A High Street estate agent has cautioned others within the industry against being tempted to go down the route of charging vendors a fixed fee.
Jonathan Newall, director of SaleBoards Estate Agents in Exeter, says his company started life offering fixed fees but says this led him to lose money.
“We set up an office in 2007 just as the downturn kicked in. None of us had estate agency experience but we generally thought it was a good marketing tactic to have a fixed fee of £1,599 to differentiate us from established local agencies” he had told Estate Agent Today.
“At first it worked. We soon became the third largest agency in Exeter in terms of the size of our portfolio, behind only [local leading agencies] Wilkinson Grant and Fulfords, and the public appreciated we were trying something new’ says Newall.
But problems started when it became clear that the flat fee appeared to deter sellers of small and relatively low cost properties - for which the £1,599 was not particularly low - while on the other hand it attracted a disproportionate number of unsophisticated sellers of large houses.
“We found ourselves with cheapskate and sometimes greedy sellers of big houses who would have made a very big saving, but were highly reluctant to reduce their asking prices even though this was a difficult market in a downturn” he says.
In addition the overheads associated with larger properties - in terms of quality of property details and demands from vendors - proved unreasonable for the fixed fee.
Newall was prompted to explain his experience to Estate Agent Today readers in the light of the recent decision by Dybles estate agency in Winchester to go down the fixed-fee route - as we reported exclusively last month.
SaleBoards Estate Agents, by contrast, abandoned the experiment - although gave it a very thorough test, for three years.
“We were losing money so it had to stop. Now we have a standard 1.25 per cent fee and we’re breaking even or making money” explains Newall.