UK estate agency fees are amongst the lowest in the world. According to research from GetAgent we share the bottom of the league with Ireland, the Netherlands and South Korea – countries that are seemingly as disappointing in real estate revenue as they are for their national football teams (Note to critics: I know the Netherlands are known as a good team, but they could only draw against Scotland recently and Turkey have just beaten them, so there).
At the other end of the scale Australia heads the fee table in cash terms with an average commission of £10,866, a combination of high house prices and a typical percentage fee of 5.7%. Perhaps all those criminals that we deported a few years back are now flourishing by turning their illicit skills to extortion by fleecing home-sellers? The apple doesn’t fall far from the tree and all that. Seriously, good luck to the Ozzies as they clearly understand how to justify a decent reward for a job well done.
But before we go any further I should address the elephant in the room just in case the comments section combusts in a fit of apoplexy even more so than usual. My time as the founder of a business that preached lower fees may seem somewhat responsible for the fact that domestic estate agency earnings per transaction are meagre in comparison to other countries. But I don’t really think I can take the credit for any dilution in the percentage that you charge despite, of course, the Emoov PR machine being such a shining example of messaging cut-through. It’s not entirely my fault or that of my ambitious online peers – although you’d like to think it might be as that would ‘explain’ why it’s not your fault. Although it is.
Your fault, that is. Let me explain.
Outside of London selling fees are ridiculously low – sub 1% nowadays. I regularly hear stories of independent agencies racing their neighbouring independents to the bottom on listing after listing at c.0.5% and with fixed fees in the hundreds of pounds being quoted to ‘win’ an instruction. It’s no-doubt true that despite house prices increasing by 53% in the past decade, your fees in real terms have stayed the same. That’s hardly progress.
So why aren’t you charging more? After all, many of you preached that online agency fees were too low and that traditional agents fees are worth the money because traditional agents are better, etc.
Why? Well, it’s probably because you’re not good enough to be able to.
Look, I’m not having a dig I’m simply contending that the standard of estate agency as a service to the public in the UK isn’t good enough. There are always exceptions, but I reckon most agents resort to reducing fees because they simply don’t have anything much else to offer.
Harsh? Maybe, but if it were not true and customers were given other reasons to instruct than just fee, then fees would be higher and so would standards be. I say that an ordinary level of performance and accessibility, as far as the public are concerned, warrants a fee that is, well, just ordinary.
Low fees – caused by poor service. Poor service because of low fees – it’s a vicious spiral of apathy and the ordinary. Earning a grand per deal and having to cover staff, premises, portal and marketing expenses is not exactly a motivating dynamic and the result is demoralisation and a poor experience for your clients. Whereas exuberance born from big rewards inspires you and leads to over-reach in service terms. Higher fees – justified by great service. Great service because of higher fees. It’s entirely reciprocal.
If your ‘why we’re better than the others’ list were brimming with benefits that the consumer recognised as value added, they’d pay you more. Just like they do in the US, Canada, France, Japan, New Zealand and so on. In those countries, real estate agents are respected and admired rather than derided. They are known to do a good job and to be courteous, professional, reliable and affective.
Why not here where we rank with traffic wardens and politicians? Well, if you were to ditch inaccessibility, ignored messages and unfulfilled promises for the opposite approach, then why not indeed. And start demonstrate with data that the additional half a percent that you will charge is provably recouped from a higher sale price achieved compared to your competitors.
Being different. Being better. Thinking like a consumer, not an agent. What does the modern consumer actually want? Then, give it to them.
Despite my prior misguided efforts to see UK estate agency commoditised and fees slashed across the board, UK property owners today will pay a good fee if you take the time to build a relationship with them first and provide them that reason to pay you more. It’s a question of value demonstration, not cost.
Incidentally, average estate agency fees in Croatia are as high as 3%…. obviously, a nation that negotiates commercial terms better than it plays football.
Russell Quirk is co-founder of PropergandaPR, the property focussed PR agency, and an estate agent for 25 years.
Comments (35)
He’s right on this one. And it’s because too many agents don’t understand just how valuable and important a service it is that they provide.
“Why should I pay you all that money if you can sell my home in a few phone calls?”
“Because it took me years to work myself into a position where I can do that for you.”
Is an answer that, if true, most vendors will accept and agree to pay a higher fee.
They just want to hear that you are confident in your own ability. Defending your fees with calm confidence will do just that.
“He’s right on this one.”
Of course he’s “right”, Charlie – he’s simply rearranged words said by countless others, countless times, for countless years and claiming them as his own.
As an Agent, he knows all of the above – it is time-tested and true – and should have fought the fight every day of his working career – and even on his days off.
Yet despite ‘knowing’ all this, he and others set about trying to destroy the very essence of those words and cheapen our industry at a point when it was already struggling to justify its’ worth.
To now turn again and lay claim to championing increased fee levels – whilst simultaneously talking down the industry’s ability to actually justify those higher fees – is frankly making a mockery of all that our profession stands for.
Yet another idiotorial (credit: me) that should never have been allowed space on this site.
DARN IT!!
Just looked up ‘idiotorial’ and it’s a word already.
There’s me thinking I’d made it up. Just like the cut’n’paster who cobbled the above together.
I guess it’s true – all the real good stuff has been invented already…
…and shouldn’t be bu99ered about with by clever d!cks with an agenda.
An experienced agent makes some good points and you lot just critisize and berate him. Bit sad really. We’re all in the same industry.
Experienced, give us a break. This guy was happy to go after other agents and failed miserably with his ventures. Most of what he talks is regurgitating other peoples news, not new ideas (this same story broke a few days before) with his twist to be in the lime light. He can’t even get the facts right.
This from the man whose company stated
“Be vigilant: The average home seller in Britain pays £3,008 in high street Estate Agency commission . . . that’s Daylight Robbery” (source: PropertyIndustryEye – propertyindustryeye.com/emoov-agrees-to-remove-claim-that-sellers-could-save-thousands/ ?
and this, from 2017:
““This research demonstrates the eye-watering amount of money that’s still being paid due to the outdated practice of charging based on a property’s value.” ( propertyindustryeye.com/agents-have-earned-303-6m-in-commission-so-far-this-year/ )
or what about his 2016 claims that agents earned £922 per hour – “This is the third year we have run this research now and it’s unbelievable that high street agents are still cashing in to such an amount, at the detriment of UK home sellers… The cost per hour with an online agent is around eight times cheaper despite the service provided being consistently better, so hopefully it won’t be long before the commission fee structure becomes extinct altogether.” ( propertyindustryeye.com/two-online-agents-claim-high-street-agents-earn-more-than-any-other-profession/ )
More neck than a tower of giraffes.
Welcome back, and a great post as well!
If anything was going to drag you out of retirement, Quirk was it. Welcome back, I think many will say it too, while a few wish you hadn’t, lol.
Thanks, Woodentop – much appreciated.
Whilst I’m sincerely chuffed that some are pleased to see my “return” (although in reality it’s more of a ‘Special guest appearance’ than ‘back by popular demand’) – it’s gnawing the ankles of the ones that wish I hadn’t that gives me the most satisfaction.
Which is what I’ll do – as and when required.
RQ giving advice/opinion on fees, like having Hannibal Lecter as your babysitter!!
Gangsta – so what is the cause of low fees
Taking a pop at Quirky is like taking candy of a baby – so let’s see a sone depth to your posts and give us what YOU think fees ha e dropped since the mid 2000s?
Well, I think you can factor in transaction numbers.
500,000 per annum in Australia
1.2m a year in the UK
Circa those numbers I think.
If they didn’t charge that sort of fee, they would be out of business. And I’m sure they have fee battles as well.
Interesting point – as an additional comparison there’s expected to be circa 950,000 transactions in France this year.
The UK is a “property owning democracy”; is it not? (PS – was originally coined in 1923 – so not Thatcher.)
To date I’ve had 2 careers, the first was well respected by the general-public and the second as an agent – well not so much – to put it politely.
In my time as an agent, I’ve been fortunate to work with some great agents – true leaders and consummate professionals. I’ve also met and worked with some agents that are quite the opposite, it saddens me to say that the latter is more commonplace than the former.
Mr Quirk asks a reasonable question, should we try and answer it rather than just take pot shots at the person asking the question.
My thoughts are:
1. Online disruptors? Certainly, they’ve played a part, but for a sector that’s never got passed 10% market share (and currently sits circa 7%) their effect is contributary perhaps but only marginal.
2. Referrals fees – as has been mentioned earlier. ‘The Ryan Air approach’ must also be a factor?
3. The big corporates? (Connells is owned by a building society.)
4. Lack of barriers to entry for the profession (no minimum qualifications)?
5. Lack of regulation?
6. The dominance of property portals?
Would be keen to hear other (productive) thoughts on the issue…
Fact check … Until multiple companies like Emoov appeared in the last decade selling to the public “Commissary” there never was a problem and to achieve their point they spent meggar £m’s on advertising that individual agents could not ever hope to compete against that dragged the industry fee’s down, while hiding from the fact that high street fees’ have high street overheads. It was relentless attacks on agents fee’s by him and his cronies’ and they ran up debts and most went broke after spending other peoples money on so called “Business acumen” LOL
Secondly some of the fees in other countries include the conveyancing process, so the story is very misleading.
Time that PIE gave up on Quirk. He is not an expert in his field but is entertaining to see how out of step he is with reality for everyone to see.
Were any of you around when Estate Agents had scale fees set for us? Were any of you around when the delightful Maggy Thatcher decided to abolish scale fees and let the market decide? I was…………If you spot a problem in our property world, I will guarantee its as a result of a well meaning Politician who has brought out legislation, which because of poor drafting always has the reverse effect.
Crikey, I must be in a tiny minority who believe that low fees are directly related to referral fees.
When corporate agencies and larger independents target their sales staff to refer business to their financial, legal, removals, insurance and other providers, you soon realise that the sale of the clients’ property becomes merely an incidental aspect of the overall opportunity their instruction represents.
Hence they can drive the commission requirement down due to the obvious cross-selling opportunity the instruction represents.
Nonetheless, the instruction remains an essential element and anything that gets in the way of that has to be circumvented one way or another. Discounted fees, special Rightmove promotions can all be deployed, in the safe assumption that each property will generate traffic from which to secure referral fee income.
This pesky pandemic was a brief impediment to this traffic, having the unfortunate effect of reducing their exposure to as many punters as they would like.
Did anyone else spot that it was just such agencies that were the first to become more flexible on viewings as the pandemic progressed, being the first to allow even those not on the market to view ?
If, as an industry, we want to be regarded as professionals, and to be able to charge and defend the fees we deserve, we should clean up our act on referral fees.
Red rag – bulls! Why rise to Russell’s bait, he clearly revels in raising the hackles of many. I find his posts so far off track they are somewhat entertaining.
PropertyTrack – if Quirk is so far track on the cause of low fees – what in your opinion is the cause.
it’s easy to say some one is wrong – yet by doing so- without an explanation on why and a counter argument- your retort is hollow
To paraphrase Seth Godin – if people only care about your fees you haven’t given them anything else to care about.
Much of the low fee problem is down to a lack of differentiation and a failure to communicate what customers really value.
Come on…racing to the bottom on fees has been around well before online agencies started touting their cheapness. The only difference is is was a war fought in small areas and quietly, but online waded in with a global “we do everything – for less” and then everyone one else started to fall in line because selling a property was deemed as ‘easy’ because the market demand was good enough. That’s a free market for you.
Good estate agents were seen to ‘prove’ themselves when the market becomes tough. I have noticed there industry change over many years, and scaling up takes over.
If you turn your attention to market share dominance being more important that doing the job well, you end up in the ‘stack ’em high, sell ’em cheap’ and off it goes again. Works for a while until something changes…like the market.
There is very little left in the world where the margins on essentials/services are significantly high and where high volume is part of it. Someone always wants to mass produce at a lower unit cost to turn the same profits.
Racing to the bottom is old news….we just have new players on the pitch who sell us that concept as a good thing. The customer will decide, they always have.
Most of the British public do not like to pay £1000’s in fees no matter how good the service, they are especially not likely to pay you 1.4-1.75% when some desperate “agent” has already been sitting in their living room offering 0.75% so whilst you might get a minority of instructions at an acceptable rate, the majority will go to whomever offers the lowest fee and that then drags down the good and the really good agents into the rat race, if they want to stay in business because the good agents are by far outnumbered by the poor, the bad and the desperate. Oh, a word to the ignorant poster, I’m an owner/manager and love this business but am just about to retire, aged 55 and dumb isn’t in my vokab, Vokaba,vacabala, vocabulary, perhaps you should look closer to a mirror, you are either an employee or ignorant and disrespectful, which by extension might be why your fees are low.
The average estate agent (owner) is as dumb as a post. Because of that we are the only country that beats each other up in fees.
Low fees are a result of being able to sell, but being unable to persuade.
An article full of regurgitated and unoriginal content. It’s yet another strange article written by someone who isn’t at all relevant to modern day estate agency.
What was the point of this story or have I missed the point entirely?
I have asked the others, so I will ask you AlwaysAnAgent
who/what is the cause of the low fee nature of U.K. estate agency?
it all can’t be laid at the door of cheap fee agents as fees have been dropping since 2008 – and the callcentre agents Purpleprix and Yerpahave only been around since the 2014/15 ish?
As Home Counties agent myself, I have my own thoughts – but would love your thoughts first
Hi James,
In my region (West Midlands) we only saw fees start to drop circa 2017/18 which coincides with the first real introduction of Purplebricks to our area and importantly the beginning of a drop in available stock for sale. I think both factors combined in the poorer high st agents begin to drop their fees.
With the market then turning to a sellers and not a buyers market the clients were getting offers agreed and selling fairly quickly. Would those clients use those agents again? Maybe not but with the total lack of stock now even if you want to move you can’t find anything to buy. We need the market to calm then maybe we can start to show our clients the difference between a good and a mediocre agency and charge accordingly.
I wish Quirk would crawl back into his hole.
Taking emotion out the discussion ‘smileplease’ – who/ what is to blame for the low fee culture of estate agency?
It’s not about who is to blame.
It’s the fact this individual changes his strong beliefs to suit his narrative.
He has no moral compass. Has a prolonged history of raising money off people by saying what he wants with care if its right or not.
Left shareholders and other businesses carrying the can with his experiment with online agency and now has been trusted to recruit self employed agents by selling them a dream.
On top of all that he makes a living as a property ‘expert’ talking about his time in agency while glibly retelling stories of his tragic past with emoov where people list jobs and savings.
I think it’s disgrace eye give him a column just because they know it gets comments.
Eye love running polls, do one for your loyal readers, should Quirk be allowed to still write stories for the site yes or no. Then publish the result with the right plan going forward.
Ok – let me reframe the question, putting aside the issue of Quirk
instead of who is to blame
what is the cause of the fee degradation over the last 15 years?
Competition
Don’t even know where to begin with this except you tried a low fee option Emoov that failed miserably ( with investor money you were tapping into months prior to its collapse with it to) now you are the advocate of high fees.
Further, the list of creditors for Emoov contained a sizeable bill to Google for adwords- just indicates to me you were speculating wildly on a low fee basis.
Part of the low fee problem has been the online agencies like Emoov, PB and Yopa advertising extensively with other people’s money and not making any actual profit from their core estate agency activities thus giving joe public the perception you can charge low fees- its not the only answer to a complicated scenario but an attempt to explain it in part.
Putting aside he tried (and failed) a low fee estate agency ‘haveathink’
putting aside he owes money.
How much of the low fee issue in British estate agency is down to the low fee agents (Pb/Yopa etc) and how much is down to the points in Mr Quirk mentioned – or is it something he missed?
Do you decide to write a column based on the amount of vitriol you will generate?