Yet another article about online versus traditional estate agents – but you might want to take a deep breath and ensure you’re sitting down before reading this one.
In What Investment magazine (“essential reading for anyone who is interested in getting better returns on their money”), the article explores which type of agent offers better value for money and walks its readers over what a local agent actually does.
“So you’ve decided to sell your home. You invite a couple of local agents around who give you a valuation based on their in-depth knowledge of your area. You choose which (one or more) agencies you feel would better do the job and instruct them for the sale. (Bear in mind in some cases here the agent will try and tie you in to using ‘only one agency’ for the sale, rather than several).
“They then put the advert up on to the main portals (Rightmove, Zoopla, OnTheMarket) and on their local window. Then they will then hold viewings, negotiate on your behalf and take you through to the offer stage.
“Once the sale has been agreed the agent will take up to 3% of the sale price as a fee for the service. Yes, 1-3% might not sound like a lot, but with the average house in the UK being £272.000 [sic] – you would be looking at a fee £2720 if 1%; £5440 for 2% and £8160 for 3%. You can see how it builds up here.”
Assuming that the average house price should read £272,000 rather than £270, we’re nor sure how many agents would charge 2% or 3% for that, let alone take the money before the sale has actually gone through.
As Eye’s recent article by Stephen Hayter shows, remarkably few agents charge 1.6% or more, and in fact the most common fee charged is 0.75% to 1%.
The What Investment magazine article goes on: “You might remember back in November 2014 when Steve Smith, the founder of Poundland, hit the headlines after selling his £6.5m mansion through his own online agency, EstatesDirect, saving £115.000 [sic] in commission.”
The snag here is that Smith’s house is still listed for sale on EstatesDirect. It was first listed last November at £6.5m and is now on at £5.75m having been reduced on January 6. The listing correctly points out that the seller is connected to the agency.
Stephen Hayter’s authoritative article is here
The What Investment piece is here
Comments (18)
Blimey, first chance that I have had to revisit this since my original post…certainly seemed to get the juices flowing and, if nothing else, its great to see that there are still a few agents out there who remain passionate and believe in the service they offer.
I’m not an Agent but I love a good debate with people who see fit through ignorance, jealosy or agenda to knock traditional agency.
If Jemma Redpath had mentioned her connection through entreprenuers club to James Caan who has invested in disrupting the industry I seriously doubt whether an independently minded editor would have santioned the publication of the story.
Honesty and integrity are valuable things Pheonix certainly well worth a bit of passion to defend.
It took less than 30 seconds to find a link between James Caan and Jemma Redpath 😳
http://www.rightmove.co.uk/property-for-sale/property-32784099.html?premiumA=true Still not sold – change the main pic, take better photos and try a better agent
How about this then as a reason to not go cheap? (Photo 4). Lol
http://www.rightmove.co.uk/property-for-sale/property-49780562.html
It does say ‘with all the modern trimmings’!
“They…………………take you through to the offer stage. Once the sale has been agreed, the agent will take up to 3% of the sale price as a fee for the service.”
Absolute rubbish. 50% of what an estate does is negotiating between sale agreed and exchange of contracts and it is that important work, liaising with solicitors and calming stressed out buyers and sellers, which keeps chains together which would otherwise fall through.
Because we rarely market this essential part of our business it is hardly surprising that commentators continually say all we do is value and advertise houses.
Estate Agents – What do we actually do for our clients?
Web based versus traditional agency …
Fee cutters versus service providers …
It’s time that those operating real Estate Agency businesses stood up to be counted. Know your services and shout them from the roof tops with pride… Let’s not be traditional, let’s be Professional, Passionate, Experienced, Comprehensive, Honourable, Available, Dedicated, Diligent, Hardworking and able to offer a truly Bespoke service. If we were drawing the comparison of real Estate Agency to a tailor, every single one of our clients would be getting a handmade suit when it comes to our service!
I know what you are trying to say and support you all the way but…. that is not the case. Too many agency bosses have allowed their junior staff to delegate their individual roles to the internet based service providers.
I can give you an example where a neg has looked up a value on the internet, told the vendor exactly what they were expecting to hear because they looked at the same data the neg looked at and as a result has an asking price some £80,000 less than open market value, £100,000 less than I would have it on the market for. The irony is that there isn’t a Hatched volume of applicants queuing up to buy a bargain, the applicants think the place is on the market at the right price too. It is bonkers !
If traditional agents want to grab the advantage they have to show they are not only doing more, but achieving more too. Central office area rep agency can only compete if they have comparable evidence ( yes we are back to data again) If every Agent removed their data once a property is sold, online agents are left with no meaningful register of applicants [they rely on reactive applicant] which means they can not assess value and without comparables handed to them by wayward service suppliers, they are valuing blind, they are guessing in the dark. No advice equates to no instructions, irrespective of the fee
Estate Agency is a service industry and without service no amount of cash or false claim in investment magazines is going to make passive intermediary/ whack it on the internet and hope it sells agency into Estate Agency.
Agents have to understand the mechanics of how the COAR agents are operating, once understood agents have to close down the help and assistance they are handing to their competition. I fully appreciate the junior staff who are reliant on purchase ready applicant requesting a viewing or are reliant on the online valuation systems to give advice on value won’t like the crutch of the internet being restricted but that is the price that has to be paid to restore respect, equity and professionalism to the profession of selling and letting property.
“If every Agent removed their data once a property is sold….” Are you seriously suggesting that LESS transparency is a step in the right direction?
Do you leave your dead files laying about the office like a public library and welcome your local competition to have unfettered access to every bit of data you have.
This isn’t about transparency, it is basic business protection and I am puzzled how you actually made the jump to transparency from what I posted.
Perhaps you consider vendors missing out on 25% of the value of their home is a good thing.
1. It’s not about your competitors, it’s about serving your clients best interests. Data & insight helps end educate end customers, allowing them to make better, more informed decisions. Also, by removing your own data, you won’t be able to make unsubstantiated claims, see below.
2. 25%? I’d love to see the data backing this up, (unless you plucked it out of thin air – that would be a shame).
If a client wants to see evidence supporting a valuation most agents take details of comparables and details of the applicant requirements that form the basis of a valuation. In effect customers and prospective customers are provided with everything needed to make an informed decision.
Any agent making spurious and unsubstantiated claims doesn’t stay in business very long.
I lodged evidence of a 25% under valuation with 3 independent recipients as evidence in a matter which is being investigated. It isn’t for you to see but I am sure when the time is appropriate you will enjoy the story.
But that would mean having to go through the faff of having numerous agents through your door in person. No one actually wants that. What the Internet affords is transparency of what has sold and for what price, so there can be no bluffing or bulls******g. We all know that happens the whole time.
As for under valuing, I don’t suppose there have ever been cases of a high street undervaluing a property in order to achieve a quicker sale? After all, it wouldn’t fit the high street agent business model now would it?
Are you somehow connected to the author of the article? Both of you seem quite unaware that 98 out of every 100 vendors do want agents through their door and the other 2 are recommended to get an agent round by property pundits on the telly. Since 1996 when Radio 4 first warned of the inherent perils of passive intermediaries whose only incentive is to list property not sell it, their market share has grown to a whopping 2% penetration.
I am not sure how such a weak and inaccurate article got published by a serious magazine it reads like a piece of rushed GCSE homework by someone who had bunked off the lesson.
That’s probably why estate agents are so popular. Just type it into Google. On the Internet.
Give or take over 1,000,000 people each year use an Estate Agent to sell their home the actual level of complaint is lower as a percentage than any other service industry but it is the one industry open to consistent cliché bad journalism such as that published by Jemma Redpath.
In an article devoid of any salient points other than the passive intermediaries are cheap Mx Redpath failed to include any of the latest thinking and discussion on what is a well debated subject.
Had Mx Redpath put together an objective piece she ought to have noted something about the actual viability of the sector she was seeking to promote. Surely investors ought to be aware the sector is financially unviable if it attempts to meet the claims the PI sector makes*. In other words it is a very poor investment for both investors and home movers. There was no investigation of a series of wealthy entrepreneurs falling over themselves to invest in service sector they don’t fully understand in order compete head to head for market share against each other. There was no mention that corporate banks and building societies have attempted and failed [over the past 30 years] to grab any long term hold on an industry that offers them huge rewards for vertical sales. It genuinely was a shockingly bad piece of journalism that reflect badly on Mx Redpath and the editor who sanctioned it’s publication.
** 3500 selling centres nationally, 1170 hours/ centre/annum to be local credible and meet working time regulations @ minimum wage means a centre spend on wages alone of £76,000 / annum. That means listing 3 properties per week per centre to cover staff costs alone. With 3 big players in the passive intermediary sector competing that is 9 instructions per week.
A Peter Jones Dragon’s Den calculation, 9*52*3500= 1.64 million properties need to be listed. That is 82% of those that are listed each year!
The PI sector currently lists about 40,000 each year, effectively it is a very long way short of viable. 1.6 million properties short of being a good investment for all the investors pouring cash into the sector on the bad of poorly researched biased reporting.
Estate Agent might not be popular but at least have the good sense to get a calculator out before offering advice to customers. What investment would be well advised to do the same.
“Are you somehow connected to the author of the article?”
No doubt ‘agentgreyed’ is, Robert.
One such possibility of “connection” being he or she be the special brother or sister that some families are blessed with – who are usually kept by their parents in a locked room and never spoken about for fear of generating looks of pity or, worse again, sniggers from those who think it is a jolly wheeze to mock those who least can defend themselves in such situations…