For decades, estate agents have been tarnished with a less-than-favourable reputation. They are often the butt of the public’s humour and are portrayed as being synonymous with poor service, poor communication, ineffective selling and over-inflated fees.
The basic problem is that the general public view the agents’ role as fairly straightforward and therefore unworthy of the fees they charge. The latest analysis suggest that the average high street agent’s fee is 1.3% of the final sale price (plus 20% VAT), which when applying the current national average sale price of £235,992, means a fee of £3,681.48 (inclusive of VAT)!
With an extended period of rapidly rising property prices (until the Northern Rock disaster struck), agents enjoyed an absolute fee-fest. During the Gordon Brown ‘Boom & Boom’ period, competition amongst buyers was rife and money was easy to borrow. While buyer-confidence was at an all-time high, property was viewed as their primary investment, and healthy capital growth was expected. It seemed that while the public enjoyed the benefit of easily-gained money through rocketing house prices, they also tolerated the rapidly rising agents’ fees as the norm.
It wasn’t until the market crashed and naturally household out-goings were reviewed, that the public realised that agents’ fees had risen so dramatically. It is fair to say, however, that it’s not all the agents’ fault – after all, they didn’t instigate house price rises. However, the percentage-based fee they charged remained unchanged, and therefore their fees grew in line with house prices.
This meant that in reality, agents had to sell fewer homes to make the same amount of money as before the boom – i.e., their incentive to sell was diminished. Unfortunately, when the market tightened, this was the opposite of the attitude required. Complacency was commonplace, as many properties had almost sold themselves during the boom. It could also be argued that the windfall created by these heightened fees was the reason many agents survived the deep recession, when the market stalled.
This is where it gets interesting! With agents hanging on tightly to the inflated fee-levels they had become accustomed to, they unwittingly opened a big gap in the market. With prospective vendors starting to get wise to the elevated costs they now had to pay a selling agent, the time was ripe for a new breed to emerge… step forward the online agent or ‘sell it yourself’ brigade. This approach and timing struck a chord with the disgruntled public.
The surge in the dominance of website portals coincided perfectly with this predicament. At the time, rightmove, zoopla, primelcation, fish4homes, propertyfinder and findaproperty were front runners and enabled the public to access houses for sale from the comfort of their own homes, in their own time and without the need for direct contact with an agent or a visit to one of their offices.
With this in mind, the ‘coat hook’ approach to selling homes was born – i.e., hang a property on the website and wait for the calls. The role of achieving a true valuation, handling enquiries, negotiating sales interest, reviewing marketing progress, accompanying viewings, securing offers, consolidating a deal and progressing the sale through the delicate conveyance stage were all handed over to the vendor. Their reward for this DIY approach is a reduced fee – or is it?
It appears that online agents claim to charge a reduced fee in return for a streamlined service. However, had traditional agents set their fees at a more appropriate level, rather than allowing their charges to run away with rising house prices, this difference in fees wouldn’t exist or indeed be so significant. It seems logical that the majority of vendors wouldn’t want to become so intimately embroiled in the stress of the sale, if their overall savings were only minimal.
Just as many estate agents defected to ‘onthemarket.com‘ to save money, vendors are doing likewise with the emergence of the ‘have a go yourself’ proponents. Ironically, the actions from both agents and vendors are being made in protest at what are perceived to be unnecessarily excessive costs!
It is worth noting at this point that there are some very good agents out there, but only a minority of those agents have retained a reasonable and justifiable fee structure. We firmly consider Red Hot Property to be amongst them and our individual approach has been independently recognised by the International Property Awards.
Our instinct is that most vendors who opt for an online ‘sell it yourself’ approach may not wish to repeat the experience, once they have had a taste of exactly what is involved in selling a property. They will, however, seek out the agents who offer a fairer deal the next time around, particularly given that online marketing has obliterated the necessity of restricting their choice to local agents.
At Red Hot Property we believe that selling your largest asset requires a professional who has a proven record of success in achieving the maximum sale price for their clients, within the desired timescale and with minimal stress. The same principal could be applied to writing your will, drawing up your company’s accounts, and more. In this day and age, it is possible to do most things yourself – but whilst it may appear to save you money in the short term, the end result can ultimately be more costly. You have to factor-in the cost of your time, and the impact on your own professional and family life and your willingness to gamble on achieving the desired outcome. And when you relate this fact to property, the difference in the end result could be worth thousands.
We live in interesting times. Innovation and evolving technologies have enabled us a range of exciting options… and thankfully, we do have choice!