MSE News: Why selling your home could get harder next week

suchgreatheights

WestonDave wrote: »

Lets face it Estate Agents who already got a ridiculous % based fee for doing very little (why does it cost 3 times as much to take a few photos and give them to interested parties when the property is worth £300k rather than £100k?)

I think if you think about it, obviously it doesn't cost them 3 times as much, but a % based commission is inherently fairer than a flat rate fee. If the agent didn't earn more money from more expensive houses, they would have to charge those with cheaper houses more money in order to earn the same level of revenue every year. So it balances out really. If you scrapped the % and instead charged a flat rate fee of say, £3,000, why should the guy with the £75k flat pay the same as the guy with the £2m mansion?

jjlandlord

It's nothing to do with fairness. This is business.

In principle a commission gives an incentive to achieve the highest sale price (hence why salespeople are at least partly paid that way).
For the agent it also allows to maximise profit by effectively segmenting the market.

However, indeed the work and service provided is essentially the same until perhaps you reach the luxury market.

miller

suchgreatheights wrote: »

If you scrapped the % and instead charged a flat rate fee of say, £3,000, why should the guy with the £75k flat pay the same as the guy with the £2m mansion?

You'll find EAs who will do exactly that on relatively cheaper properties.

suchgreatheights

Yes, and that is a perfectly viable way to do business if the agent only deals with properties within a fairly limited price range. Some consumers may also prefer a flat fee.

My point above was really that a % based fee inherently means that those with more expensive houses pay higher agency fees than those with cheaper houses, which seems to me to be a fairer way of doing things.