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Written by rosalind renshaw

The number of estate agents should be culled hard – and they should stop charging percentage-based commissions.

Apparently, in parts of London, they only need to sell one house a year to keep themselves in Armani suits and Gucci loafers.

Who says? The Guardian.

Now, we realise that the Grauniad and estate agencies are not natural bedfellows, but the article by Phillip Inman does seem to miss a few points. (Has he not heard of no sale, no fee? And isn't it a bit harsh to advocate that people should actually lose their livelihoods?)

Writing about the redundancies at Lloyds, he says they are sad for the families concerned, but that the industry always needed to shrink.

“The next target should be the estate agent,” he writes.

“Too many independent shop owners are elbowed out by estate agents prepared to pay ridiculous rents. They can only do it because they have convinced homeowners that percentage-based commissions are an acceptable, if not necessary, practice.

“Property price rises of 300% or more in the last 20 years mean they earn exceptional profits, especially in the south-east, where land and property prices remain at pre-recession levels.

“In some parts of London they only need to sell one house a year to keep themselves in Armani suits and Gucci loafers.

“Just as the financial regulator is about to outlaw commission-based sales practices by financial advisers, commission should be banned in estate agency.”

Financial advisers are having to move over to a fee-based model, rather than charge a sales commission on products such as mortgages.

You can read the full article here. Brace yourselves first.

Lloyds job losses are sad for those affected, but banking had to shrink

Comments

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    Pbro Agent - Yes i get your point, and i think we are agreeing that there are more intelligent ways of costing/pricing fees than fixed fee per sale. How about a listing a fee, which could be structured as to the type of advrtising you utilise on behalf of the vendor, with no sale no fee and max fee per sale. Now there we really are talking value based pricing.

    • 04 July 2011 15:17 PM
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    Why stress over a story that only green, hippy nutters, probably rubbish teachers on strike, will have seen anyway, does anyone actually know a Guardian reader, even worse will admit to it?

    • 04 July 2011 08:57 AM
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    Sorry, a bit off topic, but want to get this idea out and the Rightmove threads are buried and out of site!!

    I had one of those bright idea thingies about how to move forward, which would one day allow all online advertising to become free without anyone doing anything radical. It might even make a few IT people some money along the way.

    Please read the idea here and see what you think.
    http://agentsspring.freeforums.org/post16.html#p16

    Cheers Chris, oh and sorry about straying off topic.

    • 02 July 2011 00:34 AM
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    I don't suppose this fella is trying to get into the knickers of the new hotty at Which!

    • 01 July 2011 15:59 PM
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    I cannot comprehend how any human could 'wish' the loss of another's livelihood upon them. Beggars belief!

    As for the fees issue - proof that if ignorance is indeed bliss, then this horrid hack is high up in Happy Heaven!

    I wonder how much Mr Inman gets paid for the stuff he writes? Undoubtedly FAR MORE than most Estate Agents receive - for what is in the main a balls-aching existence, and made worse by the need to dodge the sprays of bullets that uninformed idiots like him fire upon the profession!

    Needs someone with the wit and wisdom of Mr Eric Walker to add is two penn'orth to this story, methinks...

    • 01 July 2011 15:02 PM
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    @Unhappy, the point I was trying to make was that to lose "no sale no fee" and replace it with a fixed fee structure which everyone would pay would be a charter to over-price houses even further at valuation stage in order just to win the listing and hence the fee, then to generally offer a poor service, safe in the knowledge that you would get your fee come what may.

    I think it would make the bad reputation agents currently have and which we constantly have to fight against, a whole lot worse.

    Having said that I think AC's suggestion of a listing fee followed by a success fee is somewhat more ideal, giving the agent some incentive to at least sell the house.

    • 01 July 2011 14:04 PM
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    @scottavinabeer "I think that jounalists should be the next target after bankers job cull"

    I agree.

    Journalists have to go quick first.

    Then estate agents as soon as possible.

    • 01 July 2011 14:01 PM
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    I think that jounalists should be the next target after bankers job cull.

    • 01 July 2011 13:12 PM
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    @ Unhappy Chappy

    The cheap fixed rate online companies are national, thought you would know that.

    • 01 July 2011 12:53 PM
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    Despite the obvious absurdity of the heavily loss making and soon to be bust Guardian lecturing anyone on business it is case that the number of EAs on the high street got there by catering to the demand levels seen at substantially higher levels (c2008). With volumes at their current nadir it seems entirely likely that the absolute number of agents will retract. The only hope for many of the lower quality agents would be widespread repos and heavy price drops that would see a new wave of buyers that are currently unable or unwilling to buy at the current overpriced level.

    A good EA provides a wonderful service that is very important for many sellers who lack the skill-set to successfully negotiate a sale themselves. Yet a increasingly savvy and web comfortable sellers will use the services of companies that list directly on Rightmove which will have a further pressure on the number of agents, in much the same way that the internet has slowly but surely seen travel agents retreat from the highstreet.

    Moreover a move to fewer, but on average higher quality agents is probably inevitable. What would be interesting to see if it is on the whole independents or corporate that best survive the transition.

    • 01 July 2011 12:24 PM
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    Maybe we should look at culling journalists when the world knows of current events through Twitter before they can make a press release?

    Really uninformed and sad to see that some people still believe good agents should be paid so little for handling the sale of the most valuable asset a person will ever own. You pay for good service and I for one don't think that is unreasonable, if you want monkeys...

    I'd also argue we are cheap considering the fees charged by our European counterparts.

    And based on the last few seller surveys done by the Property Academy fees are low on a seller's list of priorities if they know they can trust the agent they are using to do a good job for them.

    Poor show Guardian.

    • 01 July 2011 12:07 PM
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    Is that why so many agents are going bust?

    • 01 July 2011 11:59 AM
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    ".......fact remains that our high streets are BLIGHTED by estate agencies still......".

    Another idiot! There are a lot of them around at the moment.

    Like any other business the ones that are not used will cease to exist. Free market.

    • 01 July 2011 11:56 AM
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    The Truth

    What would you rather, a number of EA's offering your choice and something different, or just 1 or 2 agents, whoc have a massive market share and can then charge you whatever they want as they have all market share?

    Choice is surely a good thing, in this days and age.

    • 01 July 2011 11:46 AM
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    The Truth, i'm loathe to indirectly defend EAs but the reason charity shops are so prolific is because they pay very heavily subsidised business rates (80% relief).

    • 01 July 2011 11:41 AM
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    The response of the EA community is predictable. Lots of bleating about how expensive it is to run an office, rising RM fees etc etc. But the fact remains that our high streets are BLIGHTED by estate agencies still. In my local high street in Barnes, London it is just amazing how many there are. Everyone else, restaurants, wine shops etc have all gone bust. The charity shops and estate agents flourish and get more numerous. The charity shops I understand - my wife basically takes our children's designer clothes which cost £50 a time and gives them away for free to them. So now we come to the estate agents ....

    • 01 July 2011 11:24 AM
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    The article seems filled with a bit of vitriol and he might be coming at it from the wrong angle and arrive at the right conclusion but for the wrong reason.

    BUT (and please don't all shout at me at once) I think that unless we are all very careful his vision might come true faster than we all think.

    Don't start throwing rocks just yet!

    Consider:

    No sale - no fee means that the 1 in 5 properties that you value/ list/ sell that actually pay you a fee on completeion cover the cost of the 4 that do not.

    From the sucessful sellers' point of view, that is a bit of a crap deal.

    But it is "No Sale, No Fee" I hear you cry.

    Do you think they care, when having sold they know they have paid a huge bill, which on an hourly rate basis is massive.

    The problem is with our business model, not with the world.

    "No sale, no fee" from our point of view is just plain crazy.

    From the sellers' point of view it looks sensible, until they realise that they are subsidizing all those people who overprice their house or just dip their toe in the water or who change their mind.

    And an online agency with a branch network charging a listing fee to cover basic costs and a success fee will come along soon and take all of our businesses away from us.

    And the £500 HIP proves that sellers WILL pay up front if they have to or they can see the benefit.

    This is what eBay, Amazon, Rightmove, etcetera have done to us because your average homeowner is now happy to use the internet to buy and sell.

    From my point of view, if I could make £500 per instruction and another £1000 per completion, I could run a profitable business.

    The volume is there in my town, even now.

    BUT (and you can start throwing rocks now) a couple of agents would have to go out of business!

    • 01 July 2011 11:20 AM
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    Unhappy Chappy - you are so cynical. Like I said, we offer clients a choice, they choose which they prefer, we don't push either option more than the other.

    • 01 July 2011 11:14 AM
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    Soon to be culled - yes you can lead a horse to water and all that.....however i doubt you push the fixed fee option to your customers.... i mean which is better fo you eh ;0)

    Monkey Tennis - I wont rise to your pathetic name calling but you are right customers have a choice.....so do you offer them a fixed price option? Does any other EA in your locality? Maybe I'll come and open one near you!

    • 01 July 2011 11:04 AM
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    why not "tweet" this chap at @phillipinman

    Well, if he ever sells his house though my firm, I would be more than happy to agree an hourly rate

    • 01 July 2011 11:00 AM
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    Richie

    Excellent point, in fact I don't know when I last read a newspaper and I shan't even bother reading the said article.

    It's obviously written by someone who knows nothing about business and even less about estate agency.

    Now folks, it's a lovely day, the sun is shining, sales are up (though available properties few) - have a great weekend everyone and ignore the idiots.

    • 01 July 2011 11:00 AM
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    We offer our clients a choice, fixed fee or percentage, 95% go for the percentage. People stick with what they know, rightly or wrongly.

    • 01 July 2011 10:44 AM
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    What a moron.

    The consumer has choice.

    So if the owners of 1 Hyde Park want to use KF and pay them 2% of a £120m apartment thats fine. Or they could go to a low cost online agent with a Rightmove listing and pay £500. saving them £2,399,500.

    • 01 July 2011 10:39 AM
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    @Watching..... I'm sure thats true..... but she made some very basic mistakes as i have said she did not address what adds value to the customer.....The fixed pricing theory (with some interesting twists) works for the customer and should return a known profit per sale!

    i think the % on sale price and no sale no fee is going to make things difficult for you all especially in a stagnating housing market.

    Come on guys and girls think out of the box....how will you differentiate what is your USP!

    • 01 July 2011 10:38 AM
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    I met a girl once who thought like you, thought that a fixed price agency would storm the market.

    She priced her offering at £1,500 no matter what the selling price, she signed up for a £20k pa lease on a shop, employed staff. paid subs to portals etc. Her next thing was marketing:

    She spent fortunes on newspaper adds and leaflet printing/drops. With a marketing strap!!

    Her dynamic message?

    "SELL YOUR HOUSE FOR LEES"

    Funny, but true, .... she went bust for a lota money after 6 months. no customers

    • 01 July 2011 10:24 AM
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    The guys a tw%t, ignore him.

    He's probably annoyed that his over priced house failed to sell, when all his neighbours managed to sell their houses, "but his deserved to be priced 50k more than the other houses because it was the best house in the street, all of his friends and family told him"!!

    • 01 July 2011 10:22 AM
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    House sells for £300,000
    Agent Fee payable by Vendor on completion say £2,250

    Purchaser pays non refundable Fee to agent at point offer accepted £1,000
    Bal of fee to to agent by purchaser on completion £1,250

    Now we are talking

    • 01 July 2011 10:12 AM
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    I do not agree with the author saying that the no of EA's should be culled it is a ridiculous and inflammatory statement.....however i do not undertand or accept that a percentage based commission system is any longer appropriate. Even with no sale no fee?

    • 01 July 2011 09:50 AM
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    Pity realist doesn't know where an apostrophe goes - I mean "camera's" - it's plural mate not possessive! I suspect he takes photo's of house's.

    • 01 July 2011 09:49 AM
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    Classic ill informed opinion piece which is tomorrows chip paper or whatever the online equivalent is.
    Bankers seem to be doing pretty well again so Long live estate agents :)

    • 01 July 2011 09:46 AM
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    Wow a thread that looks at my question, of the pros and cons of fixed rate sales for vendors

    @Pbro
    What is 1.5% of £300K?
    Why agree to list a house you know is over priced

    It appears old EA's have not moved with the times customers are ony concerned with activities that add value and as it costs no more to market a 500000 property than a 200000 property so why should the vendor pay more?

    • 01 July 2011 09:45 AM
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    The world would not be a worse place if there was also a 50% cull of newspapers in the UK.

    • 01 July 2011 09:44 AM
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    That's a bit rich coming from a bunch of hypocritical champagne socialists who no-doubt have a healthy interest in BTL themselves.

    • 01 July 2011 09:40 AM
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    P.S. How profitable is the Guardian?

    a loss of £33,000,000, with the cash and remaining assets reported to run out within 5 years at the current burn rate See the Telegraph 16th June. Google Job loses + Guardian + Sinking ship

    • 01 July 2011 09:36 AM
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    "we realise that the Grauniad and estate agencies are not natural bedfellows"
    Listen to those wise words from Rosalind all you Vebra users.
    Buy Reapit!

    • 01 July 2011 09:29 AM
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    Folks. Just ignore the idiot. Starve him of recognition.

    P.S. How profitable is the Guardian?

    • 01 July 2011 09:28 AM
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    mmmmm, I tink my post will be deleted if i use lavatory language. But this alleged journalist is a £%!!@@g complete and utter &*6$*&)! ignorant %$^&. Although I expcect he could not care less as he will be well paid have a stupidly generous expense account and lovely final salary pension oh yes and all that is paid for by Guardian readers who tend to be school teachers and publis sector employees. Does he not know that the industry has about 40% less people working in it than 5 years ago? What a ^&@".

    • 01 July 2011 09:25 AM
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    Its great that people on the outside of our industry have not got a clue to how much it cost to run a top class estate agency office.
    We just stick a board in the garden, someone see's it ,a sale is agreed and we get paid a huge fee in only a few weeks !
    Sorry i was only dreaming > hard hard hard work from start to fininsh. The public dont see that bit.
    Well off to buy more"Armani suits and Gucci loafers.
    Have a great weekend all you hard working proffesional estate agents.
    Let it pour down with rain on ALL the lazy journalists.

    • 01 July 2011 09:21 AM
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    Good god! How rediculously ill informed.

    Let's look at the figures (please bare with me if you disagree with the amounts - I am generalising).

    Average monthly office costs £17,500
    Average number of active listings 100 (let's keep this simple)
    Average monthly cost per listing 17,500/100 = £175
    Annual pre tax profit £150,000
    Profit per listing per month = 150,000/(12*100) = £125

    Monthly fee to customer = 125+175 = £300 (see I told you I would keep this simple)

    So Mr Vendor, I won't charge you 1.5% of your 300k house (your valuation not mine), I will instead bill you 12*£300 = £3600 and because your house is on the market for 50k too much money and will be on the market for a year with no interest, you will be angry after that year that you've had to pay me for what you see as a rubbish service.

    You will forget that we regularly spoke to you asking you to reduce the price, you will also disregard the fact that less scrupulous agents won't advise you to reduce the price at all because it won't actually be in their interest to sell your home.

    The professional agents who would have advised you at valuation stage of the correct price of your home, won't get your custom and will quickly go out of business, leaving the unscrupulous agents and the corporates who have the cash to survive this bum fight to rape you silly and charge you a huge fee for not selling your home.

    Or you can pay me a percentage of the sale price when and only when we actually sell your home. Which package would you like again Mr Vendor?

    • 01 July 2011 09:14 AM
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    The stupid stupid journalist at the guardian ought to realise that according to Mark Goddard's state of the nation brief to staff "GMGPS are the only GMG division to be making a profit"

    Admittedly it is only a teaspoon in the great scheme of £33million pound loses, but it seems that the foot shooters haven't managed to put two and two toghether and work ought that what lttle real money supporting their lefty rag is being milked out of estate agents.

    Fewer agents =smaller support revenues= less sandals

    Mind you, given the level of customer service we get it is harder and harder to justify paying anything.

    Messrs Dee and Dumb will have their arse in a knot this morning!

    • 01 July 2011 09:02 AM
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    Maybe we should look at the journalism industry where investagtive journalism has been replaced by 'an informed source' or 'a close friend', phone hacking, invasion of privacy ect all on the 'freedom of speech' junkett. Prices have gone up 300% and in my are fees are now 1/3 of what they used to be. Basically its called freedom of competition and unlike freedom of speech we can't hide behind it and write drivel.

    The more competition the better for the consumers on price and service, which again shows how little this journo knows about the real world. I know of 6 firms that have closed down and real people have lost jobs, homes and more.

    It would be better if he spent time investigating boiler room and other scams that con people out of a lifetime of savings, not a business which rewards only on results, has high competition and people approach willingly.

    ps I doubt very much selling one house will be enough for people to have a top lifestyle try backing up spurious jingo with some facts?

    • 01 July 2011 08:49 AM
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    From an outsider yes makes perfect sense, but as and when you work,run or own an estate agency you know the truth.

    Cost of rightmove, paper, camera's, advertising, staff, overheads, technology - rebrand every 3 years to stay fresh.

    Go back 20 years and 1.5% of an average ouse say 100k was £1500 now same house could be 300k and you could be lucky to get the 1.5% in some areas and if you did this is still just £4500 - Times are changing agents have had to change too.

    Saying that some agents such as us (a corporate company) now charge a fixed fee so at least vendors can work out their budgets.

    • 01 July 2011 08:20 AM
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