Controversial online estate agent and industry commentator Russell Quirk has hit out at the fee structure of traditional agents, claiming it deters them from achieving the highest sale price for their customers.
In a blog on his eMoov agency’s website Quirk reiterates a long-held view that sellers who use traditional agents pay more than they should because they effectively subsidise the costs of agents working with ‘no fee’ vendors whose homes do not sell, as well as paying for the work to achieve their own property sale.
However, he then goes on to explain why the traditional fee structure for High Street agents deters - in his view - efforts to achieve the maximum sale price.
“The establishment flag wavers defend themselves on the question of percentage fees like this: 'We are incentivised to get a higher price and to work hard for you and that's why percentage fees are best’” writes Quirk.
But he then uses data from Foxtons’ annual report to shareholders to go further.
“The average Foxtons fee according to their own accounts is £13,000. Each Foxtons negotiator earns a typical 10 per cent take in commission but there are lots of Foxtons employees and they don't do that many deals, in fact they achieve just eight completions per branch per month (their own numbers, not mine) and therefore four negotiators per office are scrambling to do just two sales per month each.
“Imagine that you're earning a £10,000 basic and desperately need your two commissions to make ends meet every pay-day. Faced with a buyer making an offer of, say, £650,000 on an asking price of £675,000, is your reaction to potentially lose the sale by playing fast and loose with the buyer, staring them out to see if you can squeeze the last drop of cash from them on the deal, risking them walking away and you being left with nothing?
“Or is to to know full well that your commission on £650,000 is £1,300 and your commission on £675,000 is just £1,350 and therefore you focus on a 'deal at any price'? (For the pedantic amongst you, Foxton's standard fee is two per cent and so my calculation is based on 10 per cent of the two per cent).”
Quirk concludes by saying that with employee deductions a traditional agent “couldn’t give a toss” about the £25,000 difference in the example he gives.
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More temper tantrums from Mr Quirk. It seems from eMoovs' diminishing customer numbers and the static market-share of call-centre agents in general, that potential sellers "couldn't give a toss" about many of the claims he makes and are choosing agents with genuine local knowledge and skills instead.
Interesting. I wonder how incentivised companies/staff are to sell houses under the fee structure of money up front, no more commission if you sell the house or not.
Might explain the properties on with emoov and Purplebricks sitting on the market 4 to 5 times than other properties in the area.
In my experience it works well. An Agent knows that if the client's paid upfront, there's going to be a set amount of time they have before they make no profit on it at all. As it is most vendors are keen on a quick sale and online or not if you don't get them the best possible price, your reputation takes a battering and you loose any chance of a recommendation.
Quirk does have a valid point, hence few are challenging him.
The whole method of finding buyers for sellers in the housing market needs to be carefully examined in my considered opinion. When will all agents wake up to this? How bad do things need to get before they do, I must venture to ask?
I do not think much of your considered opinion if you think that Russell Quirk EVER has a valid point.
Where on earth is the incentive to get the best price if you've already been paid upfront? Worse than that where's the incentive to try to sell it a all? Most internet agents couldn't care less whether they sell it or not and this is evident when you look at the lack of effort that goes into selling a house once they have received the instruction (and been paid). I've just taken a property off an Internet agent that had it for sale at £250k and done absolutely nothing to sell it apart from stick it on the websites. I put it on at 'offers over £270,000' and we've just agreed a sale at £274,000. Instead of an Internet agent saving them money it nearly cost the vendor over £25,000!!!!!
Try looking in the mirror Mr Quirk!
Peter.... totally agree. Both sides have and are entitled to an opinion but surely vendors are stuck in the middle of this.
There are rumblings of high street agents apparently alienating online agent vendors and possible buyers within possible sales etc. Surely underhand punishing the wrong people if this is for real (if so incredible sour grapes). If the likes of online agents are succeeding in getting clients and sales, then perhaps other agents should look at solutions not oblutions. Come on all agents, lets use some business logic.. Less politics, more customer care, fair pricing, great reputations and future business... seems obvious.
I am not sure who you are or what you do, but ANYONE can list a property on a website/portal, but a call centre or a local property expert that lives 40 miles away will find it rather difficult to sell.
I work with thousands of estate agents, especially helping them to protect/raise their fees (in fact Mr Quirk attended one of my sessions and promptly raised his before going down the online model). The one thing they have in common is a passion for securing a figure at or even over the asking price - their reputation hangs on it! Yes of course the sale itself comes first but real people on the ground understanding their buyer and seller and helping both to discover their areas of compromise is massively beneficial.
In fact a report by the National Association of Realtors in the USA states that sellers using an estate agent to sell their home typically secures 16% more money for it than if they sell it privately, which is effectively what online agency facilitates. Have a great day!
Richard, If I understand you correctly, if by using traditional agents in the US sellers could achieve up to 16% more on selling their properties then most of those sellers must expect to have to pay up to 16% more for the next house they buy?
Does this have some beneficial outcome for the housing market which I have missed or is to likely to simply reduce the number of people able to trade in the market in such conditions and at those levels of over-pricing?
We are agents in Central/East London. After realising that we were receiving a lot of calls from the same number asking for "ball park valuations", we looked into that number & the person who called and they were from a well known online agency. This confirms that these online agents obviously have no clue as to the actual worth of properties in our area. We now no longer provide valuations on the phone (even to surveyors/bank valuers) and are thinking about charging a nominal fee for valuations. I'm certain we cant be the only agents who get used by online agencies for this purpose. I guess they cant be expected to know "local valuations" for every part of the UK.
Their "local property experts" are surely supposed to??
"don't care" is a bit rich coming from an agent with: no local offices for buyers to visit face-to-face; no local printed media advertising; no printed particulars; no posting service; no viewing staff, no idea about the area in which they are selling a property and extra charges for things the traditional agents consider as an essential and intrinsic part of the job. Provision of these things is tangible evidence that traditional agencies very much care.
In contrast, Quirks assertion that On-Line-Only gives better results, is constructed on a narrow interpretation of statistics and plays on peoples natural inclination to "save" money.
Well articulated Mr Harris
I for one am getting a little tired of online agencies seeking publicity by attacking a centuries old profession.Its pure manipulative self justification.
As professional agents we strive to achieve the best price through pride and professionalism and often recommend the refusal of an offer if we believe we can achieve more
I have negotiated hundreds of 000's of £ above acceptable levels over the years by knowing buyers combined with an intimate understanding of the local market
A local agent who deals with people face to face can always do better and knows the market far more accurately than these 'local property experts lumped with huge territories and where there are villages and towns in their patch they have often never been to before.
Thank goodness for sat nav.
There will always be people who just look at the highest valuation and cheapest fee
Most clients who are selling possibly their largest most important asset place their business with connected local people who know what they are talking about.
People like to do business face to face
Online agencies are come and go and service a need for, what is it? 1-2% of the market?
Mmmmm
I find it all rather amusing that anybody is surprised, angered or anything else by Russell's regular outbursts, that are clearly designed for effect and to hog the headlines. I have learnt rather like a petulant child it is best to ignore them and eventually they give up when nobody is paying attention!
Trying to grab a headline or two stating the obvious. In fact earning extra commission is secondary to a good agent who has a legal and moral duty to work for the seller. In Emoov’s example, the system isn’t at fault, the negotiator is. Mr Quirk obviously comes from the Donald Trump school of PR. Say anything, annoy people, disrespect competition, grab the headlines. Ignore.
High Street agencies should applaud Russell for having set the bar so low that only the most inept of agencies will lose business to eMoov. EMoov will never be part of any community and consequently will struggle to achieve anything significant.
Might I suggest that high Street agencies use the same distribution channel as EMoov for their much more interesting stories. www.Property4Media.com is the place to start.
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