A traditional estate agent has taken a leaf from the book of online rivals by scrapping old-style percentage commission and instead charging a flat fee for all sales.
“Why should you pay more to sell your home because it is worth more?” asks Michael Dyble, managing director of Dybles, a single-office Winchester agency that has been running on a commission-based system for almost three years.
The agency will stick with its traditional no sale, no fee principle.
“We simply charge one fee of £2,750 + VAT (£3,300) no matter the value of your property. After all, everyone gets the same service whether their house is worth £200,000 or £2m so why does everyone pay a different fee” explains Dyble.
“I’m trying something here where I can get people in the mind-set that estate agents can have a ‘high street’ office, employ the correct staff, offer the best service but without having to charge unfair and unequal fees that get charged at the moment. I am trying to revolutionise estate agency” he says.
Dyble told Estate Agent Today that he had always intended to move to a flat fee system when he established his company, but he felt that the market and the customers had not been ready until now.
Under the old commission structure, and in a relatively high value local market such as Winchester, his firm typically generated £4,000 to £5,000 plus VAT per transaction.
“But as I’ve seen more Purplebricks and other online agency boards go up, and from talking to customers, it seems a no-brainer. The customers I speak with say that they want the traditional services of an estate agent but they cannot see the need for high fees.”
Dyble says he will not stint on the same scale of services as he offered before, nor is he considering operating as an online agent.
But he insists that “there’s so much profit in estate agency” that he feels flat and lower fees could generate more business than he enjoyed before.
The Dybles agency started the new fee structure at the end of last week so cannot yet say how it is performing - but Michael Dyble has promised to keep EAT informed.
His firm’s website and more details of the scheme are here.
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Another agency that thinks fees are a better way to differentiate! When choosing any agency, valuation and fee should be the least important to any vendor
Good luck to him, it will probably serve him well. It is a little bit of a shame though that high street agents are now reacting to the 'fee pressure' put on them by online competitors.
And what, may I ask, should be the most important thing to a vendor when choosing an agency?
@Chris Arnold - from a distance it looks like you've nicked my avatar:)
A brave an innovative move, I have to say. Good luck to them!
I don't think lower fees has to mean a race to the bottom as some agents seem to think. Some agents feel justified in charging high fees or commissions for the service they offer. Fair enough, but I think it is definitely the case that certain sellers are peeved that estate agents can get such a large cut for, in some cases, doing very little.
Fees are too high and people will inevitably look for cheaper elsewhere. Of course, they'll want the service to be as good, if not better, when they go elsewhere, which isn't always going to be the case for less money. But, at the same time, higher fees doesn't automatically mean better service. You see it with high-end hotels and restaurants - more expensive doesn't necessarily mean superior.
*and
Well, especially now that estate agents not only compete each other but they have to compete online platforms too.. That's where agencies need to introduce new ways to fight the oligopolistic market of Online platforms and attract clients/tenants...
In the 90ies Mintel published a report into estate agency fees which recommended performance based commission as the best solution, I agreed but vendors found it too complicated.
@Simon Shinerock - agreed. I've tried it again and again - I would say that most vendors don't get it and of the rest most still end up thinking that they will end up paying too much, even though they get more themselves.
I do think that charging a percentage of asking price can be a bit bonkers given how much work can be involved in progressing a cheap flat through to completion compared to a semi detached house in the same area. As an agent though, by the end of the year, the fees end up balancing out to an average across all transactions that hopefully is profitable.
Which is why a fixed fee, regardless of your property type, makes sense. BUT, if I say £2750, the guys across the road will say £2500 and the ones round the corner will say £2000 and so on.
I know that kind of happens with percentages, but because most people struggle with calculating them, a vendor is unlikely to go for someone saying "I'll do it for 0.05% less than the others" because they won't be able to work it out for themselves.
Please don't think I'm being offensive. I have to say that although it costs me more, I like VAT being 20% because all you need to do is knock a zero off the end and double it - a sum I can do in my head much easier than 17.5%.
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