Incentivising estate agents

aroominyork

Is it recognised and useful practice to incentivise estate agents by giving a property to two agents to sell with an asking price at the top of the range of say £1m, having a regular commission rate up to £900,000 and agreeing a rate of say 10% for anything they secure over that? Views and suggestions would be much appreciated.

csgohan4

you can do what ever you want in your contracts with the EA, but be careful if you have two EA, you may end up paying two lots of fees. Ensure one doesn't have sole selling rights at the minimum

AnotherJoe

I think you are overestimating the ability of EAs to achieve a price above what the market will bear.

G_M

If the EA is gung-ho optimistic about how many clients they have looking for 'just your kind of property', and quotes an optimistic sale price, then certainly possible, though I'd stick to one agent.


Negotiate a variable commision rate eg



1%, or 1.5% if they achieve a selling price over £X00,000.

eddddy

G_M wrote: »

Negotiate a variable commision rate eg



1%, or 1.5% if they achieve a selling price over £X00,000.

I'm not sure that example works too well...

For example - if you say...

• 1% if you achieve under £100k
• 1.5% if you achieve £100k or more

There's a big incentive for the EA to get an offer of exactly £100k, but very little incentive to get an offer over £100k.

Hence the OPs suggestion of something more like...

• 1% of the first £95k
• 10% of anything you achieve over £95k

It gives the EA much more incentive to push the buyer beyond £100k - even if it's only to £102k, or £105k.

G_M

eddddy wrote: »

I'm not sure that example works too well...

For example - if you say...

• 1% if you achieve under £100k
• 1.5% if you achieve £100k or more

There's a big incentive for the EA to get an offer of exactly £100k, but very little incentive to get an offer over £100k.

Hence the OPs suggestion of something more like...

• 1% of the first £95k
• 10% of anything you achieve over £95k

It gives the EA much more incentive to push the buyer beyond £100k - even if it's only to £102k, or £105k.

You could be right - my brain's hurting......


But if you're hoping for/happy with £90K then the incentive is there for the EA to exceed your expectations....?

aroominyork

G_M wrote: »

If the EA is gung-ho optimistic about how many clients they have looking for 'just your kind of property', and quotes an optimistic sale price, then certainly possible, though I'd stick to one agent.

Why would you stick with one agent?

AdrianC

It does work - we did exactly this with our EA when we sold a few years back.

They suggested a price we thought optimistic.
We agreed to market it for that, with a fee of <whatever> up to what we thought was sensible, and a higher rate for everything above it.

It sold in weeks, not for full asking, but for much more than we'd expected. (This was before SDLT was rejigged, and the final sale price was just below one of the big steps).

It wasn't a huge marginal rate, like 10%, either. IIRC, it was 1.25% up to £x, 1.5% on anything above.

PasturesNew

Whatever deal you try to cut, the bottom line is that, over time, they'll forget it's incentivised - and they'll just do "their job as they normally do" because they've a ton of houses for sale and will sell any one to any person they think might buy it.

They might nod/smile at you enthusiastically, but once it's on the books you're just "another address for sale". They're unlikely to bust a gut squeezing a few extra £££ out of a buyer if they can use that time to motivate another buyer, or sign up another new house onto the books. Time is money - and they've not got the luxury of time to spend focussing on little deals here and there (and remembering they exist).

AnotherJoe

AdrianC wrote: »

It does work - we did exactly this with our EA when we sold a few years back.

They suggested a price we thought optimistic.
We agreed to market it for that, with a fee of <whatever> up to what we thought was sensible, and a higher rate for everything above it.

It sold in weeks, not for full asking, but for much more than we'd expected. (This was before SDLT was rejigged, and the final sale price was just below one of the big steps).

It wasn't a huge marginal rate, like 10%, either. IIRC, it was 1.25% up to £x, 1.5% on anything above.

How does that prove it worked? You don't know what it would have been sold for without that clause.
I had a similar clause back in the day when SD thresholds meant an abrupt step change at certain price points. The house I sold went for £250k exactly (one of the thresholds) despite them stating confidently they could get £265k or even more. . I called their bluff by having a lower commission rate at 250 or below. I was proved right (unfortunately).

phoebe1989seb

AdrianC wrote: »

It does work - we did exactly this with our EA when we sold a few years back.

They suggested a price we thought optimistic.
We agreed to market it for that, with a fee of <whatever> up to what we thought was sensible, and a higher rate for everything above it.

It sold in weeks, not for full asking, but for much more than we'd expected. (This was before SDLT was rejigged, and the final sale price was just below one of the big steps).

It wasn't a huge marginal rate, like 10%, either. IIRC, it was 1.25% up to £x, 1.5% on anything above.

It worked for us too a couple of sales back. I can't recall the figures/percentages involved with the incentive, but know that we achieved full asking price within five weeks when we'd been advised that it would take considerably longer to sell as the house was very niche (thatched, unusual layout etc) as well as being on a notoriously busy road.....

Our EA was extremely enthusiastic throughout and brought on board colleagues from another local branch and it was actually the manager there who found our buyers.