Estate agents’ fees were named as the biggest financial barrier for downsizers to sell up and buy somewhere smaller.
The Daily Mail yesterday said that estate agents’ fees average 1.8%.
The paper said that downsizing costs vendors almost £29,000 in costs, adding that “Stamp Duty is only half of it”.
The article, in the weekly Money Mail section, said the costs were “crippling” and were a “huge obstacle” to people wanting to downsize: the paper said it is simply not worth their while to move once costs are factored in.
The piece took as an example a four-bedroom home worth £490,284 with the owners wanting to downsize to a two-bedroom home at £292,797.
Stamp Duty would cost £4,640.
However, the average estate agency fee at 1.8% – the Mail drew the figure from an outdated Which? figure which has several times been cited in Advertising Standards Authority cases – would come to £8,825 plus VAT, a total of £10,590.
Only yesterday, online agent HouseSimple was banned by the ASA from claiming that high street agents charge “1.5% to 4% (plus 20% VAT)”.
According to yesterday’s Mail, other costs would include conveyancing at £2,000 and a survey at £600.
Altogether the Mail put the downsizing costs at £28,830.
That would leave a pensioner swapping a four-bed for a two-bed with £168,657 after the move, said the paper, which seems unaware that Which? has amended its average estate agency fee to 1.3%.
As EYE has repeatedly reported, a number of agents charge less than this. Selling a relative’s property last year, the charge from a well-known regional agent was 1%, and given the length of time to sell and the amount of sales progression the agent had to do, this was not begrudged.
Which? has previously put the average estate agent fee at 1.8%. It now quotes My Home Move’s average of 1.3% – although it does claim that fees can range from under 1% to 3.5%.
The whole issue begs the question as to whether high street agents should openly state their fees.
We fully understand how difficult this issue is.
But has the time come?
Comments (39)
Getting agents to display fees? Sounds a great idea, they’ve tried it in the lettings business & look where that’s got us! Good agents display all fees, bad agents ignore the legislation because local authorities are just not interested in enforcing! In this town there are at least 3 agents that do not openly disclose fees for letting; I’ve reported them to TSO but no action has been taken whatsoever. As a result shelter jump up and down in their prams bleating about how tenants are being ripped off, badly treated and charged fees that they knew nothing about when they decided they wanted to take the property, then government think that shelter need to be listened to and start interfering with our business!
If Burple *ricks et al want to keep lying about fees, confusing and misleading the general public then let them do so, gradually the tide of discontent will catch up with them and they will have to address the service side of the business in equal if not more measure than the “grab the business at a cheap fee” side of their business. At that point, LPEs will have to start to spend more time chasing existing business than getting new business making the whole business model unsustainable or certainly seeing their incomes dramatically reduce as they find less time to grab more cheap business!
You can’t quote a fee until you see the property. You can give indications obviously but surely you agree each fee with the client based on their needs and requirements.
If the property is coming to market at t price that will enable a quick sale you can pass on some of the time n marketing saving to the client. If the client wants to try a higher than recommended price then no doubt it will be on the market longer and take up more man hours to sell. Also, what’s wrong with offering a “deal” to someone who is also buying from you?
Even the agents who advertise fees will always reduce to win business – FACT
Trying to shoe horn an industry that is the biggest “people business” around with so many potential outcomes into a rigid style of trading just doesn’t work. You can never build an App that could accommodate all of the eventualities of a sale – with tens of thousand of pounds at risk clients will always want a professional they can easily access and speak to face to face if required. It’s a shame that it looks like it will take a little while longer for people to realise this.
Really?
Let’s look at this whole transaction based on a cash buyer to make things simple ie a two part sale and purchase transaction based on average estate agency fees recently quoted by Which of 1.3% including VAT or 1.04% without.
Downsizer is charged 1.04% estate agency commission on £490,284 (not including VAT) = £5,098.95
The cash buyer buys property at £490,284 and pays stamp duty of £14,514
Downsizer buys new property at £292,797 = £4,640 Stamp duty.
Seller of this property is charged 1.04% estate agency fee (not including VAT) = £3,045.08
So estate agency fees in this two deal transaction =£8,144.03
Government Stamp duty = £19,154 plus 20% VAT on both agency fees!
However, the average property price based on Rightmoves regional price index of the 6 northern and central region is around £175,000 x average estate agency fee of 1.04% = £1,820 which is why the savings claimed by the call centre agents are way off the mark.There is a huge north/south average price difference and that is why such saving claims must be regionalized as upheld by the ASA yesterday.Based on this evidence all savings made by call centre agents are now null and void and must be re-calculated on a region by region or postcode area?
Well illustrated point.
Thank you for your kind comment, Chris.
Marketing may become very expensive if you can only justify your claim for a small part of the UK?
Sensationalist journalism? From the Daily Mail? Say it ain’t so!
The biggest barrier for me getting a glass of water is turning on the tap. Just because it’s the “biggest barrier”, doesn’t mean it’s of any serious importance. As a nation we have one of the cheapest estate agency fees and one of the most expensive housing markets. If you’re going to downsize you easily can.
I’ve never read a single word in the daily mail that is worth the cost of the ink, I suspect the daily mail has no vested interest in bad mouthing estate agents because it has an on line estate agency arm too?
Lucky we are not in the states then as clients are charged 4-8% – Jheez
Who wants to downsize? I have worked long and hard to literally build a home my children & grandchildren can come to visit. I don’t want to downsize I want to sit and enjoy what I have built and achieved. Living in a big house will cost me a bit of extra heating, a few £ extra council tax but nothing of any real consequence and certainly nothing like the cost of hotels for the family to come and see me.
If I did want to sell a 1.8% fee is nothing; each year for the past 31 years I have been gifted compound 6.9% growth in property prices for absolutely no additional cost other than maintenance.
I just calculated I am up 791% on my original purchase price, I paid back 3x what I borrowed in mortgage interest so I would consider myself more than a little miserly if i started worrying about a 1.8% fee to release spending money far cheaper than any equity release scheme would cost me.
For those that do downsize my recommendation is to buy from an online agency, they are telling me they’ll flog me a home 20-30% off its proper open market value ( seriously I have seen the advert). The message is a clear one; If you are selling use a traditional agency and put up with the fee that allows them to employ people who know what they’re doing. Buy from a cheap agent who is volume reliant and doesn’t give a stuff if anyone buys from them and you’ll get 16x what you paid your agent off from some muggins who saved themselves 1% but cost themselves 29%. Genius system!
You have to love Janet and John property journalism, there are more things to consider than cash!
Well, when you put it like that…
Brilliant!
>Who wants to downsize?
People who don’t want the maintenance hassle and cost (utilities, council tax) of a property that’s too big for them and would perhaps like to release equity to increase their standard of living.
I advise and help more elderly people to stay in the homes they love by using the money they had set aside to pay for the move and using it to pay for home help and gardeners for the rest of their remaining days. I’ve had scores of tearful people who had never been advised to think that way and were able to stay in the home they love, in comfort and with peace of mind. I may lose the instruction at the time, however, I often pick up many recommendations as a result and, the family usually comes back to me when the property finally has to be sold.
Over the years I’ve had scores of tearful (happy) people who had never been advised to think that way and were able to stay in the home they love, in comfort and with peace of mind. I may lose the odd instruction at the time, however, I often pick up many recommendations as a result and, the family usually comes back to me when the property finally has to be sold. It’s not right for everyone and we discuss all options with them based on their personal circumstances, however, it is probably better advice than they will receive from many agents who were selling gym membership just a few weeks previously.
So the windfall of rising property prices should be free of tax, and as free of fees as possible as some sort of reward for many years of keeping the national housing stock properly maintained?
Additionally you think people who have invested in premises, staff, training, paid business rates, national insurance contributions, bank charges and taxes should subsidise the scheme to maximise the spending money available to people who are already in a comparatively privileged position?
Okayyyy!
>Additionally you think people who have invested in premises, staff, training, paid business rates, national insurance contributions, bank charges and taxes should subsidise the scheme to maximise the spending money available to people who are already in a comparatively privileged position?
Who are you addressing? Your comment is in a reply to my post answering your question “Who wants to downsize?”. If you are addressing me then I don’t know where all the tax issues came from, I was simply stating who would want to downsize.
I personally can’t wait. Far too much hassle & cost owning a property that’s too big. Excessive heating & water bills, council tax, gardening costs, property maintenance costs. In a great school catchment area that’s no use to us any more.
Then there are probably many who downsize to a bungalow for downstairs bedrooms.
Plenty of people, I’d say. Not everybody is emotionally attached to their home and there are plenty of things that become less attractive as you get older.
Oh so its alright for professional estate agents to earn a fair commission? Glad that is finally sorted
Now about this can’t wait business how is your sale going?
I agree with you Robert. Why should anyone tell you what you should or should not do. Government policy of taxing people to move will beyond doubt put a number of people off moving. Although I see little justification is agents charging excessively for what they do – percentage fees being one of those – it is changing as thankfully we still pretty much live in an open market. At least you get a service for what you pay to an agent with Government it is merely opportunistic taxation. Paying an agents charges is a choice – Taxation isn’t.
The whole issue begs the question as to whether high street agents should openly state their fees.
We fully understand how difficult this issue is.
Why is it difficult?
We openly state our fees on our website and if people call us to ask – we offer a fixed fee or a completion fee up to 1.25%.
Does it affect our business? It seems not, as we get more valuations and more instructions than any of our local competitors who, almost without exception, don’t display fees.
I’ve rang our competitors as a potential seller and asked about fees, “well it depends on a lot of things” “its best if we come out and look at the house first” “we’ll match any fee you are offered” are just some of the replies I was given.
This reminds me of ringing a double glazing company to ask how much a 4x4m conservatory would be. Evasive, seemingly having something to hide and not transparent. I went with a company who gave me a good idea of the price and weren’t far off when they gave me a quotation.
The level of fees consistently comes out in surveys as not the most important factor in a sellers decision; reputation, service, customer reviews and trustworthiness being more important.
So, why is it difficult to openly display fees?
Yes, what’s so difficult in publishing the normal commission rate you charge? Together with information on when and how this rate varies?
I’d be interested to hear. Where’s PeeBee when you need him most?
Publish the commission rates on your website and there should be a national register. By all means tell potential customers why your service is so much better than other agents’ but make sure you can substantiate the claims with hard facts.
Length of contract and whether it is a rolling contract are other material information which should also be published.
Ask any professional for a quote for a job (plumber, architect, builder, etc.) and they will ask to see what the job involves first.
In the case of estate agency, this may involve method of sale (private treaty, auction, tender, informal tender etc.) any likely additional time spent at viewings (size or complexity of property), likely time spent sorting survey or legal issues out, additional marketing costs, specialist suppliers such as drone operators, 3D tours or video etc. At PDQ we always try to give a rough idea of a fee range and state that this is dependent on the property, location etc.
There you go Chris, you’ve managed to explain the process in a few sentences. All you need now is to quote your base commission rate, what that would be for and then state how that may vary depending on the above. Less than half an hours work to give your customer a good idea of what they are looking at.
I would have thought Estate Agents would want to put themselves above that of the building trade. But if Builders just did one thing 90% of the time then I’d expect the same from them.
As for conveyancing solicitors you’ll generally get a fixed quote but you tend to have to phone up. Then if you instruct a general lawyer they will provide you with a detailed breakdown of their charging rates down to how much a photocopy will cost you.
So to clarify Mr Duck, you feel our fees should be displayed as…….from X% or from £X…with an * by the side denoting that the amount payable may be higher depending on the particular property or requirements entailed for us to achieve a successful sale at the best possible price?
Are you pinkmove in Newport??? fairplay you take a lot on.
The Daily Mail. That is all.
The Daily Heil-
so bad I refused to help a little old lady when she asked me to help her get it from a high shelf. I told her to stop buying comics written by lazy facists
@ waco79, why turn a perfectly sensible point into a juvenile display of bigotry? Check out Robert May’s response for a grown-up way to respond
Well said waco79 – the paper and it’s nasty journalists stink!
in what way is it bigotry to call out the daily mail as fascists – it is factual
MarcH
The way forums work, is that when one replies to a specific comment it is related to that comment not necessarily the whole thread. If I had wanted to discuss the main thread I would have left a “comment” not a “reply”.
However, many thanks for the patronising “reply”, I do hope I have returned the favour!!
😉
It’s a fair question should estate agents display their fees, but the answer in my opinion is no. When someone chooses to use the company i work for, I dont want them to choose us due to our fee, i want them to choose us due to the service we provide compared to our competitors. We arent expensive, but i want the chance to compete on customer service, not be ignored because we choose to set a level that i feel is reasonable for both sides, but not a cheap as chips operation. If someone comes into the office, or phones to ask about of fee, i will discuss it with them, but then i have the chance to expand on what we do.
IF somebody wants to market their property at the right price and it takes me 3 months less to sell it then the muppet asking 10% over value,,,why should they get the same fee??? builders don’t quote fee cos every job is different.
The time is right for good old fashioned rigorous journalism that actually researches and cross checks ‘facts’ rather than relying on questionable press releases from firms with a vested interest in deceiving the public.
Kitchen table journalism that’s all. Its August, a quiet month; they need a headline to shock their readers now that Korea and Trump have stepped back from the BIG RED button, and the usual stories of EU stole our grandchildren, statins will save your life and the coldest and snowiest autumn is on its way! Whats better than an opportunity to have a side swipe at the worlds most hated profession, estate agents. Wonder when The Express will run it!!!
On a more serious note, they forget to mention that the downsizing will cut down on annual running costs and of course the £168k could be an annuity or indulge themselves with a few lovely holidays and spoiling their grandchildren.
The time is also right for us to be clear on our fees. Our industry constantly criticize the hybrid/online model who generally do state their fees but we don’t dare mention ours in any adverts. If anyone calls my office asking what I charge I tell them. We charge 1.2% across the board. We don’t negotiate and we don’t do different fees for different clients. That is as unfair and dishonest as you can be. Call my office and I’ll tell you my fee straight off. Call most of your offices and your fee discussion avoidance training kicks in. You just can’t bring yourselves to give an honest answer. One on the valuation most of you out there will get whatever fee you can. If it’s an old dear who doesn’t know better and doesn’t negotiate you’ll charge her 1.5%. If it’s a hard negotiating 30 something guy you’ll drop. THAT is a bigger issue than all the gripes and groans about Purple bricks and all the other online agents. Our industry is NOT honest, fair and transparent with our fees.
Well said but that’s not very convenient for the agenda of a lot of the posters on this forum.
I believe that in many many cases nowadays the estate agent’s fee will be less than the stamp duty on the purchase.
Where are the lobbyists and industry Rics, networks, naea, onthemarket, rightmove, zoopla..they should be constantly feeding media with stories of how estate agents help the process and aren’t making that much money i.e Average salary of manager and negs posted in press.
We sales chase
we do solictors jobs
we hold keys for surveyors to turn up at 8.50 to annoy my staff
we employ locally
we get paid for getting people the best price. if they were selling through online or even worse, privately to mate in the pub , they could lose 1000’s.
etcetc————–
Is it to strong to say that agents get the same propaganda as they must have used on the jews..its all false but hey who cares its popular. i might complain to human rights
Conspiracy Theory
Zoopla and rightmove want purplebricks to succeed so they can have 1 customer paying the same as all the small estat eagents = less Reps for the portals = More profit = zoopla owned by daily mail.
Wow – just wow – and people wonder why estate agents are disliked. Firstly estate agents are invariably ill informed and havent a clue on the conveyancing process and cause more problems than they solve but it is incomprehensible how you could even think it appropriate to compare how estate agents are viewed with atrocities of the past is an absolute disgrace.
i was comparing propaganda methods , not saying estate agents go through anything like the jews. You ve been reading daily mail to long and using part of a sentence to make a fake reaction.yep just read my sentence back… it is this kind of journalism that creates problems for minorities in all of society. I think being aware of how atrocities of the past actually happened is more useful so people learn what theyre fake headlines can create.