What Estate Agencies Do With Their Commission

By Russell Quirk

According to the Office of Fair trading, the typical percentage commission on a house sale works out to 1.6%. UK house prices average out at 175,000. The average fee for selling a home, then, would be 2,800. Oh, and let’s not forget VAT.

That’s an awful lot of money for what appears – on the face of it – to be very little in the way of actual work on the part of High Street Estate Agents. But we still cough up, grumbling, but seldom asking that all-important question: why?

“It’s simple,” property firms of all shapes and sizes will tell you, “You’re paying for our vast experience, our extremely qualified specialist staff, our extensive local knowledge and, of course, the marketing exposure we provide.”

But that’s all a misleading notion in 2011. Because the internet provides a buyer’s local information, market commentary and so on. Have a look at UpMyStreet.com for instance. An estate agent doesn’t even need to be locally based these days in order to know how to value a particular property because the property portals themselves all provide online resources to assist the agent and prospective purchasers in determining likely worth. For comparables, HM Land Registry lists just about all property transactions on its website too and feeds regularly updated information to numerous others such as Nethouseprices.com. Market research is easy to do for anyone, anywhere now.

In fact, if you do that for more than a couple of hours, you’ll end up with vast experience on a par with that of any given ‘Julian’ in any given estate agency office in any given area in the UK. Ah, but let’s not forget that all-important ‘marketing exposure’. If you’re selling a house in Pendlebury, you list it online as a house for sale in Pendlebury. That means when people looking for a house in Pendlebury enter “house for sale in Pendlebury” in their web browser, they will find descriptions of properties on the market in that area … and those listings will include your house. Job done. But, how about looking through the property classifieds? These days, it’s more a case of looking for those property classifieds. And as for those regular mailings to estate agents’ “hot prospects”, they’re hardly regular these days. And is there any point of estate agents doing anything at all if – as Rightmove suggest – over 90% of all house buyers do their property searches online these days? Again, we have a definite and resounding “no”. What point is there, when all a homeowner who wishes to sell has to do is list the property on sites like FindaProperty, Zoopla and PrimeLocation, which is a much more cost-effective route than paying an average of 2,800 for someone to stick colour photo on top of a photocopy of some typed-up property details and sling it all up in a fancy storefront window. And let’s not forget that all the staff behind that window are out of the office during the evening and night – which is exactly when potential buyers most have the time to talk to them?

So. 2,800, then. What’s it buying? And can estate agents give us any justification for billing us that much in the first place?

The real reason that their commissions are so extortionate is because they choose to maintain an old fashioned business model despite the stellar like progress the world wide web has allowed their customers’ search habits to make. They insist on clinging on to their multiple branch offices in prime retail locations, refurbishing them with Italian furniture, funky signs and glass fronted Perrier fridges. Jamming them full of highly paid ‘Julians’ that are out parading the streets in shiny Minis for most of the day, necessitating even more staff to be in the offices just in case a solitary enquirer does pop in to peruse the window display over a fizzy water. Unlikely as such an event is.

And as for actually running these offices, what with town centre rentals at an extortionate high, as are utility and fuel costs, plus crippling business rates, total costs can vary throughout the UK, but there’s not going to be much in the way of change from 15,000 each and every month.

And here’s the crux of the matter: The National Association of Estate Agents announced recently that the average number of houses the average estate agency sold in the average month was – are you ready for this? – four. Income from each of those four sales? 2.800. In total? 11,200. Not much of a profit there, then. Not on average, anyway. And this is why you’ll find estate agents desperately trying to sneak those percentage commissions up as much as they can.

Taking a few steps back from the whole situation, it’s blindingly obvious that going through estate agents to sell a house is going to cost a fortune now – and more of a fortune in the future. That fortune isn’t a reflection of the agency’s vast experience, extremely qualified specialist staff, extensive local knowledge and, of course, marketing exposure. No – it’s all going to go towards the upkeep of that office and keeping the fizzy water fridge full. And that’s because who actually visits an estate agency office these days? Answer: their staff. And pretty well nobody else.

So if you’re considering putting your house on the market, go online instead and save yourself around 90% of that average 2,800 you’d be paying your local Julian. You could then spend it on something much more useful. Like your very own Perrier fridge, perhaps?

eMoov makes it simple for you to sell your house on the internet. You can sell your home quickly and with the advantage of cheap estate agents fees. All properties are added to all ten of the most popular property websites in the UK such as Rightmove and Prime Location. Plus as online estate agents, their low cost service reaches millions of people 24/7.. Unique version for reprint here: What Estate Agencies Do With Their Commission.

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Topics: Selling | Comments Off

Tags: agency, agent, agents, cheap, commission, estate, fee, fees, house, internet, Online, property, rightmove, sell, Selling

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