Radio presenter, property expert and chartered surveyor James Max has changed his mind about online agents – after backing one in the early days.
He did not disclose the name of the agency, but says in an article in the Spectator that it was back in 2006.
In the same article he says that the Purplebricks business model has “gaping holes” in it – and a marketing budget that is “way too flamboyant”.
Max, who presents Business Breakfast on Talk Radio each weekday morning, comes down firmly on the side of traditional agents.
He reveals: “I invested in a firm that set out to disrupt the market by offering a fixed fee selling model, not unlike the one used by Purplebricks.
“It did not end well and I learnt some important lessons.”
He was also an executive director of BNP Paribas Real Estate, now the owner of Strutt & Parker.
Max cites factors that sellers should consider when choosing whether to use an agent or not.
One is market knowledge.
A good agent will know the market and create competitive tension – “and with a percentage fee is motivated to sell at the best price possible,” says Max.
He also discusses fees: “Why would you fork out more than you have to? For most estate agents it’s no sale, no fee. Online agents have a fee regardless of success. They aren’t as motivated to sell.
“Then there’s the issue of getting the best price. If an agent isn’t motivated, why would they push?
“The simple answer is that online vendors are unlikely to achieve as good a result as a top estate agent.
“In a fast-moving market where everyone knows all of the deals going on there’s an argument for saving a few pounds.
“When markets get tricky? That’s when an agent earns their fees.”
He argues that online agents may charge less but if a high street agent gets only a slightly higher price, then the seller could be better off.
He says of Purplebricks that brokers’ recent ‘sell’ notes are not just because of over-expansion abroad: “The departure of the firm’s founder and the drop in share price is just another indication that all is not well.
“A good estate agent will tell you things you may not want to hear. That some of your internal decor is tacky. That your home looks like a total mess and needs to be cleared up or that your taste in wall art is putting off buyers. Or that a market has fallen away.
“That personal touch is what you need.”
He advises: “Prepare to work your agent hard. Don’t worry about the fee; think about what you could do with the extra profit when you sell well.
“A decent profit lasts far longer than bragging rights about how little you paid someone to get the job done…
“I know what I’d do, I suspect you do too.”
https://life.spectator.co.uk/2019/05/should-you-use-an-estate-agent/
Comments (25)
I believe that the idea that Online Agents have “no motivation to sell” speaks volumes about the industry as a whole. No commission = no motivation is a myth, it’s more like unmotivated sales rep = poor service.
The world’s largest, wealthiest and most respected businesses/industries do NOT need commission to operate.
Why does an engineer for the local electricity board go out of his way to fix an outage that impacts multiple customers? Is it for commission? No it’s because that is the expectation set out to him by his employer. He respects the needs of his business and, by extension, his customers.
Why do technology leaders constantly produce better and more high-tech products if they aren’t paid a % of the gigabytes contained in each device? It’s because sales drive growth, an element of key importance to their industry. No growth means no public sway, leading to diminished sales and inevitable downturn.
Why does a shop assistant go out of her way to help her customers if she earns nothing more than a basic wage? Because she is motivated, success focused and wants to progress her career. Demonstrating her ability is the only way to progress in her industry, to the customer’s benefit.
If you genuinely believe that no Estate Agent in the land would try to give the best for their customers unless they receive remuneration proportionate to their effort, then perhaps the Estate Agents you are imagining would be better off in telesales, because they are precisely the type of people that are the reason we and our industry are hated by the general public.
Our local PB property expert actually told me that once he has got the property online he just moved onto the next one as he needs to earn money. The electrician and the shop assistant that you refer to get paid for doing a job; if they don’t do their job they get sacked. Motivation.
I don’t understand why, with all the great tools at our disposal, overvaluing happens very often at all….unless it is the largest property in the area with very little comparable evidence. Then sometimes its a lot more difficult to arrive at an accurate figure.
I know that the corporates in our area put a higher value on properties in the belief that it will win them the instruction. However I use a very specific strategy and technique to combat this, and most times win the instruction. It is all about telling stories, but only true ones of course.
BSOS23PC
What is that reference number you put on the bottom of your posts?
is it a half price referral code if I instruct PB to sell my home?
Oh hindsight!
Who’d have thought that the moment we’re not in a rising market that the online model starts to fail and show its flaws!!?
Commissary indeed!!
It’s interesting that everyone has reacted to ‘overvalue’ As a 37 year estate agent I have no problem in testing the market at a higher price than we valued it at if the owner is fully aware of the strategy and potential pitfalls. It is usually the seller that wants to push their price not the agent. None of us intentionally overvalue as we all want to sell as quickly as possible. I think that’s why we all react so badly when it’s brought up. It would be interesting to see how many properties that moved from one agent to another sold at or close the ‘new’ asking price. Nothing worse than losing one of your register to another agent that then lists it at a lower price. Why would we ever want to overvalue a property and spend weeks/months marketing it and not get paid? How does anyone know what value we put on it anyway. The asking price is set by the owner not the agent and is often higher than we want. Greed drive prices up more than agents. Have you ever sold a property of your own Cyberduck?
curious as to EA charges – if you think a property is worth £10 but the client want you to try at £20 if it sells do you get commission on the first listing price or the actual sale price?
Are EA terms changing to the listing price or still as sale price?
Being just in Lettings we are thinking of going over to this as we can pretty much recommend the right price for 99% of our local properties to market at and let at straight away and its frustrating when a client thinks they know the market better and wants us to try for a good step up then and then reduces a few weeks later.
If a client wants a price that is in orbit and you consider it unobtainable then refuse the instruction. Nine times out of ten the client will be so shocked that they will come to their senses and take your advice. And if they don’t then you don’t want that instruction anyway.
Totally agree with you EAMD my brother handles all the sales vals and what seems like every time he comes back with the instruction, upon the take on or on the day the vendor is already being greedy and ignoring solid honest advice. They’ll want to go on £10k/£20k more than advised, either due to other agents over valuing or simply believing they know best… We are clear we will trial it for a higher price, after all they’re the client, it is their home and therefore it is their decision but make them aware that those 1st two weeks are critical if not it must change price in to a new search bracket to have any impact.
As no sale no fee businesses ,it is in our interest to sell and get paid not to over value and let it sit there costing us money. PB will have to have some super deep coffers to change their model to an online high street no sale no fee model. I cannot wait to see the fall out in the coming 18 months. I’ve read Cyberduck’s post for years and years now he is just trolling.
It seems that agents are now fighting back. Good stuff! #BetterThanWhingeing ☺️
The piece (and your views cyberduck) are a classic example of drawing the wrong conclusion from so-called research. And if you had direct experience of working in Agency and working with vendors you would understand why I say that.
Of course, properties aren’t just reduced because of overvaluing.
(That’s not me saying that. It’s what Which say in that article you quote cyberduck)
Cyberduck is Purplebricks LPE,
Now just the thought of that is hilarious!
Estate Agents who overprice cost sellers £4.3bn.
https://www.which.co.uk/news/2017/02/estate-agents-who-overprice-properties-costs-sellers-4-3bn/
Like I stated last week, High Street Agents admittedly don’t always get it right. However, when we get it wrong we don’t charge and that is the defining fundamental difference.
Seriously, you have supplied a link to the single most fundamentally flawed article on housing ever. How can you ever hope to aspire to even a modicum of credibilty while posting nonsense like this.
Cyberduck can I ask you please. When PB finally falls over will you then admit that online call centres are never going to work. The whole thing is crumbling in front of your eyes and you still seem adamant that it’s the way forward…
From the horse’s mouth this morning:
‘I sold with PurpleBricks and my neighbour listed with a traditional agent. I listed high (and knew it) and reduced a few times.’
Some observations on the Which piece:
1 Where does it state in that article that the research only applies to ‘high street’ agents and not online only?
2 By automatically assuming ‘estate agents’ excludes the likes of PB does Cyberduck not consider them to be estate agents?
3 If PB are included but aren’t listed in the regional figures it doesn’t meant that they haven’t overvalued, just that they aren’t discussing reducing unsold stock. And why should they when there’s no motivation to sell?
4 There’s a difference between reducing because of overvaluing and because the owner wanted to market at a higher price initially which Which (no it’s not a typo, think about it) of course can’t assess.
5 One of regional figures relates to the agent who sold the most in that area, no mention of PB there either.
Summary, PB aren’t estate agents, they don’t advise sellers to reduce because they aren’t interested if the seller moves or not and they don’t sell that much anyway for all the squillions spent on advertising.
Competitive tension? Don’t traditional agents overvalue?
From a Which article some time back….
“We also compared how online-only agents fared against their more traditional high street counterparts. Our research suggests that properties sold through online agents sold on average 38 days faster than traditional agents. Furthermore, while 19% of properties sold by traditional agents were reduced by 5% or more, for online-only agents that figure was only 13%.”
I’ll post the link in a reply as it might be removed.
I love how you suddenly change character when Purplebricks are being exposed.
Just a previous vendor are you?!
Cyberduck – have you ever given any thought as to what might be behind these stats and why they might actually tell a very different story to the one being portrayed?
Cyberduck its 7.00am in the morning, you’re retired I think. The sun is out, birds are singing in the trees and you’re posting on a forum for a trade you’re not involved in. Surely you have something better to do.
First question I ask whenever I see his username. Not just here though, he still does the rounds on lse and the other site too. Sad.
So don’t on-liners over value?
What incentive is there to get the price right for on-liners who charge upfront?
What incentive is there for the on-liners who charge upfront, to agree the correct sold price?
What incentive is there for on-liners who charge upfront, to work there stock
What incentive is there for on-liners who charge upfront to get out of bed?
And when the wheel comes off, where does the customer go for help?
Special note to Ducky: The questions relate to on-line only agents. So don’t start your usual biased replies by waffling on about other agents.