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TODAY'S OTHER NEWS

No commission, no fees - meet the agency selling homes 'for free'

An estate agency is pioneering a new business model in which it charges no commission whatsoever to the vendor.

Freeagent247, an online operator with no shopfront premises, instead operates a model under which the buyer effectively pays the agent a one per cent fee plus VAT - called a Purchaser Privilege - which allows the seller to pay nothing at all, even if the property sells.

Daniel Lewis, one of the two partners running the agency, has told Estate Agent Today that he came up with the model after 10 years working for traditional agents in the Worcestershire area.

“In the end it was a fees war. Naturally sellers wanted to pay as little as possible and there was competition between agents - and the only way that was going was towards lower and lower fees. Against some online agents, it was a war that couldn’t be won” says Lewis. 

“So we came up with something completely different, which we don’t think has been tried by any other agency anywhere” he continues.

Lewis and his business partner Gerard Smith visit the property of each client, use a professional photographer, prepare conventional online floorpans and even have a home staging expert on call if required. 

The agency restricts its stock to properties that can be visited by the two partners, so most are in Worcestershire with a small number in neighbouring counties.

Properties marketed by the firm are advertised online and on Rightmove and enjoy digital marketing via Facebook ads and Google adwords. The two partners also correspond with clients via text, email and WhatsApp.

The agency has been running for just over two months and is about to exchange on its first three properties within the next few days. It has around 30 others on its site.

“We still work on behalf of the seller in the usual way, and we’ve secured legal advice that our business terms are as solid as any agency operating in the traditional way” Lewis told EAT.

At the bottom of property details on its website there is the wording: “A Purchaser's Privilege of 1% + vat of the eventual purchase price is payable by the buyer in addition to the purchase price on completion.”

Lewis says this business model has so far been “really successful” and despite buyers having to pay an additional fee, their offers and attitudes have not been any different to those which the company’s two founders witnessed when working in ‘ordinary’ agencies.

“I cannot see any downsides to this model. Over time, I believe this isn’t just as profitable as the usual seller commission-based but could even be twice as profitable” he adds.

So far there’s been no attempt by rival agencies to emulate Freeagent247’s model but Lewis doesn’t rule it out. 

“I think this could be the future. This could be how all agents operate in the future.”

Look at the service for yourself here.

Poll: Could buyers paying commission catch on?

PLACE YOUR VOTE BELOW

  • Chris Arnold

    Been done by Romford Homes in Solihull. Sold a couple of houses before they went bust two years ago.
    The enquiringly mind would ask:
    If the sellers are being charged the fee, might the offer not be less?

  • Chris Arnold

    Sorry, should of course be if the buyers are being charged the fee.

  • icon

    Totally agree, the seller will stay pay by way of achieving a lower sale price as buyers look to include the purchase fee in the overall price they pay.
    Agents need to concentrate on what it is that makes them worth a fair commission rather than get drawn into fee wars.

  • icon

    "We still work for the seller in the usual way". Sorry. You don't. Because the seller pays nothing and the buyer pays you, your primary duty of care is to your buyer and you need to make sure he buys the house at the lowest price possble price.

  • James Robinson

    An agent either works for the seller or the buyer, this is defined by who pays the bill and if you are paid you have a fiduciary duty to get the best price for your client. There are many search agents who charge a fee for finding and negotiating the purchase of a property for their client the buyer. It appears that Freeagent247 are convincing the sellers that they will be working for them for free while legally they are working for the buyer. God help them when the wheels fall off

  • jeremy clarke

    James Robinson is correct an agent has a duty to get best price for their client the vendor. If a house is advertised at £350,000 and sale is agreed at £345,000 then surely that means that the buyer is able to pay £4140 more than the offer?
    Company tried it in Christchurch, their fall-through rate was very high and I suspect that had something to do with mortgage companies/valuers/deposits? As the market continues to tighten all of the market disruptors will fall by the wayside and traditional will come back into its own.

  • icon

    Same with online auctioneers who charge the buyer only. You only have to google "modern method of auction" to see how disparaging prospective bidders are of this method and how they reduce their bids substantially to cover the extortionate commission they are paying or simply decide not to go to the auction. Hardly helping the seller and hardly surprising trading standards are onto it.

  • icon

    News papers could cash in,let people sell via them for a weekly fee,a low fee like £25.00 month until sold.

  • icon

    This just seems odd and could only work for in demand properties with multiple offers. Just seems an unnecessary complication to tell the buyer he has a 1.2% fee to pay in addition. Vendors where applicable can offset agency and disposal costs from their gains, to the buyer it just adds 1.2% incl. VAT and few buyers are overpaying in this market.

  • icon

    Same argument could be made here as is made against tenant fees. The agent has a monopoly on that property, the buyer cannot "shop around" unless the property is a very bog standard naff new build. If the agent is working for the seller, the seller should be the one paying them. The seller has the power to shop around.

    If this catches on the housing market is just going to attract even more attention from government. Basically what they are saying is they could not compete, and now they have decided to go shady.

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