A report drawn up by Reapit and data consultancy Dataloft suggests that agents in 2017 lost a potential (and jaw-dropping) £4 billion in commission as a result of properties which were withdrawn from sale.
In a forward to the report, which is available from the Reapit website, thew company’s chief executive, Gary Barker, says 2017 may be an untypical year because of economic and political uncertainty depressing markets.
“But we have for many years seen big differences between the volume of properties for sale on Rightmove and the number of sales recorded at Land Registry” he says.
“More recently, online agents have taken flak about their ability to turn a listing into a sale. Perhaps the problem is not unique to the disruptors? It also highlights issues with a no sale, no fee model. The scale of abortive costs has serious ramifications for those who compromise on fees” Barker adds - although stressing that his figures are not part of a debate for or against online agencies.
The report, which runs to 18 pages and is here, includes these highlights:
- the withdrawal ratio across the UK in 2017 was 45 per cent;
- for London, the withdrawl rate was 61 per cent and for England and Wales excluding London, 40 per cent;
- “if for every property sold there is one withdrawn, this demonstrates that vendors who progress to sale are paying a substantial subsidy for those who withdraw from the market”;
- Higher priced homes were far more likely to be withdrawn - below £500,000, sales outweighed withdrawals and above that, the balance reversed;
- In broad terms, withdrawals peaked in July and November;
- by extrapolating the analysis undertaken by Dataloft, the potential fee income lost to agents as a result of withdrawals could be in excess of £4 billion;
- some 38 per cent of withdrawals had received an offer but in most cases these were never accepted.
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The agents didn't "lose" anything. We are in a bear market. Agents over-valued properties to gain an instruction. The price was unrealistic and was never going to sell for the amount quoted, so it gets withdrawn. Yes the agent wasted a little time and money, but these are fixed costs for agents - as they have to pay staff even when (as now) there is very little for them to do. So overvaluation makes sense, because they might just get lucky and catch a dumb foreign buyer who doesn't read the press! So these aren't "lost" revenues at all.
Ive done this for 20 years this is just the business model for estate agency half of what you list doesn't end up completing. People change minds to sell, can't get the price they want or were just testing the market. Its only since Purple bricks started claiming ridiculous conversion rates that people started to realise that only half the homes listed ever sell. We lost nothing because we never had it in the first place. Anyone who says they sell more than about 55% of what they take on is not being truthful.
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