How do estate agents’ have the cheek to charge a king’s ransom for selling a house?
That’s not EAT asking the question – it’s the BBC.
And the BBC has the answer: sign up to a private sale website, take a few photos, and bang in the For Sale sign. It will cost you between £300 and £600 – a massive saving.
Furthermore, pay the private sales website a higher rate and your property details will be “advertised on the big portals like Rightmove and Zoopla”.
In a piece by financial reporter Brian Milligan (Selling your own house: Could it save you a fortune), estate agents are apparently “having to defend their reputations like never before”.
The story points to a change in the law, due later this year, when ‘passive’ intermediaries – ie, sites that in theory do little more than list properties – will be able to operate outside the Estate Agents Act.
The story predictably provoked masses of comments. Less predictably, perhaps, some of the comments are actually pro-agent: agents deal with the dreaded chains and they don’t just say “this is the kitchen” but negotiate.
Of course, there are some anti-agent comments including: “Estate agents will soon go the same way as record, CD, camera and DVD shops. The sooner the better. Estate agents were the epitome of everything that was wrong with the 80s and 90s.”
The fact is that the forthcoming deregulation of the industry – if indeed that is what it is – will all be about some rather crucial detail.
While it is proposed that the new business models will not have to worry about the Estate Agents Act, it does appear that under the Consumer Protection from Unfair Trading Regulations replacing the Property Misdescriptions Act, the duty not to mislead will extend as much to online sites as to the high street.
That duty means not just making sure descriptions are accurate, but not making omissions.
The OFT guidance specifically includes not just agents and developers but also “intermediate websites that facilitate contact between buyers and sellers”.
The BBC story (and comments) are here.
https://www.bbc.co.uk/news/business-22123316
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Comments
There is plenty of business to go round..
If your an agent and you say otherwise then you need to be more proactive, stop being negative and get your backside in gear..
Grant and HoP- Yes, good to see you recognise that there are some separate and growing niches, as well as a sustainable market for the traditional EA service.
I've no doubt private sales will grow (along with market share for online agents). It was all doom and gloom about them taking over about 5 years ago..... and I'm still waiting. To be fair the niche has grown but I can't say its a worry or effecting business. If anything its another board to tout!
To be fair the majority of our sales come from our mailing list anyway and the websites are just a rather handy tool for getting more of them to sell to.
Those who disagree with me are obviously missing a trick and/or haven't really got a clue what this game is all about.
Time will show which way the industry goes. I still have 6 instructions a week @ 1.5% and have no issues.
FACT : Rightmove won’t let private sellers advertise their properties - this is why EA's cannot moan about rising fees!
FACT : Whatever Rightmove plan it is very different to achieving
FACT : the PMA is of little use to buyers, most don't even know it exists and the old rule for EA's was, if in doubt leave it out. - so buyers never trust pictures or particulars no matter who the seller is.
FACT online agents are taking market share from traditional agents because there is a demand for this service.
FACT- a majority of sellers are happy with the service provided by on line agents
FACT - house of pain made up the statistic that 98% of properties listed with on line agents don't sell
FACT : Rightmove won’t let private sellers advertise their properties directly due to the revenue they will lose from agents.
FACT : Rightmove is planning on stopping Online Agents who allow vendors to upload their own properties from advertising on their site.
FACT : Selling/Buying from an agency is safer as the PMA and CPA are enforced !! Private vendors don’t care and therefore buyers are being more cautious !!
FACT : Trading Standards are taking action against Gumtree to allowing vendors to advertise properties with no EPC
As an agent I do not care if a few vendors want to try it, I will be more than happy to take on their property once it hasn’t sold. There are only three reasons ANY property does not sell…
PRICE
PARTICULARS
PICTURES
Why does everyone start getting into a flap everytime a story like this comes out!?
Then we get the Online brigade boasting "we do exactly the same as an estate agent but cheaper". If vendors want going to an online only agent, then let them chuck their £500 odd down the drain because they think they're "saving thousands", its their choice. The odd 1 or 2 will actually sell and the vendors will be happy with the service they had. The trick is to be on hand to mop up the other 98% that don't sell, happy days, easy instruction!
If you are a traditional agent and get worried about articles like this then its probably time you called it a day as you are still in the pre-2008 "i'll sit back and wait for the phone to ring" mind set. Being a cheap agent isn't a good business model. At the end of the day a MOTIVATED vendor wants results and pretty much (within reason) don't care how much it cost's to get them. An unmotivated vendor wil always go for the cheapest i.e. an online agent.
There have always been private sales, no problem, you can do your own Conveyancing too, most folk don't have a survey just have a look round and kick the tryes themselves, daft but true however, it was ever thus, where that advert appears is no issue to the industry.
Has the internet created more sales, more efficency?? no, just moved jobs and roles around the office.
Big asset to do yourself, but you can now, as you have always been able to. The question is how many, dont forget the last 10 to 15 years has seen negative unrealistic folk predicting the end of High Street agents, no one shut for years here, fact not talk matters.
The information advantage enjoyed by agents is being eroded by technology.
These days Joe Average can look up sold prices, asking prices and all manner of data to use as a guide to negotiation.
There will always be a need for the Estate Agent. There will also always be consumers that are happy with the service they receive an are willing to use a commission based system. This is all about choice, different consumers should be able to use the traditional estate agents, online estate agents or go it alone. Good Agents have nothing to worry about but one thing is for sure it should be an open market allowing for fair competition.
All estate agents do need to look at the commission based system though. For example consumer are smarting up to schemes like charging 2% for a £100k property costing £2,000 and then 2% for a £300k costing £6,000. Consumers know that their paying more for the same service as thoughs the less expensive properties. I represent the private seller and write a blog at www.mtppblog.co.uk using the OFT’s data explaining why the likes of the BBC think you could save yourself a fortune by using private sites. Its would be good to get some of your views on this and other topics I have on my site.
Is this an advert?
The online agent is lessened by legislation only, the definition of 'intermediary' restricts their duties as an agent but that doesn't mean they don't have a place in our industry. Remember they were borne from our inadequacies.
Whilst buyers will struggle with viewings, negotiations and chains it doesn't mean they won't evolve. Maybe the next niche to be filled will be professional negotiators/sales progressors who knows? The fact is, in a depressed economic climate we are being asked to justify our fees. Our present model is based on the price of the property and if we are to believe that we all give great service then it doesn't add up. Great service is great service regardless of the amount of the fee so why not set it as a fixed price? We can argue overheads but if the small independent charges 1.5% and so do the chains then that doesn't add up either so wasn't it a matter of time before someone asked 'why charge more just because my property cost more'?
We still own the industry but we need to look at our fees. If we charge £2250 (1.5%) for a 150k flat then that £2250 fee should apply to the 250k house.
Online agents are growing so obviously there is a need for them and we'd be foolish to dismiss them. It's only a matter of time before our advantages are completely eroded so whether we need to take our business completely online or offer a more transparent value for money fee that doesn't discriminate, it's something we need to get our heads around now.
Isn't it time we stopped kidding ourselves? Some estate agents may indeed deliver a better service than the online guys - but a hell of a lot of them don't. The culling process on the high street still has a long way to go. That's the real truth of the matter.
I just thought I would mention that this site is read by the industry and not the public. Don't try to justify your charges to each other. You are preaching to the converted. Just accept the critics and move on.
"If the online discount model worked then conventional agents would have gone bust years ago." No because different types of sellers and markets require different types of EA service. In fact, you said so yourself at the end of your post.
You claim "At the end of the day, I have managed to get my sellers more for their properties than they would have if they had tried selling themselves" I am not sure you can prove this but perhaps you can?
Your post seems to be saying that the traditional method is the most effective, but I have already given a case study of traditional versus online where on line wins.
I do agree with many of the other benefits of using a traditional agent, but this does not prove it is the more effective method, it just means it is more suitable for a majority of people.
If the online discount model worked then conventional agents would have gone bust years ago.
At the end of the day, I have managed to get my sellers more for their properties than they would have if they had tried selling themselves, I have competed directly with my vendors in the past (that used the online agents and my company together) and we have consistently had more viewings and higher offers, often beating the price per foot previously set in the areas we cover.
The key things lacking with online/vendor private sales are:
Impartiality: Vendors are emotionally attached to the sale and buyers know it, so there will always be a conflict with negotiations becoming personal and heated. The agent acts as an important go between to keep things on track and to keep the facts in the open.
Support: We have a wealth of experience with the market and legal / lease / managing agents / local authority that can help get a sale through when in most cases it would not.
Comparisons: It is hard to up sell a property when you only have one to sell and you are the owner of it. Agents can show multiple properties to teach the buyer the value and rarity of what they are seeing, this becomes very useful when stopping a deal from collapsing as you know what the buyers have seen.
Vetting buyers: When you have done the job as long as we have you get to know the tricks and problems that certain buyers have so you can vet them and eliminate most of the time wasters and dreamers. Private vendors cannot easily do this.
Market Knowledge: When you are selling and letting day in day out you know the market intimately. Most private sellers only believe what they read in the papers or on the news which is often either too general or biased to the issues of the day.
No sale no fee: For all the work we put in, sometimes a seller changes their mind on selling even on the day an exchange is due. We only get paid if the seller is happy with the figure we have got a buyer to offer so the risk and hard work is on our side throughout.
Another thing to note is that the fees in the UK are some of the lowest in the World for the same trade. Foxtons tried the UK fee model in the US and failed as the vendors wanted a more personal service which they were happy to pay for.
@Marked one
"it's about estate agents justifying their fee in order that the public perceive their service as value for money and therefore worth paying. "
That's how I read it too and if you do read the BBC post Brian Milligan actually goes on to say
"Get used to the graft of banging the sign into the ground, because from now on the task is only going to get harder."
The research that we have done so far at Finders and Sellers has convinced us that the public do still want to talk face to face and leave the work to the professionals, at least this generation of buyers do, the next, I'm not too sure about, most of them are exceptionally computer savvy and have no problem with online negotiations, purchases and sales of all kinds.
I do think agents need to offer good value for money to attract the punters in which of course means cutting the cost of outgoings and so far over 4,000 agents listing over 300,000 properties with Finders and Sellers free of charge are paving the way to a new style of online advertising.
I don't think the high street shop window agency has had its day just yet but things are changing very quickly.
Michael -Why was it unlikely to happen?
If your "least experienced negotiator" was employed by an online agent (and not you) and that same online agent had the instruction, wouldn't the result have been the same but for a lower fee?
Its people and effort that sell properties not the fee model !
In time the dust will settle on all of this and the public will have worked out whether it is better to use an agent, or not.
2 weeks ago we took on a new build for a small developer, suggesting q guide of £225k should achieve close. He said he'd be happy at £200k but I felt we could do better. 10 days later a cash buyer no chain offered £215k via our youngest, least experienced negotiator (who had also written up this new build as the vendor wanted speed & my diary was chockers).
Not only was the developer delighted at her ability to write an excellent set of details covering the intricacies of an off-beat new build but also he was delighted when she came back to him teh next day and sealed a sale at £220k. Our fee for getting a deal at £20k over vendor base and £5k over initial offer was £3168 incl VAT and an offer from the developer to handle his next 5 houses.
The buyer is also happy & excited. This is unlikely to have happened via a basic online advert.
Before people get too carried away - I think the story here is not whether to use and estate agent, someone else, or go it alone, it's about estate agents justifying their fee in order that the public perceive their service as value for money and therefore worth paying.
People will pay for service, if they believe that they are getting value for money.
Ok lets have a balanced argument here.
The problem is no one agent model can prove they can obtain a higher achieved price than another.
However, I have been keeping an eye on a performance test of the online vs traditional agent models, check this blog
http://www.whatsamsawtoday.com/
From 5th April
"And also rejoice in the fact that I have proven estate agents do NOT have magical powers when it comes to selling property!"
"The battle of the estate agents: online estate agents Vs. High Street estate agents has been fought and Hatched the online estate agent have won several times over"
"And let us also not forget Hatched got me FULL ASKING PRICEl"
Would you hire a plumber, a care worker, a bus driver, a tax consultant a council employee to sell your most important asset to a member of the public you they have never met before? Does each member of the public understand the nuances and misinformation abounding in the market? If they receive an offer, who is to tell them that the offer has merit or not? if they receive a valuation from an online desktop computer, where is the local knowledge to tell them of its accuracy? The so called online agents are already severely hit and miss and out of line with the local market. Do away with the expert and watch the market grind to a halt.
Private sellers believe that they save themselves money; they do not however have access to the full market and in many cases lack the skills and experience to negotiate themselves the best deal through to exchange. I have bought and negotiated for others to buy privately several times from people who never approached an agent and were delighted to have avoided a 1%+Vat fee.
I too was delighted as these purchases were completed for c.5-8% below market value!
Many people under estimate the work that goes into financially qualifying buyers, checking a chain, liasing with solicitors to get the transaction through to exchange & having to renegotiate price should anything go wrong e.g. down valuation on a survey. Think twice before bypassing an agent to sell your home.