why do estate agents charge so much to sell houses?

Mutton_Geoff

Herzlos said:

I think we paid 0.9% for our last sale and would happily do that again if we ever move.

Inc VAT? Another of my pet dislikes why some businesses are allowed to quote ex VAT prices in an industry where 99% of their customers are unable to claim it back.

I'm guessing you really paid 1.08% inc VAT but even your mentioning the price stuck to the (misleading) ex VAT quote.

If it really was 0.9% inc VAT, well done. I can beat you though, my local agent just agreed to handle my sale for 0.375% inc VAT 

Herzlos

I'd have to check, but I think it was inc VAT. We got a good deal because the same agent was selling the house we were buying too.

saajan_12

Herzlos said:

A percentage fee also gives the customer confidence the estate agent is going to seek the maximum price for the property, though the comission different is usually trivial.

This can be negotiated, eg by setting a target value, with the commission being say 0.8% of the price upto the target plus 10% of anything above the target, to keep the incentives in line. 

This may not work for everyone though, as if you aren't confident already of the market value then the agent might low ball you with the target. 

robinwales said:

My house is worth £600k. A local estate agent wants 1% plus VAT which is £7,200. Does it really cost anything like that to sell a property? Most houses go onto Rightmove, Zoopla etc so the human activity that used to take place in agents offices is now mostly done online, which must save agents costs. They do an initial valuation, photography (often badly), and arrange viewings. What else do they do? You can't privately register your property sale on Rightmove, you have to be an agent.

 And they wonder why pensioners with a valuable property don't like the idea of downsizing.

Its not just what it cost for your property. Agents generally work on a no sale no fee basis, meaning each successful sale has to pay for the commisison on the 2 others that didn't go through. 

Currently that just is the model, and while there are a few fixed price offerings, they seem to take the extreme budget, painful route. IMO there could be a viable middle solution of a fixed fee even if it doesn't sell, but with the full service similar to a high street agent. They're not incentivised by a conditional fee, but they have to do a reasonable job same as with solicitors and most other service providers. 

vacheron

I remember thinking this when we bought back in 2010 when our seller told us that her EA, a well established local company, was charging her "about 3%".

Every enquiry I made through them was delayed, the seller questions to me were delayed, eventually when the seller and I first met we exchanged phone numbers and just did everything from that point on ourselves (including viewings, extra photos, trade/survey visits, and negotiating all the fixtures and fittings).

The EA didn't come to attend any of our viewings, and they didn't even bother to turn up for the handover so I got the keys directly from the seller.

Once the sale was complete, they ignored my repeated requests to collect their for sale board (free advertising I guess), so after weeks of asking I eventually removed myself and binned it. 

So they bascally took 10 photos, wrote a boilerplate description (with numerous inaccuracies), put it on their website and rightmove (or it may have been Vebra back then), then pocketed about £10,000!