Steve Smith, the founder of Poundland and one of five people behind hybrid agency EstatesDirect.com, has criticised a lack of transparency by traditional agents over the levying of VAT on fees.
Smith - who since selling Poundland in 2002 has been in business selling residential and commercial property - says he recently sold a house in London for £650,000.
A normal estate agent would charge around two per cent in commission, about £13,000 but many people only find out at the end of the transaction that the fee is £13,000 plus 20 per cent VAT. That's £15,600 he says.
EstatesDirect says it undertakes exactly the same services as a traditional agent but at a lower fixed price to users, which is not a function of the value of the property on sale.
Smith says he has transacted more than 100 properties in the past 12 years and estimates he has paid over £200,000 in agents' fees.
If you have got a property for £80,000 or £1m why does it cost so much more in commission, because the job is the same And why were the estate agents getting the money when mostly I would show potential buyers around the property Smith asks.
Smith made his remarks in the Financial Times.
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Comments
Funny he quote a 13K fee when he states he has paid 20K for 100 sales, which is of course an average of 2K. Perhaps thats why everything is only 1, he can add that up!!
Erm... hello.
The company you refer to state on its website "Owned by BID2BUY.com LTD". According to Companies House, this company was DISSOLVED on 5/2/13. On the bottom of the woeful webpage, it states " 2014 Bid2BuyaHome.co.uk LTD All right reserved." There is NO SUCH LIMITED COMPANY listed at Companies House.
Explanation required, I suggest...
Hello,
There is a company that never charges VAT whatsoever and the costs of listing on this property listing website is only 5.00 for up to one years.. No hidden costs whatsoever. It covers homeowners wanting to sell their property themselves or by using an agent/ rent based properties too, including home swaps within the UK.
www.bid2buyahome.co.uk
It always makes me laugh when entrepreneurs such as Steve Smith and Stelios try their hand at our business: local newspapers have tried it, solicitors, supermarkets, banks, building societies, insurance companies, high street retailers, celebrities. They have all tried and they have all failed to dominate the market. Why because they have no clue how our industry works. Steve Smith with Poundland - what a great idea. The only advantage to him was that no one had thought of it first of buying cheap stuff and selling it at massive margins, It is a bit like penny shares. Buy for a penny sell for 3 pence - a 300% profit. Do this hundreds of millions of times and you become a very rich man. Are we bothered about easi move, or EstatesDirect.com et al, are they a threat - NO!!!!!! Oh the point I should make is that Steve should read the ombudsman and TPO regulations which state very clearly that the total fee including VAT must be a an agency agreement, maybe he was using cowboys agents to sell his properties who are not members of the ombudsman or adhere to the TPO regulations. Maybe he wont either, we'll see.
I wonder if we'll start seeing "50% extra free" on For Sale boards or 4 bed houses sold but with only 3 bedrooms, or some of the other tricks he used to make Poundland what it is. I think you'll find its a bit harder than knocking out odd sized loaves of bread and 'special offer' biscuits to your average customer Steve
Clearly Steve Smith knows nothing about Estate Agency Fees. As much as I retired from Estate Agency 5 years ago, any experienced Property Professional will know that all Fees associated with Estate Agency have to be agreed with the Client at the the time the Property is brought to the market and prior to any marketing commencing. This is just misleading everyone. I sincerely hope that Steve Smith's Client's are fully aware of their fee liability. It seems to me that he is inviting his Clients not to pay his fees.
So for Steve Smith to say that many people only find out about their Estate Agency fees is clearly wrong and shows his Property ignorance.
Thank you.
.....If you have got a property for 80,000 or 1m why does it cost so much more in commission, because the job is the same......
Is this man totally stupid regarding the property market in the round
I agree with the remarks of Guest (Sceptical as always)
Old news. Same press release about lack of transparency on fees was trotted out last year by another onliner hatched and it was boring then. Next
Obviously not seen a terms of business agreement for the vast majority of estate agents whereby it has to be made crystal clear what the full fee is with VAT. Maybe get a bit of experience in the actual business before sending out such boring press release's Steve!!
Another day, another yawn... when will these people learn. we charge more because there are less buyers the higher the price. it's more work, more marketing, the list goes on. Another person from a different industry coming to revolutionise the wheel that is already round. In London I even believe a higher price should be charged for studios and other cheap flats as the phones generally explode as soon as anything under 300k comes on the market. And more viewings, nervous first time buyers, meddling bank of mum and dad, answering silly questions like "what are the neighbours like, and how much is the gas bill"
I think you are going to find out the hard way Steve:)