Consumer media outlets have been making much of a claim by online agent House Simple that capital's estate agents earned now less than £1.1 billion in fees last year.
The online agency claims sellers paid an average of £9,384 in agent fees per transaction in 2014; this, added with the increase in sales across the capital thanks to a good exchange rate and recovering economy, led to the total being 23 per cent higher than the £915m figure for 2013.
Unsurprisingly, agents in Kensington and Chelsea pocketed the most - £73m in fees, despite the relatively small size of the borough.
In Olympic host borough Newham, estate agents' fees jumped almost 55 per cent, from £11.3m to £17.6m while in Greenwich there was a 50 per cent rise from £20.3m to £30.5m.
Alex Gosling, chief executive of HouseSimple, stuck the knife into traditional agents in his quotes.
"After their performance last year, you'd be hard pressed to find a high street estate agent without a Cheshire Cat-sized grin on their face. Properties in desirable London boroughs were practically selling themselves, and yet high street agents stubbornly kept their fee levels high" he says.
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Comments
Leon: Don't get me wrong, I am fully aware that online listing companies have a purpose in a very select few areas of the UK (when the market is easy).
However, where I live and work, I have noted around 15 online listings within a 15 mile radius in the past year, and I can honestly say that so far, none of them have sold (and I mean none, 0%).
Around half of these properties have since been transferred to actual estate agents and subsequently sold, several have remained on the market under their online company without success.
Many people will be reluctant to swap from an online company to a high street company, as they may have already paid several hundred pounds up front and feel as if held hostage.
It is not a business model which I believe works or is ethical. Hybrid agency and specialty/nice agency will undoubtedly be the future.
'Leon' - you say "I got told of 1 couple who enquired through RM and and I showed them around and they put in an offer 1 hour later which I accepted."
I hope you don't mind a couple of questions (with probably more to follow when the answers are known...):
What was the timescale between going 'live' on the market and the viewing/offer
Was the offer of the asking price If not - how much below (against an asking price of how much)
Look forward to these - and any future - answers to my queries.
What exactly by definition is a large sum. in all contextual: You are talking about some of the most expensive property in the world. Buyers don't call up and make an offer 5K off asking. Agents are negotiating hundreds of thousands of pounds for their clients and the buyers don't just hand over their solicitors details they want the properties completely remodelled in some cases. Gosling thinks Housesimple can do all of thatfrankly if he does then its him thats simple!
Well no, of course not. But these large sums are not exactly going to play too well with the public who, whether we like it or not, see most estate agents as money-grabbing, in it for themselves charlatans. That's the perception. Estate agents in London making this amount from fees isn't exactly going to help change that perception.
Obviously, if people are willing to pay the sums then the estate agents are well within their rights to take it, but such ludicrous amounts of money don't sit too well with me.
I think he/she is trying to say that online agents are better than traditional. The poster is entitled to their opinion, just like you are entitled to disagree. Granted, it wasn't the best-written post, but it was still pretty clear what they were trying to say.
to (p): I thought exactly that but after speaking with a few of them and understanding their business model it started to understand how they do what they do. I got everything that my local gagent would have given me but the facts remains I paid 600 got a board, portal adverts and constant updates and feed back. I got told of 1 couple who enquired through RM and and I showed them around and they put in an offer 1 hour later which I accepted. To me the only difference was that i never met the person at the end of the phone. but with linkdin and other websites you can quickly find who you are speaking with! and i saved 3000. This may not be for everyone but hey its working again another fact!
In response to leon: Well the fact that they charge everything upfront with absolutely no guarantee of sale and generally inexperienced and unmotivated staff (they already took your money why should they give a toss if the property sells).
The problem is that people need to stop calling them online estate agents and start calling them online property listing companies. This way vendors will understand exactly what it is they are paying their 4, 5, 6 hundred quid up front for (plus extra for boards, floorplans etc).
An agent is someone who goes out and interacts and develops relationships and generates new business on a personal level.
I have recently worked with an online agent to sell my property. I did save 3000 and it was sold within 4 weeks. Now it was in an easy market so if i gave my property to and high street agent im sure they would have been able to sell it within the same time period. But I go back to my previous statement I saved 3000. so why should people in say London pay 1ooo's in fees when in some in some areas properties sell themselves its just logical!
Were the people using these agents forced to pay these sums No. If an online agent was offered a larger sum to 'market' a property would they take it Yes. At the top end of the market more money will be made - why is that such an issue to Housesimple et al
What incomprehensible BS. What point exactly are you trying to make here
I agree there needs to be a shift in the way estate agents work and charge there vendors. The main reason they charge so much is to make up for the properies they have lost or had withdrawn. Online agents are new and interesting. I cant see any reason why they would fail with they continue to sell houses!