Fall throughs which could be avoided by Reservation Agreements have cost agency branches an average £10,000 per month.
That’s the claim from digital platform Gazeal which has made the calculation by monitoring transaction and other market data.
According to HM Land Registry figures, there were 105,630 completed transactions in October. Based on Nationwide's national average house price of £229,721 and an average commission fee of 1.0 per cent, Gazeal says agents' total monthly earnings are in excess of approximately £242m.
But it goes on to claim that £80m in commission fees could be lost each month due to a third of transactions falling through - that’s in excess of £10,000 per branch.
The figure reflects the fact that the number of potential property transactions has risen sharply in recent months due to the stamp duty holiday, which could continue into the New Year.
According to Zoopla forecasts, an additional 100,000 sales are expected in the first quarter of 2021 as high transaction volumes spill over from 2020. This could result in an additional 33,000 fall throughs and lost commission for the industry to the tune of approximately £75m, suggests Gazeal.
"This results in agents doing hours of work without getting paid. Agents have to face the reality that each branch risks losing thousands of pounds in commission each month due to fall-throughs" says Bryan Mansell, co-founder of Gazeal.
He adds: “Providing reservation agreements is a good place to start as they confirm commitment on both sides and take emotion out the equation. A reservation agreement is a fair and balanced way of protecting transactions in which no-one is punished if no-one is to blame for a transaction falling through. Furthermore, sellers are encouraged to use reservation agreements as recommended in the government’s How to Sell Guide."
Gazeal claims reservation agreements have been proven to reduce agents' fall-through rates by at least 50 per cent.
Mansell adds that ensuring properties are 'sale-ready' with up-front information such as protocol information forms, title documents, certificates and guarantees, can reduce the chance of any problems further down the line and protect agents' pipelines.
"Giving buyers a transparent view of the property before they make an offer can really speed up transactions and drastically reduces the chances of them pulling out at a later date. Quicker transactions which are more secure allow agents to get paid sooner and more frequently, while increasing consumer satisfaction with the moving process” he concludes.
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A reservation agreement is something to consider when getting a sale agreed but surely encouraging a seller to take the appropriate steps to Get Legally Prepared ahead of marketing or at least in tandem with, has to be the place to actually start. There are 5 simple to follow steps. Take a look at 'get legally prepared dot co dot uk' for information and get involved. We build these solutions for free for agents to adopt to help with messaging to vendors in the early stages of engagement.
We take no referral fees, displace no existing relationships, we only support collaboration between stakeholders to dive successful pipelines.
Gazeals Reservation Agreement provides Free 'Sale Ready' TA documents for Sellers to complete online, sign and transfer to Agents and Solicitors when they list a house. We always recommend that a Reservation accompanies the Sale Ready Pack. The Sale Ready pack is not just the Law Society Protocol TA forms, buyers need to see additional information to help make an informed decision prior to making an offer.
The article says this regarding Sale Ready packs
Mansell adds that ensuring properties are 'sale-ready' with up-front information such as protocol information forms, title documents, certificates and guarantees, can reduce the chance of any problems further down the line and protect agents' pipelines.
Don’t worry, I’m sure you can for a little while longer rely on tops from disgraceful “referral fees”. It’s a scandal. When you are regulated, this gravy train will be gone. Also, you’ll no longer be able to mislead (yes, mislead) buyers & sellers that they must use your “preferred conveyancers”....
My preferred solicitor provides a much better service than *most* of the poxy conveyancers that my customers otherwise find on Google. And no, I do not get paid a referral fee - I recommend her because she's excellent at her job.
Who are you aiming this post at exactly? Gazeal take no referral fees from anyone and provide a Free service for Agents.
Thanks Steven Robertson, I was referring to the line:
He adds: “Providing reservation agreements is a good place to start......" and suggesting that 'a good place to start' was at the beginning with getting legally prepared, not at the sale agreed stage.
I appreciate that it is noted in the text as an additional comment, but the place to start has to be at the beginning.
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