UK estate agents are paid one of the lowest commission rates in the world, according to a spokesperson for a leading brand.
Alice Watson-Smith, Managing Director of Fine and Country French Riviera, makes the claim in the latest edition of The Home Stretch Podcast in conversation with Iain McKenzie, Chief Executive of The Guild of Property Professionals.
She notes that the average commission in France is around 6%, which compared with the UK market sounds astronomical.
“In relation to all the other countries we work with as a brand, the UK has one of the lowest commission rates in the world. In South Africa it is around 7%, whereas in Portugal, Spain, Hong Kong and Australia, it is all around 5% to 7%.” says Watson-Smith.
Growing up in Zimbabwe, then moving to Cape Town, South Africa where her estate agency career began, Watson-Smith now runs a very successful office in Cannes, working within the prime sector of the market. While there are similarities between Cape Town and the French Riviera, such as great weather, palm trees and beaches, when it comes to the property markets, they couldn’t be further apart.
Exclusive instruction
“While the Cape Town sector I worked in was more of a first-home market, the South of France market, specifically on the French Riviera in the upper quartile, is predominantly second-home buyers and investment properties.” she adds.
Speaking about estate agency in France, Watson-Smith says that traditionally the idea of a sole mandate or exclusive instruction is a foreign concept.
“In France, most agents work on open/simple mandates, with sellers giving multiple agents the listing, and whichever agency sells first, makes the sale. The seller has their price, and the agent adds the commission on top of that.
“What that means is a home will be listed at different prices, with different images and different agency details, which can create a minefield, especially for international buyers. It is a system that is changing, particularly in the international marketplace on the French Riviera where we have been successfully increasing our number of exclusive mandates.”
McKenzie and Watson-Smith go on to discuss several other aspects around estate agency in France, such as regulations, government taxes on home purchases, the sales processes, and the upper quartile of the market.
To hear this conversation in full, visit The Home Stretch podcast
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In fairness, making a very general comment and claiming no specialist knowledge, Googling the subject says that USA realtors charge (up to 6%, but they provide some legal representation) and Australia (1.5 to 4%). Both countries are lightyears ahead of us when it comes to property marketing. I suspect that their creative presentation of homes, pictures and words helps owners appreciate what they're paying for a little better. Their agents tend to look very professional compared to some of ours.
HOW properties are marketed is tangible - you can see it, touch it. Sold boards are the only other tangible differentiator between agents. Everything other than property marketing and sold boards is intangible, and amounts to agents saying, 'Use me, I'm a good guy, and I advertise on Rightmove."
The UK's property marketing tends to fall into three categories: the very good, the average, the bad, and the ugly - yes, that's four. I think that means that many agents feel inadequate; they're not offering much, so they drop their fees to buy business. And, looking through the portals, I'd say that many would be right in their thinking. I don't want to offend a whole industry, just the part that's letting the rest of us down in the UK. And I want to encourage them to wake up! Low fees must inevitably lead to corners being cut, or alternatively, failure and having to be sold to a rival.
For how it should be done, especially for higher-value homes, see, for example, Google Ashdownjones; their approach makes a BIG difference to how houses and agency brands are perceived. It makes a massive difference to the bottom line. You would be astounded by their turnover in the second year of opening.
But why push the boat out only for your dearer homes? Don't forget that the average price for homes in the UK is around £275k at the moment (depending on who you ask). That's much more than you'd pay for a packet of cornflakes that comes in a brightly coloured box rather than a paper bag.
Why should smaller homes be promoted with photos that make a nice kitchen look like the lower deck of Noah's Ark following a nasty storm? Even a flat worth £70k represents someone's massive investment. that's not pocket change.
All homes deserve better than many agents are providing. Only when agents do a great job will they gain sufficient self-respect to expect the commissions they will need to stay in business - especially during these more challenging times.
John DurRANT (over)
P.S. I needed to get that off my chest. I love estate agency and most agents, but some really get up my nose because of their lack of a sense of responsibility to their clients and to themselves.
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