AGENTS WARN THAT FEES MUST RISE AS SALES FALL

"This is no laughing matter when commission levels have plummeted to frightening lows, due to lower transaction volumes. Agents too, can lose their homes," Addinall says.

He believes standard fees should rise to 3% for multi-agency instructions, with discounts allowed for a sole agency agreement.

That would mean many bills almost doubling from current levels - and with estate agents never near the top of national popularity leagues, it is easy to imagine many homeowners refusing to pay them.

However Trevor Kent, former president of the National Association of Estate Agents (NAEA) with a one-branch business in Gerrards Cross, Bucks, says: "If clients want their homes advertised in local papers and online with firms like Rightmove, it is only fair they should start paying for this privilege.

"I wouldn't be surprised if agents soon suggested a registration fee - possibly £200 - simply to put a property on the market."

Kent thinks that vendors who have been widely enjoying 1% sole agency deals should pay a minimum 1.5%.

He says more vendors should accept joint sole agency agreements to ensure at least two agents handle a sale at any one time - with an 'override' clause ensuring 60% of the fee goes to the agent who actually finds a buyer.

"Although many people think fees are lower in the north, this is partly because agents in the north are smarter at billing for extras, like putting up sale boards, and running advertising campaigns."

Kent says that in the current market, vendors might also be ill-advised to sign up with one agent, or joint sole agents, for longer than eight weeks at a time.

However, Henry Pryor at Primemove, which brings together more than a million homes for sale on the major property portals, says his estate agency career included two earlier recessions - and convinced him that anyone lifting their fees will end up in even deeper trouble.

"Whenever the market hardens, there is always a call for higher fees," he says.

"In fact, competition on fees remains as keen as ever, particularly when there is a chance of a quick sale, and I heard in recent weeks of major national firms ready to go in at 0.5% on central London homes which they think will sell quickly.

"This time, online agents represent a further argument for keeping fees low, and there is talk of ASDA coming back to the market with fees to undercut most agents."

Pryor says most agents would like to get 1.5%-plus for sole agency, around 2.5% for joint sole agency, and 3% for multi-agency instructions.

"But it is common knowledge that major firms are frequently ready to do business at well below 1%," he says.

Pryor urges vendors to beware of driving down agents to the lowest possible fee.

"Any agent able to secure a sale fast in this market fully deserves the extra 0.25% on their commission," he says.

"The important thing for vendors is not to screw down the fee, but to make sure an agent is active on your behalf and has a strong motivation for completing a good deal."

According to City analysts at Merrill Lynch, around 1,300 estate agents have already shut up shop this year, with a further 2,200 likely to follow by Christmas. Another 1,500 agency branches could go in 2009 as market conditions worsen.

With agents closing at the rate of 150 offices per week, Merrill Lynch reckons a third of all the estate agency branches in the UK could be lost in this recession, accounting for around 20,000 staff.

:: Many agents are convinced house price falls will be all over within a year - and homeowners are even more optimistic that today's financial fiascos will soon be behind us, says a new survey from Abbey.

The Spanish-owned lender says 61% of estate agents think house price falls will have ended within a year. Homeowners believe house price falls will last for just seven months.

Most homeowners intend to sit out present problems - some 79% say they will wait for any further house price falls before they make a decision on moving.

Just 7% of homeowners think the next year offers a good opportunity to snap up their next home at a bargain price.

:: BUILDERS FEAR SHARP DECLINE IN 2008 PROSPECTS

Demand for new homes has dropped sharply, with demand from the two most important groups of buyers - first-time buyers and buy-to-let investors - falling even faster than the mainstream market.

That's the warning from the latest Housing Market Report (HMR) compiled by The HomeBuilders Federation (HBF) which admits too many new homes are probably standing empty because they have been built in the wrong places.

"There is widespread concern within the industry and beyond that the shift to apartments has been overdone in many markets," the report says.

"It seems improbable that average densities will rise much further, and a decline over the next few years must be a strong possibility."

Because the HBF has been keen to work with Government in recent years, it is far too diplomatic to point out that the oversupply of urban flats is partly the result of Government planning policies.

But the mistake of building too many new homes in the wrong places is already causing thousands of job losses.

Persimmon, one of Britain's biggest builders, is the latest major builder to confirm more than 1,000 job losses, following similar news from Barratt Developments and Taylor Wimpey.

The danger is that recession in the housing market will spread to the rest of the economy and cause thousands more workers to be laid off.

The HMR says that more than 75% of builders reported lower net prices during May, against only 5% reporting a rise.

Builders also drastically increased their use of sales incentives during May - while fearing that things are likely to get worse in the short term. Sales incentives enable builders to provide discounts without reducing their asking prices too drastically.

Says the HMR: "With a balance of minus 77% of builders reporting fewer site visitors than in May 2007, this is the worst result since the HBF survey started in April 1992.

"Only 5% of companies said visitors were up on a year ago, compared with 82% reporting a decline. Visitor levels have now been declining, year on year, for the past 17 months, while net reservations have been falling for up to 13 months."

The HBF report also confirms a record balance of -73% of builders reporting lower prices during May, down from a balance of minus 63% in April.

:: AUCTION SALES REVEAL SHARP RISE IN REPOSSESSIONS

It looks as though many buy-to-let investors could be facing losses on nearly new properties running into tens of thousands of pounds in auction sales scheduled during July.

The July 16 sale in London's New Connaught Rooms to be held by Andrews & Robertson and Willmotts contains so many nearly new flats collected up from around the country that there must be a real risk of values falling further as bidders wait for bargains to fall into their laps.

The previous sale by the same agents in early June achieved a 58% success rate.

One repossession in the catalogue, a studio flat on the outskirts of Nottingham, has a guide of just £30,000-plus. A two-bedroom terraced house in Kirkby in Ashfield, Nottinghamshire, is guided at £55,000-plus.

A well-maintained two-bedroom house in neat gardens in Mapperley, Nottingham, has an £82,000-plus guide. It must have been quite heartbreaking for the owners to lose it.

However, the auction brochure is dominated by repossessed flats, mostly only a few years old.

A one-bedroom pad at Highcroft Hall, Birmingham, converted from a former hospital, is guided at £115,000-plus, while a two-bedroom open-plan flat in Beauchamp House, in Coventry's Greyfriars Road, has a guide of £98,000-plus.

Colchester is another bloodbath for investors: in Connaught Close, off Hythe Hill, the guide price appears to be around £90,000.

There are several flats on offer in one new development in Aylesbury, Buckinghamshire: the going rate for two-bedroom homes there is around £120,000.

Small companies are evidently feeling the pain too; the Andrews & Robertson sale includes plenty of boarded-up business premises in London suburbs.

Another indication of a housing market in trouble is half-built blocks of flats for sale: bids of £950,000-plus are sought for a block of seven flats in Morden, Surrey, at the Auction House Goodfellows sale at Croydon Aerodrome Hotel on July 16.

Meanwhile, for those who relish holidays in Cornwall as far away from crowds as possible, the next two-day WestCountry Property Auction sale (Redruth July 23 and Plymouth July 24) offers the ultimate bolthole: a former Second World War bunker near Sennen, converted into three/four-bedroom accommodation at the end of its own private drive, and enjoying spectacular Atlantic Ocean views over Lands End, Sennen Cove and St Buryan.

Buried under a huge mound of earth, The Bunker has a guide of £300,000- 500,000. That's steep, but think of the money saved on external maintenance.

There is also likely to be strong interest in an attractive two-bedroom country cottage just outside St Austell, with a third of an acre plot. The guide is only £100,000-plus because the property is currently occupied by a tenant on a regulated tenancy paying just over £3,000 a year.

Bidders here need both cash and patience in abundance because they may have to wait years for full vacant possessions.

The developer who gained planning permission to knock down a building on the front at Newquay in Cornwall, and to replace it with 14 apartments on three floors, plus an underground car park, has also decided that discretion is the better part of valour: bidders are invited at £595,000-plus from anybody bold enough to take the scheme forward in uncertain times.

INFORMATION: WestCountry Property Auctions on July 23/24(0870 2414 343); Andrews & Robertson/Willmotts on July 16 (0207 703 4401); Auction House/ Goodfellows on July 16 (08451 303 055).

Countrywide Property Auctions in July/ August (0906 666 2468). Calls charged at £1.50 per minute.