An estate agency that charges buyers not sellers is proposing to roll out nationwide.
FreeAgent247.com, has been set up by Daniel Lewis and Gerard Smith, and claims to provide owners with a ‘free’ way of selling by reversing the fees so they are paid for by the buyer.
A statement about the agency, issued by its accountant Haines Watts, claims that the approach has been ”extremely successful” in Worcestershire, where the company has been based, with the agency regularly handling over 100 different properties.
It also claims to have achieved the asking price on 99 per cent of properties, which it says is “a key national measure of success for estate agents.”
“There were a lot of doubters when we launched FreeAgent247.com, but I think it is safe to say that we have proved the critics wrong” says Lewis.
“Reversing the fees so that the buyer picks up our charges makes complete sense for the seller. It takes away a big additional cost, whether you are selling a two-bed starter home or a luxury rural property. We are now seeing a steady stream of clients asking us to sell £1m+ properties.”
He continues: “Usually in our sector, when you lower the price for the client, they expect the service to suffer. This couldn’t be further from the truth, with a team of experts - covering estate agents, digital marketeers, photographers and video specialists - handpicked to deliver outstanding customer service and, importantly, to use their skills to sell your property.
“We’ve tested the model in Worcestershire, now the emphasis will be on increasing our geographic reach across other parts of the country.”
The firm was set up in 2018 and is online-only, with no shopfront premises.
On its website it tells sellers: “We can create a bespoke marketing video to highlight your property’s key selling features … We will pick a launch date and time to optimize market reaction.
“Your property media will then be showcased on our website, social media, Rightmove and also handed over to our Digital marketing team who target your perfect buyer through continued online campaigns.
“FreeAgent247.com will then deal with all enquiries personally, accompany viewings and negotiate all offers on your behalf. We proactively alter our property details every week to ensure your property is amongst the most viewed online, every single week. We also provide a detailed weekly report on the online activity.
“Once we have agreed a sale for you, we will work closely with all parties and solicitors to ensure your move goes swiftly and smoothly. And you pay us absolutely nothing.”
At the bottom of each property’s details on the agency’s website, there is the statement: “PLEASE NOTE A buyer's fee of 1.0% +vat of the agreed purchase price is payable by the buyer, upon completion only legally through the solicitors, in addition to the agreed purchase price to FreeAgent247.com.”
You can see the agency’s website here.
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Fees for consumers should be shown inclusive of VAT so example should read 1.2% inclusive of VAT.
I innovated this approach in 2008 and have pursued it ever since. There are some real advantages to sellers but it is a challenging model and you have to get it right. It’s not especially appealing as a lead generator either so not really that suited to the online model
fine in a sellers market where people are competing for houses..... wouldn't work so well in a tough market
the seller still pays...... as buyers will knock of the commission off the purchase price (which probably explains why they have only achieved asking price on 99% of sales....... as most of ours are selling at asking price or above in the present market)
According to their website – and looking at their offer form I am a little worried by this clause –
‘In making the above offer I/we acknowledge our requirement to pay a buyer’s fee on completion of sale and through the solicitors only of £2000.00 + vat (if the purchase price is lower than £200,000) or 1.0% + vat of the eventual selling price (if purchase price is higher than £200,000), in addition to the agreed purchase price. Payment of the buyer’s fee being instructed by the seller and forming part of the property seller’s sale contract.’
First, will this distort in any way the offer made by the prospective buyer, eg they reduce their bid to compensate paying the vendor’s fee?
Second if the buyer is using a mortgage would the paying of a vendor fee by buyer, be seen as a really a mechanism to buy property at a higher value. Eg, vendor sells at £400,000 – buyer puts down £200,000 get a mortgage for £200,000, and pays the vendor gets the benefit of £4,800 via the instrument of the fee being paid to the agent. In reality the real cost to buyer of buying home is £404,800 not £400,000 should the mortgagee not be made aware of this?
Third, what is the HMRC view? As SDLT is paid on the sale price, so if the vendor gets sold at 400,000 then SDLT is calculated on the 400,000 but if the vendor receives 400,000 plus the benefit of the seller’s fee 4,000 + 800 VAT, should SDLT not be applied to 404,800? No doubt the accountant in the mix will have sorted all of these issues.
Wow, never thought of it that way before. Same goes for modern method of auction (which is a complete con for the seller with extortionate fees for the buyer)
Surely a buyer has always paid the sellers fee by simply agreeing to buy the property. Agents fees always come out of the proceeds of sale. As such, with this model, I am sure that an offer will be made to reflect the fact that the 'fees' will now be coming out of the buyers deposit pot.
No seller has ever had to put their hands in to their savings to pay for a sale, unless they were in negative equity.
I do wish them luck as it is definitely a differentiator and I'm all for supporting those.
If the buyer is paying the fee, they are your customer, not the seller. So a buyer has to find the extra fees to pay the agent on top of their deposit and conveyancing costs?
Hmm, similar scam to modern method of auction.
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