Estate agent fees

property.advert

G_M wrote: »

You're showing a punter round a 1 bed flat. Takes 2 minutes. Showing a city banker fat-cat round a 6 bed mansion with underground gym, swimming pool and extensive grounds takes al afternoon.

Whilst I will agree to that extreme point, showing two 2 bedroom flats, one priced at £200k and another at £1m does not really require any different skill or talent or indeed time. Yet on a 2% commission, the former would generate £4,000 and the latter £20,000.

There is certainly no rationale for a fivefold commission.

G_M

property.advert wrote: »

Whilst I will agree to that extreme point, showing two 2 bedroom flats, one priced at £200k and another at £1m does not really require any different skill or talent or indeed time. Yet on a 2% commission, the former would generate £4,000 and the latter £20,000.

There is certainly no rationale for a fivefold commission.

There are several rationales:

* the buyer of the £1m flat is almost certain to have more available income/savings - a prospective buyer's ability to afford a product or service always has an impact on price
* other agents use a similar pricing strategy - lack of opportunity to 'shop around' or negotiate on price has an impact on price
* the (more) limited profit margin on the £200K flat is cross-subsidised by the greater profit margin on the £1m flat
* agents that specialise at the higher end of the market have much lower turn-over of properties, hence charge higher fees.

googler

property.advert wrote: »

Whilst I will agree to that extreme point, showing two 2 bedroom flats, one priced at £200k and another at £1m does not really require any different skill or talent or indeed time. Yet on a 2% commission, the former would generate £4,000 and the latter £20,000.

There is certainly no rationale for a fivefold commission.

Who's making extreme points here? Is there any rationale for quoting figures based on 2% commission, or on £1 million prices for 2-bedroom flats, other than in London? Are you really suggesting that conducting viewings is the only activity an EA does?

According to the OFT a year or so ago, the average EA commission in E&W is 1.4%, in Scotland 1.1%.

Realistically, 2-bed flats in Scotland come in at broadly £110,000 to £160,000 pre-owned. There's some prestige new-builds and posh areas that would exceed this, but in the main.....

£110k at 1.1% = £1210
£160k at 1.1% = £1760

googler

hotpot1000 wrote: »

It is evident EA's are greedy, they charge more to sell a more expensive house than a cheaper house, how can they honestly say that there is more work to justify bigger charges?

What do you suggest, then?

If you suggest a flat fee for everyone, what should it be? Don't you think that flat fee will benefit those with higher-priced houses, and penalise those with cheaper houses?

Take the example from earlier - two 2 bedroom flats, one priced at £200k and another at £1m, on the OFT average rate of 1.4% - that generates income of £16,800. On the assumption that covers expenses etc and generates some income for the agency, what would be the flat fee to generate the same income? £8,400 each. Would the owner of the £200k house be happy to pay £8,400 instead of £2,800?

GentleGiant_2

The problem is that most estate agents are very poor.

I have been trying to buy land and agents simply fail to follow up enquiries - they are useless.

Looking to put my house on the market - one agent (Spicer Mccoll) wanted sole selling rights (a big no-no) another could not be bothered when I walked into their office - thought I had walked into a coffee morning!

They all charge a lot, yet do not deliver the goods.

Hoof_Hearted

googler wrote: »

What do you suggest, then?
Take the example from earlier - two 2 bedroom flats, one priced at £200k and another at £1m, on the OFT average rate of 1.4% - that generates income of £16,800. On the assumption that covers expenses etc and generates some income for the agency, what would be the flat fee to generate the same income? £8,400 each. Would the owner of the £200k house be happy to pay £8,400 instead of £2,800?

Well most of us living in the real world would think that £2,800 is more than enough for selling any 2-bedroom flat, regardless of price.

Online, it would only cost £400.

Hoof_Hearted

GentleGiant wrote: »

The problem is that most estate agents are very poor.

I have been trying to buy land and agents simply fail to follow up enquiries - they are useless.

Looking to put my house on the market - one agent (Spicer Mccoll) wanted sole selling rights (a big no-no) another could not be bothered when I walked into their office - thought I had walked into a coffee morning!

They all charge a lot, yet do not deliver the goods.

Many agents are just not honestly working in their clients interests in so many cases. They undervalue property for a quick hit on the commission or overvalue to get the instruction and then get the client to lower the price. They quote ridiculous commission rates (which are always negotiable) and have contract terms which can be unreasonable (e.g. sole-selling rights). They get fees for recommending solicitors etc. which then makes it more expensive for their clients.

The desperation is obvious in some chains where targets have to be met. Basically, I just don't like them (except flat-fee online ones).

googler

Hoof_Hearted wrote: »

Many agents are just not honestly working in their clients interests in so many cases. They undervalue property for a quick hit on the commission or overvalue to get the instruction and then get the client to lower the price.

As opposed to what? Are you saying an online agent is better at determining asking and selling prices?

Hoof_Hearted wrote: »

They get fees for recommending solicitors etc. which then makes it more expensive for their clients.

..and Housenetwork customers get referral fees for distributing discount codes to new clients, often by posting them in these forums. Where's the difference?

Hoof_Hearted wrote: »

The desperation is obvious in some chains where targets have to be met. Basically, I just don't like them (except flat-fee online ones).

Desperation is also apparent in over-inflated price comparisons used by some online agents - "If you'd used a high-street agent at 2.50% commission, it would cost you £X more" ..... when the E&W average EA commission is 1.40%, or 1.10% in Scotland

googler

Hoof_Hearted wrote: »

Well most of us living in the real world would think that £2,800 is more than enough for selling any 2-bedroom flat, regardless of price.

Online, it would only cost £400.

See #17 for my 'real-world' estimates. I was merely extending the previous poster's example, not suggesting £2800 as a flat rate

Yes, of course it costs less to operate an admin office on a commercial or business park than a high-street office.

Yes, of course it costs less when an online agent doesn't interact with viewers or buyers, doesn't do viewings, leaves the client to put up their own sale board, etc etc

Generally speaking, the public expects a local agent to provide free valuations, free advice, and to spend time with viewers and buyers who don't buy. They also expect not to pay until successful conclusion.

Does your online agent go out to people's homes in the hope of getting their business, or do they only go there once the owner has committed to pay them?

Hoof_Hearted

Do high street agents do more -- yes.

Does that "more" justify charging 10 to 20 times more -- no.