Insolvency Practitioners And Estate Agents Aren’t All Bad
Everyone knows someone who has a bad word to say about these two professional groups. I have experience of both, having been an estate agent and as a marketing manager at an insolvency practice.
First, let’s get one fact straight. In every walk of life or profession you will always come across some bad apples. Are there any more bad apples across the insolvency or estate agency sectors than any other industry? I doubt it very much.
So why is there such a bad perception of both? Let’s take a look at estate agents…
Estate agents are working for the seller
The most obvious reason why is the fact you may deal with lots of estate agents when buying a house but they aren’t actually working for you. They are working for the seller (and getting paid by the seller) and so always put their best interests first. That means they are trying to extract the highest possible price out of you! Unfortunately, they are likely to annoy you, mess you around and find favour with another buyer, allow gazumping and be prone to not answer your calls. I have also bought and sold a lot of houses over the years and as a seller I have had no complaints. However, as a buyer they have really annoyed me.
There is certainly an argument that they do make some pretty exaggerated claims and maybe tell white lies. For example, they may describe a house as “in need of updating” when it is actually a complete wreck, a trick used to get your interest. Everyone is going to look at the house at least twice before buying so you can’t claim you were duped.
Some situations are out of their control
It’s important to remember that there are also a lot of things outside of estate agents’ control. This is mainly the solicitors as gathering all the information takes time. Again, the solicitor is working for the seller and does not have to inform the estate agent what is happening.
Buying and selling property often brings out the worst in people. When you buy and sell a house you are generally talking about large sums of money and most likely the biggest sum of money you have ever had to deal with. This leads to stress and let’s face it greed. The estate agent is always caught in the middle of the transaction and so ends up having to develop a pretty thick skin.
Selling a house can be seen as ‘kid’s play’
Some people think estate agents don’t deserve the money they make. Well, it may appear easy to sell a house but I bet if you did it yourself, you would not be able to get as high a price than an experienced commission-led sales person would.
Estate agents are also not regulated in the same way as other professions as there is more focus on sales than professional advice. However, they are bound by the Estate Agents Act and the Property Misdescriptions Act which both protect the buyer and seller from “sharp” practice.
So you see, it can sometimes boil down to an estate agent working hard for the seller in a situation where things are out of their control but nonetheless they have to act as the middle man in stressful circumstances.
Now, we look at the insolvency Practitioner profession…
Insolvency practitioners work for those who are owed money
The majority of complaints come from directors who feel their company has been charged too high fees by IPs. Similar to estate agents, it should be remembered that insolvency practitioners are not acting for the company but for the company’s creditors. It’s their job to collect as much money in as possible.
Insolvency practitioners are heavily regulated by the insolvency practitioners association (IPA) and are actually personally liable for the money recovered. They also need to be qualified accountants with investigative skills as well as be good negotiators. Insolvency is covered by complex legal rules that have to be followed so they tend to get paid well for understanding how to apply these rules, like a lawyer would.
Insolvency Practitioners have huge responsibilities
IPs are put into companies that are in deep trouble and have to act quickly to sort out what is usually a serious financial mess. When a company fails, it is very rarely due to an unexpected incident but an issue that has been ongoing. As a business starts to struggle, it digs itself into a bigger hole, borrowing money all over the place, not paying creditors and losing focus. The most common cause of failure (90%+) is inadequate financial controls. In tougher times, these good financial controls become ever more important.
Insolvency practitioners are also caught in the middle of what is a stressful time for everyone concerned and it is easy for people to act in hindsight after the event.
This is particularly true in the sale of a distressed business, commonly referred to as a Pre Pack Administration. When a business is sold, the parties have a very short period to make a deal. Any delay will result in sudden loss of value so it is not surprising that these businesses are often sold at what is perceived as a knock down price. Remember that insolvency practitioners are always looking for the best result for all parties. Of course, not everyone will get what they want and when people are out of pocket, they are upset and look for someone to blame.
Like estate agents, losing large sums of money can also bring out the worst in people and creditors and directors can make rash decisions.
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