An estate agent is today launching a pay-by-results fee structure linked directly to the customer’s perception of whether the agent has done a good job – or not.
The level of fee, ranging from 0.5%, will be decided by the customer shortly before exchange.
Yorkshire-based Linley & Simpson, which launched into sales two years ago from its traditional lettings specialism, has developed a sliding scale of five different commission rates tailored to performance.
These range from 0.5% plus VAT – if the seller feels mildly disappointed in the service they have had – to 1.5% plus VAT if they are delighted.
In between, the levels are 0.75%, 1% and 1.25%, all plus VAT.
However, sellers will be still be able to choose the firm’s traditional flat rate of commission if they want at 1.25% plus VAT, with the Leeds city centre branch retaining it as standard.
All Linley & Simpson’s other branches – Roundhay, Horsforth, Chapel Allerton, Wetherby, Wakefield, Ilkley, Harrogate, Ripon, York and Saltaire – will offer the new fee structure from today.
Mark Christopher, head of residential sales, said: “This is an innovation that is over and above, and not a replacement for, the single fee structure that currently exists.
“For the first time, vendors will be handed a bigger choice – and say – in what level of commission they pay and how.”
He told EYE that sellers would be given the tariff of choices at the outset.
“We would then sit down with them after an offer has been accepted and shortly before completion for them to evaluate our service.”
Will there be a danger that some sellers will decide at the outset that they could quite simply get away with paying less than the normal 1.25% fee?
Christopher said he accepted this, but added: “There may be one or two. But we would always be driving ourselves to offer the very best customer service possible, and perform beyond expectation.
“The world – and people’s expectations – have moved into a different era. Our new approach is designed to reflect this, as well as act as a catalyst for rewarding and driving up standards across the sector.
“We wanted to inject some innovation and modern day thinking into our fees.
“Many forward-thinking companies in other sectors have adopted a payment-by-results approach with success. We feel it is timely to take the lead and offer our clients the same option in the estate agency sector.”
The firm is calling its new fee structure Completion Satisfaction.
Comments (22)
Well… this gossip has just managed to find its’ way into the other pub today – so let’s see how many people are going to have a natter about it compared to us sitting here in the snug.
Pity for them that they ‘barred’ their homebred #bunnyboiler – ‘she’ would have rattled off 71 posts or more for them in the first hour I reckon that this type of manipulation of fees is discriminating against… EVERYTHING, obviously! ;o)
We have been doing this for 6 years!! It certainly works for us! We actually set our fee anywhere between 1% and 2% and it’s rare that we only get paid 1%. In fact our average fee for last year was 1.6% which therefore shows if you work hard enough people do recognise your efforts and honesty.
With respect… you’re just over halfway. And it looks like you’re losing out on over £1440 (inclusive of VAT – you do know that you’ve got to quote INCLUSIVE fees on your website now, don’t you…?) per property.
To some Agents up here that would be a good fee in itself… and you’re chucking it away.
Unless, of course – you think 1.6% is a good result. That being the case then well done – the trick is working.
I absolutely love the idea BUT it is as likely to work as good old fashioned communism.
There will of course be a percentage of people who will over pay even though they have had bad service (think about those who leave tips at a restaurant but then whinge about how rubbish it was). There will be a roughly equal number of rinsers out there just looking to make it cheap by making things up.
On balance the fee will end up lower than usual.
However, it is something UNIQUE to advertise and that’s a good thing.
But, there isn’t an agent out there that has not missed a phone call or forgotten to phone someone back or been stuck in traffic or caught at an appointment with a very chatty customer that makes them late…
Any excuse to reduce the fee will in the end be the way it goes.
“These range from 0.5% plus VAT – if the seller feels mildly disappointed in the service they have had…”
And what if they are completely, utterly wazzed off?
I’ve read some of the reviews…
If their fee’s show PLUS VAT, then they will be breaking guidance which states fees should INCLUDE VAT
This idea was being promoted by an estate agent in Dawlish (Devon) several years ago – but no longer. Last year they tried £1,000 fixed fee for any value. Have not noticed an increase in their listings. Maybe the area is wrong.
Oh, dear, Mark – I hope you’ve set your budgets, targets and KRAs at one of the lower bar settings or you’re going to be having some very difficult discussions at your Manager Appraisals!
Hopefully your corporate upbringing will steel you for those, though…
There will of course be people who take advantage of this, but as estate agency is a service lead business it’s a great way to show your vendors that you’re a better choice than your competitors. If people truly feel they have received excellent service I should think they’ll pay what is fair.
It’s an instruction winner, but not a revenue generator. I can imagine all the sellers in those towns talking to each other about this deal!
Possibly a bit too risky if you ask me.
This chap has amazing faith in human nature – personally my experience is people will, 9 times out of 10, go for the minimum they can get away with.
In 35 years selling homes I have only had one seller who called me last month from Australia to say “I know what your agency agreement says but we want to pay you 0.25% more – send me another bill, we’re so pleased with what you did”. I was amazed! His wife then went onto Rateragent and gave us a 5* review. Only thing is I can’t wait 35 years for the next one!
Wait until the cheque lands and in its in Australian dollars and you realise he has only paid you half your fee!
S
Oops , seriously though stories like that do restore your faith in human nature.
Not always by any means, but how many times have you gone more than an extra mile for your client, desperate to sell and you have achieved a sale in a week. get them a good price, then not even a thank you and they quibble your fee because ‘it cant have cost you much because you have only had it on a few days?’
Then the couple who whatever you do seems to go wrong, viewers don’t turn up, 2 sales fall through, you lose the keys, 12 months later you eventually achieve a sale and the vendor walks in on completion with a bunch of flowers and a bottle of wine.
There’s nowt as funny as folk!
Its a risky game and from a business point of view, I wouldn’t like to be sat here not knowing whether my income for the next 3 months is going to be 0.5% or 1.5% of my sales. There is a big difference, for me personally one says profit, one says loss.
Dangerous game (sometimes, maybe his collar and cap pricing will work)
A company did just this deal near me in 2005 (Again mentioned this on EYE in a previous story) they did this to try and get the market share and closed down 8 of their 16 offices in 2007 including all of the ones in the villages we had offices. A few people which took to the idea paid nothing…..! At least the idea above has a 0.5% collar, the Agent near us didn’t and I think they must have done a fair few £0 invoices, when peoples automatic “look after number 1 system kicked in” We started to say to sellers who went with them, just send em a fiver for their efforts! the response a few times was, we not even going to send them that!
@livingproperty re fee’s – A bloke walked into my office yesterday from the local Rotary Club of which I am being schmoozed by to join (they want young blood which makes me feel very happy at 40 I am considered young) he handed me a tout letter from well known agent who has done your suggestion saying “THE MOST COMPETITVE” fees in the village…..
Again very Dangerous, How they going to beat me, if I decide to sell the next 20 for nothing or £1 “Just for a laugh” Are they going to pay the vendor to beat me? You need to ensure you can offer what you say and how can anyone claim the WILL beat any other deal unless in their mind they are prepared to do this for nothing if the worst happened.
Quote a fee, quote the best/lowest your are prepared to offer and don’t try and rip people off! If you lose a listing over 0.25% and think I would have matched that, then you are a fool (not you livingproperty) for not knowing how competitive your competitors are and should have offered the deal in the first place.
More so, I find sliding fee scales work well on when related to price performance, 1% if I get the asking price, 0.90% if we drop below ??? and 0.80% if we are below ???? focuses the clients mind on our ambition to get THEM more showing if we don’t we will take not only the hit based on percentages but knock even more off.
Nice idea but I expect most sales will be 0.5% people like to moan and are greedy. If you have a chain where another agent, solicitor or vendor is holding up the sale. The agent is always the one getting the blame. I am guessing they are struggling for instructions?
I think you would be surprised smile. This scheme is not quite as new as the company has made out………others have tried it and found that it actually works very well…….as long as you are an exceptional agent – service wise. If you give bad valuation advice, don’t give viewing feedback and fail to keep all informed then you will end up with 0.5 every time.
On the other hand if you provide a superb service start to finish (which maybe results in a much higher figure being achieved for the property) then most will think you deserve the upper fee level. People don’t mind sharing a % over and above what they expected and will often feel embarassed to pay the lower level if they really have had a great selling experience.
Agreed – but as you say – you have to be an exceptional agent and provide a superb service – easier said than done but always a true agents objective.
To be fair to them i have just looked at their website, they have over 500 properties listed for sale.
Seems very strange they would need to do this promotion, i would have thought with that type of market share you would be looking to increase fees.
Perhaps this is the way they see that they can, in fact, increase fees.
Nice idea, but I find it hard to believe that people would choose to pay 1.5% over paying anything lower with the same company. As a seller, I’d want to be keeping as much money out of the sale of my home as possible – I’m not going to be 100% truthful if it meant the difference of £thousands.
Why not just make your fee negotiable, and offer to beat any other quotation?
I think you’ve missed the point livingproperty. Offering to beat any other quotation means you are lowering the fees or creating a fee war, when perhaps the services you offer and the vendor experience you provide would suggest you can raise them.
I think it is quite refreshing, and it would be good to know how this transpires.