Two leading voices in the PropTech sector suggest a radical overhaul of agents’ fee structures, saying that neither traditional full service nor online business models have got the answer.
James Dearsley - a contributor to Estate Agent Today each Wednesday - and Eddie Holmes, both prominent figures in the UK PropTech Association, argue that traditional agents paid via commission may not enjoy sufficient incentives to fight for the highest possible purchase price.
The pair contend that a 1.3 per cent commission on a £190,000 home is £2,470. If the home was sold instead for £210,000, the commission would be £2,730. “That is a range of £260 – hardly the difference between life or death for the business” say the pair, suggesting that the share of such a figure going to the negotiator may be considerably less than that.
Dearsley and Holmes are also sceptical of the online model where an upfront fee is paid for listing with no incentive for the online agent to actually sell at all.
They then provide what they claim may be a solution, which goes as follows.
1. Low or no listing fee;
2. A sales price set by the vendor; and
3. A 50/50 share between agent and seller, of any upside over and above that asking price.
If that sounds familiar, then look at the Nested model which we covered in an Estate Agent Today story earlier this year.
“Nested are close to getting this right, but the fundamental issue with their model is that they are incentivised to bring properties to market at a below-market-value price. This is still a misalignment with vendors” say Dearsley and Holmes.
It’s a fascinating piece that the PropTech pair have written, and you can see it here.