Just a thought ... how do estate Agents make money ?

prosaver

phill99 wrote: »

I remember when I was at University years back, my Urban Economics Lecturer explained it like this: If a town has 30 estate agents and 1 petrol station and you were going to open another Estate Agency or a petrol station, which one would it be. We all, in our naivety, said: Petrol Station.


Her said. "No". An Estate Agency. He explained it based on market demand. If a town can only support on petrol station, but 30 Estate Agencies, it can easily support another estate agent, but will struggle to support another petrol station.

i went to this car boot sale and seen loads of burger vans and thought I would never make any money if i sold burgers, but after reading your post, might be a good idea.

hazyjo

They have got salaries to pay but there's relatively little outlay. Not like shop stock or equipment to buy. Yep, rent to pay, but not lots else (unless they have cars).

When I worked for a commercial property company, we survived the 90s recession with property management. I expect a lot of them do that.

Jx

PasturesNew

rogertb wrote: »

(fee 0.75% + VAT) ... though we'll probably go on-line as that's still £4K.

(maybe as many as 30) Estate Agents

How can so many Agents survive on what must be slim pickings from such a small geographical area

Here's my fast and nasty, quick and dirty, snapshot from flawed data sets:


Land registry data says that there were 94 properties sold in July. That's "regular/normal" properties, they don't list odd stuff.

I chose July randomly to give the solicitors long enough to get their forms into the LR and for it to be online. But there might still be some stragglers. So let's round it up to 100.

Looking at the last 25 sales on RM to get some sense of value of the market, from the last 25 sales in BH23 the average value sold was £343k.

100 properties at an average of £343k, is £34 million per month.

1% commission, is a monthly income for July (not a peak month probably) of £343,000.

So, somebody is trousering £343k from sales each month just from flogging houses in what's probably not a peak month.

bullinn1

Excellent pasturesnew ... but between 20 agents that's only £17K each if they get all of the business, some of it is probably going to online firms. Goes a long way to answering my question though so thank you ... who'd have thought that many properties in such a small town would be sold every month.

PasturesNew

rogertb wrote: »

Excellent pasturesnew ... but between 20 agents that's only £17K each if they get all of the business, some of it is probably going to online firms. Goes a long way to answering my question though so thank you

Land Registry just showed the regular houses. There are also all the holiday caravans the agents sell, and the beach huts. Also the "odd properties" and garages etc. Then there's any plots of land (probably 0 though).

The figure I threw together was just for "regular homes" ... which is enough to cover their overheads, on average ... all the other sales and backhanders are the icing on their cake.

And, as others have pointed out, there's the lettings side of it too.

rogertb wrote: »

... who'd have thought that many properties in such a small town would be sold every month.

Yes, I'd have thought "can't be more than a handful...."

There's one sale last month that probably won't show up on the LR figures either ... two lots of about £400k for a plot, each - so night on another £1mill. Company buys two properties that never went onto "the market" or on RM .... demolish them for a plot, lots of money moving through the system that won't show up online anywhere. There are many sales that never get to LR, for some odd reasons. e.g. company sales, some probates, and others.

bullinn1

It's another world ... no wonder some of the 'principals' are mega mega rich (don't forget we have "Sandbanks" just along the coast ....

googler

PasturesNew wrote: »

1% commission, is a monthly income for July (not a peak month probably) of £343,000.

So, somebody is trousering £343k from sales each month just from flogging houses in what's probably not a peak month.

... for all the agents. Didn't you forget the stage where you divide this sum by the estimated number of agencies (30) to arrive at income (before expenses) of £11,000 or so per month for each agency, on average?