Estate Agent fees
I have an issue with estate agent fees. I just don’t think that all the minutes spent marketing, taking viewings and administrating post-offer when added up, should result in a fee anything like what is usually charged.
We’ll use London as an example. Estate agent fees average 1.8% (as confirmed by the OFT), and a little research says the average house sale is £393,000. That means the average house seller pays a fee of £8488.80 to the agent selling their property.
By contrast, I had a qualified Electrician working in my home recently and I paid him by comparison a ‘paltry’ fee of £140 per day. Generally he started at 8 and left by 5 and ate his lunch whilst on the job.
I’m not sure how you quantify how many hours are actually spent on each property as an average, and I’m not sure anyone would actually know without timing it with a stop-watch. I’m sure agents would tell you its weeks when logic says it just wouldn’t be. Let’s remember that agents usually have lots of stock in their portfolio so their time is spent being shared between it.
Estate agents fees – What are you actually paying for?
Are you paying for experts to value your house?
Well most agents are not members of RICS, so really they are giving an educated guess as to the value of your home. This is vindicated by the void between asking prices and selling prices, which reputedly is as high as 24% nationally. Now of course in some cases this is likely to be sellers having unrealistic opinions of their property value, but in more cynical cases it’s likely to be an ‘attempt’ from the agent to win the instruction.
Are you paying for top quality marketing?
Better agents, yes in some cases. But if you look at some of the images posted on Rightmove you really would think the agent had never used a Camera before. Either that or utter bewilderment as to why there was an odd attraction to compose a shot of the corner dresser in the lounge!
Are you paying for an expert sales person?
When I viewed a house a few years back through a reputable local London agent I had a running commentary. “This is the Kitchen”. “This is the lounge”. “This is the…” Look, please be quiet if that’s OK, I have eyes and they work fine.
I don’t like to be sold too. I like to look and see for myself, and have a discussion with my wife. Then if I want to I might ask the agent something trivial just to catch them out, like where the nearest Primary School is?
Now I’m not suggesting the better agents are really as bad as this, but I’d say as a stereotype it’s pretty close to your average agent and average agents are everywhere (and some are really big brands, so don’t be fooled). The Secret Shopper programme only vindicated that many agents’ sales skills range from borderline annoying to plain lying in a vain attempt to prompt an offer or create some competition. It’s kind of insulting to the general public really.
Nobody knows the property quite like the owner. In fact when I decided I was going to sell my residence a few years back the local agent (who was charging 1.75% if I recall) asked if it was OK to book a few viewings for me to do because they were ‘double booked’. I was OK with this because their first viewing was simply awful. They didn’t mention the loft was boarded with easy access and useful as a study, they didn’t mention any of the under-stairs storage or the fact the property had recently been re-wired, that it had a new(ish) roof or had double-glazed sash windows fitted recently. In fact they pretty much said nothing, so might as well had not been there. Funnily I also remember saying,” if I do my own viewings will you half your fee?”. It didn’t go down too well!
Are they expert negotiators?
I’d agree the better ones are probably pretty useful at it. But at the other end of the scale, some really do simply want to bag a deal. Another personal experience a year ago was a local (and reputable chain) agent telling me that I should accept their buyers offer “as it’s a good one and I don’t want to scare them off”, though I’d clearly asked for the agent to try and get £3k more (the property was a refurbishment project and was being sold at a fair price which was lower than very similar stock that was well lived in). Needless to say I changed agents and ended up with an offer £2.5k more (not what I wanted but better all the same).
Is it to pay for their high street office and staff numbers?
Something like 6% of buyers actually visit agent offices to find property since the internet boomed for advertising property. Almost everybody looks online nowadays, so the only reason for the huge office is advertising. Advertising, so the agent can secure more properties to sell and charge even more fees of £8488. The office itself is simply a place to house staff. It doesn’t really serve much of a purpose anymore. Most who browse their windows are simply that, browsers. Agents could do exactly the same job from much less expensive offices (perhaps business focused work units) and then charge lower fees to their clients. In fact many agents are now doing this.
It also begs the question, if most people are using the internet to find property (and the very same websites too) surely most agents have the same or very similar lists of registered buyers?
Is it the post-sale service that you just couldn’t so without?
This appears to be one of the areas that agents regularly say is their strength, holding property deals together. Now I’m sure some agents work very hard to do this part of the job, after all their income is often commission based. However some agents employ part time staff to administrate, some agents even have their individual sales members do this. Some agents don’t even offer this service at all. From experience I’ve always felt that if you strike the right relationship with your Solicitor (and this is why using a good one is important), the agent’s role is not so critical. Sure every case is different, and I’m sure that many agents can recall times where their intervention saved a deal from collapse, but if you are buying a property, then you really ought to make it your priority to know what is going on and ask your Solicitor for regular updates.
I’m really not trying to suggest in any way that the very best agents are not worthy of their fees. They probably are. It’s just from experience you will find that most agents aren’t the better agents and there are lots of very average agents commanding a fee that simply isn’t commensurate with the service being offered.
Check your agent’s service before you make a decision. Is the marketing up to scratch (and not taken with the sort of freebie camera you get at a wedding)?
Is their valuation realistic? If it sounds too high, then do some research because it’s easy to do and information is readily available on websites like Rightmove. If nothing else very similar to your property and very close to your property has sold for the valuation amount offered, then ask the agent to explain how they intend to secure a buyer.
Most of all shop around. If you market your property really well, and advertise it at the ‘correct’ price, it will get attention on the web portals. Whether is posh & sons selling it or the new little online agent with low fees selling it, you’ll most likely find your buyer if the basics are done correctly. Cheap often is cheerful so I’m not suggesting any old agent or service can offer the expertise you really desire, but good value that’s another story and from what I can see there are some accredited online agents out there offering astonishing value for money.