5K estate agent fee for BUYER on 220K house

Dan-Dan

I agree with Googler , how does a red hot market correlate to the buyer paying the fee , surely it would work just as well , in such a market , for estate agents to hike their fee`s to the sellers ?

Running_Horse

One probate property has been sold this way round here; it was a large rambling doer-upper with huge potential. The EA immediately leafleted the whole area saying what a great way to do business it is, but no other sellers have used it because the market is good but not that hot.

This will only take hold if we as customers allow the EAs to impose it on us. It is going to be up to consumers to collectively hold out against it until such a time as the market cools again, and it will quietly disappear.

Marmaduke123

googler wrote: »

I don't get how shifting the fee liability from seller to buyer is more appropriate to a red hot market (assuming as above, the seller pays a nominal fee and the buyer pays what the seller would have paid).

Surely they are trying to increase their share of the market by enticing sellers to use them rather than another agent. There is no risk to the agent as a quick sale is virtually guaranteed at the moment. More sales equals more income for the e.a.

Dan-Dan

chicken and egg!!

googler

Marmaduke123 wrote: »

Surely they are trying to increase their share of the market by enticing sellers to use them rather than another agent. There is no risk to the agent as a quick sale is virtually guaranteed at the moment. More sales equals more income for the e.a.

Take your first point, but -

Moving the fee from seller to buyer doesn't change the EA's risk.

Number of sales overall is dictated by buyer demand and available stock, not by the charging methods used by the EA....

Marmaduke123

Dan-Dan wrote: »

I agree with Googler , how does a red hot market correlate to the buyer paying the fee , surely it would work just as well , in such a market , for estate agents to hike their fee`s to the sellers ?

It's a sellers market
For the estate agents, they are competing with each other to get the properties which do come on the market
There are many buyers out there some of whom are either a bit desperate or are being swept along by the speed of things. A red hot market is tempting them to cooperate with paying the agents fees.
Only the buyers can stop this spreading, by refusing to play ball

Dan-Dan

Marmaduke123 wrote: »

For the estate agents, they are competing with each other to get the properties which do come on the market

surley that is where the % and other sales activities seperate them when it comes to choosing the EA to use

I really cannot see the industry countrwide moving over to a fee payable by buyer and seller , in the long term

Marmaduke123

I agree. I think we are talking about a London phenomenon here, which I hope will be temporary

As others have pointed out, the sellers involved are being offered a nominal flat fee of about 150 pounds.

TrixA

This is happening in the area of London where we're looking - one of the most prominent agents in the area now has the majority of their properties listed as sale by tender with a 2% 'introduction fee', and one of the other big agents has started doing it too.

The 2% fee charged to buyers is more than the 1% or 1.5% fee typically charged to sellers, so agents are getting a good return out of this method, and I'm predicting it will spread. While only a minority of agents are doing it buyers will be able to vote with their feet, but if it becomes widespread buyers will not have the luxury of ignoring so many potentially suitable properties, particularly when supply is squeezed. Nor is it a solution to reduce your offer by the amount of the fee - this tactic really only makes sense where there is an asking price to benchmark against, and when you're not competing with multiple other bidders. And if it was that sort of market agents wouldn't be getting away with this approach in the first place.

IMO the practice needs regulating against, just as does the practice of letting agents charging fees to tenants - illegal in Scotland but in London now almost a universal practice. I don't think agents should be allowed to charge a fee to buyers unless an actual service is provided, and one which is different to that provided within the standard seller pays model. In the current market it's pretty hard to argue that introducing buyers to sellers is a service requiring thousands of pounds worth of time and effort.

getmore4less

Ultimately it is the buyer that pays one way or another

What it does change is the SDLT on the fees so there is a small saving in the overall transaction.

as above there is a subtle difference in that there is 1 seller per house that can negotiate the fee, the agent has to decide if they want to have a chance at selling it

With the multiple potential buyers they only need enough to say yes and they can ignore the rest that won't pay.

the ultimate looser is the seller.(the buyer only has so much money the seller that gets less)