Controversial online estate agency chief Russell Quirk says the traditional commission-based business model forces successful sellers using any High Street office to effectively subsidise the much larger number of unsuccessful sellers.
Speaking on The Bottom Line, the BBC Radio 4 business programme, Quirk says this is the huge downside of the model. He claims some 75 per cent of High Street agents' work goes into pitching for and marketing properties only for sales to fall through (sometimes at the last knockings of the deal).
With traditional agents receiving no income for this abortive work - unlike the online model, where agents receive and retain fees up-front, whether the property sells or not - the minority of consumers using the agency pay for those who fail to sell their home.
Quirk was one of three business people on the show to discuss the different methods by which services were charged in Britain's changing economy. The other guests were Christopher Saul, a senior partner at legal practice Slaughter & May, and Debbie Klein, UK chief executive of The Engine Group, a marketing and communications consultancy.
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Comments
I wonder when Russell quirk and the like are going to tell us something we don't already know...as regards no sale no fee vs up front fees. My experience is that the vast majority of prospective sellers resist paying upfront fees for any services relating to a house move. The home information pack was a prime example most vendors simply did not want to pay for it.
The lovely part of the DIY model is indeed the payment in advance. To some extent greedy sellers and landlords are punished by overzealous expectations of a) price and b) "this is easy" mentality. Hopefully if unsuccessful they will revert to common sense and leave the estate agency to the estate agents...
I did catch some of this programme on Saturday. Although some of the points he mentioned were valid (for a change), of course he did not mention how his online firm charges the money up front, with around half of clients not achieving a successful sale and therefore wasting 500 +. An equally poor proposition for consumers wouldn't you say