Payment Upfront/No commission Estate Agents

googler

JimmyTheWig wrote: »

Any idiot could sell a house worth £300k for £200k, with no effort. So why would an agent get 1.5% of £200k for doing that?

Because the lower figure, the selling price, is the maximum that any buyer is willing to pay (although more realistically the house could be marketed at £300k and sell at, say, £280k - your example's a bit extreme, surely?), and because the seller agreed to pay the agent the said percentage under the terms of their contract?

note_2

as said before, a house sold slightly below what its worth sells itself, my grandparent bought a flat one week after it went on the market. we knew what sort of place she needed and she decided to buy it.

so the agent in this case gets 1.75% of sale price for absolutely no work whatsoever. they hadnt even got round to taking pictures of the flat!

googler

note wrote: »

as said before, a house sold slightly below what its worth sells itself, my grandparent bought a flat one week after it went on the market. we knew what sort of place she needed and she decided to buy it.

so the agent in this case gets 1.75% of sale price for absolutely no work whatsoever. they hadnt even got round to taking pictures of the flat!

So, are you suggesting the EA shouldn't have been paid at all?

Also, you're a relative of the buyer - how do you know what the seller agreed to pay their agent?

JimmyTheWig

JimmyTheWig wrote: »

So for a house worth £300k they should instead get, for example, 9% of the selling price above £250k.
So if it sold for £300k they'd get 9% of £50k (£300k-£250k) which is £4.5k. Which is the same as 1.5% of £300k.

googler wrote: »

What about houses which sell below £250k ...???

Tell us how you would determine fees at selling prices of

£50,000
£100,000
£150,000
etc in £50,000 increments, up to £250k, and whether or not you think the 9% rule should apply to all sales over £250k.

Why 9%? Why not 10%?

I got to 9% from a back-of-an-envelope calculation to ensure that the agent's commission was equal in both scenarios if the house sells for what it is worth.
For houses not worth £300k, the rules would be different.

Extrapolating, then, I'm saying they should get 9% above 5/6 of the value of the property.
So for a flat valued at £50,000 I think they should get 9% of anything it sells for over £41,667.

I'm not too fussed about whether people agree with the figures or not. And it's probably too complicated a method for most people to be happy with. I just think that the agents need more incentive to sell properties for higher prices, rather than badger the owners into selling at whatever price.

googler

JimmyTheWig wrote: »

Extrapolating, then, I'm saying they should get 9% above 5/6 of the value of the property.
So for a flat valued at £50,000 I think they should get 9% of anything it sells for over £41,667.

So, in this falling market, you're suggesting that if a house marketed at £50,000 sells at less than £41,667, the agent goes unpaid?

Dave_Ham

In isolation, the idea makes sense although I acknowledge the quickly hashed numbers.

The issue is that the process of house buying/selling is flawed and unregulated and a change in their commission structure may make it commercially better for the seller.

The issue being that most sellers are in turn buyers and therefore all that happens is that house prices increase and Estate Agents get richer - and probably resort to even worse tactics than they currently do.

I could spend months of my life trying to come up with an alternative system and the only one that works is a truly independent from Estate Agents website, that is equally popular with buyers and sellers. Many have tried this unsuccessfully like Sarah Beaney's attempt to link up sellers directly.

Rightmove has way too much power and therefore my opinion is currently that get onto Rightmove in the cheapest fashion and manage the process from viewings and bids yourself...

Just my thoughts in any case - back to work

googler

Dave_Ham wrote: »

The issue is that the process of house buying/selling is flawed and unregulated and a change in their commission structure may make it commercially better for the seller.

I could spend months of my life trying to come up with an alternative system and the only one that works is a truly independent from Estate Agents website

So your proposal for a 'change in commission structure' is the creation of a new website? How are those two things even remotely connected....?

Richard_Webster

As a conveyancing solicitor I was approached by one of these "on-line" estate agencies asking me if I wanted advertise on the pages showing properties in my area. They had quite a good number of genuinely local properties being advertised and I was fascinated. So I asked them how long they had been in business. "8 years...." "Funny", I said, "I've never had a single conveyancing job in all that time involving your agency...."

It was fairly obvious to me that they took the money and the sellers found they didn't get any take up so went off to traditional estate agents to sell the properties.

The pricing of some properties was also somewhat eccentric. No local knowledge and it was evident that some sellers were using sites like Zoopla in an unintelligent way. So a 1970s/80s 3 bed terrace with a loft conversion making it 4 bed was being advertised at a 4 bed detached price, when it was probably only worth at most 2/3rds of that amount.

Dave_Ham

googler wrote: »

So your proposal for a 'change in commission structure' is the creation of a new website? How are those two things even remotely connected....?

Not sure on the agressive way to ask a question, no idea is a bad idea and all that.

I will try to explain better than I did previously; My view would be that Estate Agents are essential, based upon the need to be on Rightmove for demand purposes. If therefore, buyers looked elsewhere to find a property (new independent website) then yes the Estate Agents would lose power.

Personally, I would be happy to sell my own property and with a good solicitor there is nothing that an Estate Agent can do that I cannot. Granted, this would not be for everyone, but I bet for one there are many on here that would be able to save money, given a bit of reading, knowledge and confidence.

Given the industry I am in, the Estate Agents genuinely create more problems that they solve by and large. I acknowledge there are exceptions.

So a new website would not solve the flawed process, but I would like to think that it would shift the balance of power and would like to think that buyers and sellers dealing directly, would minimise people being silly throughout the process.

axomoxia

If the agent can get a 2.5% better price than I could on my own (don't forget I am buying their negotiating skills as well as marketing skills) then they are worth their 2% commission.