valuation; • local area: specialism/visibility; • personal recommendation.

Professionals Estate Agents 'Got a friend who actually worked in an estate agent … and we knew him and he’d done us a deal with the fees.' (Belfast) 'I said that a competitor [estate agent] within the area gave me a certain percent [commission rate] (…). It wasn’t significantly less, but it was less, and they said they’d have a think about it and they phoned me back within about two hours and they said ‘yeah, we’ll do it with that’. Whether they checked, I don’t know but at the end of the day as the gentleman said, it’s still business for them if they sell it, you know, whether it’s one percent, 1.5 percent, it’s better than losing it to a competitor.' (Cardiff) Choosing Estate Agents

Professionals Estate Agents 'You need to get a good estate agents (…) if you want to sell. We invited five round to do a valuation of our flat. There was huge variation on the valuations (…). I know certain estate agents have a reputation for being a bit cut-throat—getting you on at a cheap price so they can get the sale through quickly and turn over the property (…). Eventually we worked with an agent who was willing to work with a slightly higher valuation and maybe wait a bit longer [for the sale].' (London) 'I think [you’d choose] one that’s maybe been going for a long time (…) a well known company.' (Belfast) Choosing Estate Agents

Professionals Estate Agents 'Even though we didn’t use an estate agent (…) for the house we bought, our buyers were renting through the same estate agent and because of that it was so transparent and they just kept us informed right the way along the line. They were brilliant.' (Cardiff) 'It always seems to start off well […] fella will come in and take the photos, it’s up on the Internet, in the brochure, the for sale signs are put up dead quick and then you hear nothing.' (Belfast) Communication 'Estate agents are good if you let them know what area you are interested in and I find if you say to them, ‘look can you let me know’ and one particular estate agent ended up texting me every so often to say such and such house has come on the market. That was good.' (Belfast)

Professionals Estate Agents 'There is no transparency at all. You have no idea – they could tell you they are receiving bids, but you don’t know.' (Belfast) 'Sometimes you don’t know whose side they are on.' (Stockport) 'They lie. They were saying that it was chain free and give you one set of information but […] it is as if they weren’t even there. They weren’t getting us both together to try and move things on or anything like that basically.' (Cardiff) Trust 'When you first put your house on the market and all of a sudden you have got all these viewers I am sure they are family friends of theirs [the estate agent] so they can say there is loads of people going to come and view your house and they all look alike.' (Stockport)

Alternatives  Private transactions Selling with an estate agent viewed as the norm: • general view that selling without an estate agent would be complicated and stressful; • consumers see private transactions as an unnecessary risk given the emotional and financial importance to them of their home buy/selling. However, consumers who were dissatisfied with the service they received from their estate agents said they would consider alternative approaches to buying/selling. Some examples of private transactions: • buying direct from family/friend (Wales, NI and England); • a potential buyer tracked down the owner of an empty rental property and offered to buy direct (Wales); • ‘ambulance chasing’ or offering to buy a property from relatives of deceased was cited as common practice in rural areas (Scotland); • one respondent had negotiated several of her own sales/purchases over the years directly with buyer/seller (Scotland); • one purchaser negotiated directly with the builder/developer in order tocut out the estate agent who was seen to be unhelpful (NI).

Alternatives  Private transactions 'We bought from a family friend so yes it was really straightforward (…). We knew them and just dealt with them. It was really straightforward. I mean in fairness to him he waited for ten months for us.' (Cardiff) 'I think that it [private transactions] is not really what is classed as the norm is it? Because everybody really is so used to dealing with estate agents and going through that way. It is so different isn’t it?' (Stockport) 'My dad found out about a house going to be sold and we did that, he negotiated with the seller and it was never on the market and you do hear of that.' (Aberdeen) [buying a new-build direct from developer] 'I didn’t even realise that you could negotiate with them. I just accepted the price they were selling at.' (London)

Professionals Solicitors/Conveyancers in buying process Think about finance & obtain mortgage Solicitor Look for property/ find property in principle Apply for mortgage on basis of specific property Finalise mortgage Solicitor/SPC Scotland Solicitor/SPC Scotland Solicitor/SPC Scotland Make offer

Presented by: GfK NOP Social Research Your contact person: Alison Palmer Deputy Manging Director (Qualitative) Pho