Estate Agency Fees - What are they for?

WhoDaresWins_2

Please forgive the newbie question, but what exactly does the estate agent do to justify a 1% fee?

The quote I got at the weekend was broken down into advertising, home buyers report, conveyancing etc (which are all self explanatory) but what exactly do the estate agency fees cover?

Thanks,

ILW

Purchasing and running Mini Coopers.

AlwaysWorking

It's like any business that you buy a service from - the fee also has to cover wage costs, rent on the office, insurance etc etc.

I know everyone loves having a go at estate agents though.....:rolleyes:

Jowo_2

Simple - the time and effort they spend for the vendor selling their property by introducing them to prospective buyers and to earn profit for the company.

Is 1% spent better than a 100% unsold house?

Personally, though I think estate agents are poor value for money, I'd rather have a barrier between me and the buyers.

princessamy86

Advertising costs are quite high, rightmove costs a fortune so they need to cover this somehow. You're paying for their time and effort in selling as jowo says. A 1% fee is actually very low, when you factor in all the time, effort, advertising, phonecalls, accompanied viewings (if you're having them), For Sale board etc. Lots of agents charge more than 1%.

WhoDaresWins_2

princessamy86 wrote: »

Advertising costs are quite high, rightmove costs a fortune so they need to cover this somehow.

But that's the thing, I'm paying for advertising on top of the EA fees!

princessamy86 wrote: »

You're paying for their time and effort in selling as jowo says. A 1% fee is actually very low, when you factor in all the time, effort, advertising, phonecalls, accompanied viewings (if you're having them), For Sale board etc. Lots of agents charge more than 1%.

As I said, I'm paying for advertising seperately, there's no accompanied viewings, the For Sale board is included within the Advertising budget.

As I see it, they're taking phone calls and arranging appointments and 1% for that is a bit much

One of the PAs in work could do that for a quarter of the price, lol!


I think the total cost for everything is around 2.6% of the sale price - is that reasonable to you guys?

princessamy86

NO!!!!! Sorry hadn't realised you were paying for advertising on top, 2.6% sounds like a total rip off to me. Is it 2.6% for just the advertising and agency fee or does it include your conveyancing? As an example, the company I work for charges 1.5%, then you need to pay for your HIP and conveyancing on top. All the advertising is included in the price. A good EA will justify their fee by getting you a good price for the house and making the right buyers aware of it, then handling the sale well as it progresses. A bad one could make the whole process horrendous for you, and I think bad agents are in no way worth any kind of fee, that's just my opinion though!

Jowo_2

WhoDaresWins wrote: »

As I see it, they're taking phone calls and arranging appointments and 1% for that is a bit much

A more optimistic interpretation is that they have a potential pool of buyers already registered on their books and you are paying a small sum to engineer the type of successful introduction that you are unlikely to attain if you choose to market the property yourself since the majority of buyers go through agency route.

The agent operates as a gatekeeper so you don't have to spend your time dealing with the time-wasters, the deluded, the merely browsing and the down right curious which is more likely to happen to those selling their own properties directly to the public.

PasturesNew

My agent got £4000 when I sold. For that they advertised it in the local papers, I even featured as Property of the Week once; they are there to answer the phones and make appointments; they have an office with a main street frontage that displays my house details; they accompanied viewings (although I did do some) - probably took them 25-35 hours of staff time just to leave the office/do the viewing/get back; they put the property on Rightmove -which is pricey.

It looks like money for old rope, but you don't have to use an EA... do it yourself and see.

googler

Let's assume your agent has a high-street office in your home town. Buyers and sellers will visit this office, your property will be displayed in the window, and there'll be staff or agents inside to take enquiries from the public, and a means of recording those enquiries. You say one of the PAs at your work could take calls, but - the PAs at your work don't have a high-street estate agency office, I'd wager.

The 1% has to cover a proportion of the rental or purchase cost of the office, business rates, telephone and internet bills, heating, lighting, utilities, furnishing (and renewal of same at intervals), cleaning, maintenance, etc. Even the window cleaner who comes by every Thursday has to be paid for out of the various one percents.

Let's assume the agent gets a professional printer to do the window cards and schedules; they probably get a volume discount from the printer that you wouldn't get for a one-off job for just your schedules, so your 1% effectively pays for 'access' to the volume discount.

A preferential rate probably applies to any newspaper advertising the agent does, so even though you're being billed separately for the advert itself, your 1% gets you the benefit of the discounted rate.

Assume your agent has their own website, and subscribes to a portal or two. All the costs here have to be met out of the 1.00% too.

Getting down to the individual agents' activities - the first stage is the valuation - factor in travel, preparation and time for ALL the valuations the agent does. The 1% for the business they DO get has to cover all these costs in the business they DON'T get.

Once you've agreed to go with a particular agent, they need to measure up your house, photograph it, get the details to the printer for the schedules, and to the websites and portals. Figure out how long that takes, figure out what you currently get paid per hour, and work out a cost for these acitivities, and allow for that in the 1%

If your agent is doing the viewings for you, add in travel, petrol, time, etc for getting to and from your house

Someone once said - "Sometimes when you pay an estate agency fee, you're paying for access to the person the agent spoke to yesterday"
On the assumption that the agent has spoken recently to someone who's looking for your house, or something very like it, how much would you pay for immediate, instant access to that person? Figure out a sum, and include that in the 1%.

As other posters said, your agent, if doing the job right, should have a pool of buyers who've expressed interest in certain style, price of property and should be able to dip into that pool when your house is available. Can you put a price on how much work goes into keeping these people on tap?

They also act as a 'filter' between you and the great general public. Allocate some time to this, apply your hourly rate to it and allow for it in the 1.00%

They liaise with buyers and their agents and their solicitors on your behalf. Allocate some time to this, apply your hourly rate to it and allow for it in the 1.00%

I could go on, but once you've put a figure on all of the above - would you be happy with what's left from 1.00% as your salary?

googler

OP -what's the market price of your house?