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TODAY'S OTHER NEWS

Are agents’ fees falling because of increased competition?

An analysis of estate agencies in 21 major cities suggests a big rise in competing companies, prompting risks of fee wars between competitors.

The analysis shows that the number of agencies operating within the cities increased by 7.1 per cent on this time last year. 

Bristol has seen the biggest uplift at 16 per cent; Bournemouth is up 13 per cent with Southampton, Leeds and Sheffield close behind.

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Just two cities have seen a decline in the number of agents - Portsmouth and Aberdeen, down 13 and eight per cent respectively.

The research shows that across these 21 major cities, there is an average of 23 properties listed on the market for every one agency branch, down from 26 per agent this time last year. 

Leeds has seen the greatest decline with nine fewer homes listed per branch. 

Despite seeing an annual drop of two listings per branch, Liverpool remains the busiest with 39 properties on the market per branch.

Cambridge is home to the fiercest level of competition, with just 12 properties listed for every one branch. 

The research has been commissioned by Nested, an online agency which has been running a campaign to woo traditionally-employed agents over to self-employed status. 

Nested spokeswoman Alice Bullard says of the increase in agency branches: “This means more competition and a lower number of homes per agent on average, which inevitably results in a drop in revenue for those who can’t differentiate themselves from the rest of the market.  

“For those big brand names with a hefty wage bill and multiple branches to support, this could spell trouble, particularly in the cities that have seen the biggest increase in competition. 

“However, those that have made the choice to follow the self-employed route with the support of a trusted brand are far better placed to negotiate a more competitive marketplace.”

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    After 20 years and not one complaint against my name I am thankfully leaving the industry within the next few months. I don't mind the extra competition, it can be healthy, however I now make less than what I did 20 years ago, as a director I have far more responsibilities and costs that just make estate agency no longer viable.

    The general public now want to use the online estate agents as a bargaining tool to cut fees and I now average £800 per property which is no longer viable as where I am in a small town we have a smaller population than major cities, 5 estate agents not including the hybrid estate agents that are also playing there part in the town (the hybrids are notorious for over valuing to gain instructions then dropping price 6 weeks later to the correct value and I will simply not lie to gain instructions).

    So I have created a new Ltd company as a wedding videographer and make double than what I do as an estate agent with no HMRC AML money laundering obligations to worry about, NO zoopla costs, No rightmove costs, No letting web costs, Not to mention rent to pay, gas and electricity, insurances etc to run a high street office not to mention web design maintenance and costs and car running costs. My outgoings average £40,000 a year for estate agency, my videography business averages £2700 a year so I know which one I am choosing.

    For the first time in years I am looking forward to a brighter future without estate agency and not worrying about incoming or outgoings. The UK is now on a run on a "race to the bottom" mentality and it's time to get off. Good luck to all those that stay in it, hot off to you all, I have just had enough and life is too short.

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    Of course agent fees are falling because of competition, but not as a result of oversupply of agents or under supply of stock, but because we have created a business model which is unsustainable and the only route out of it is scale.

    As an industry the majority take great pride and care over their service delivery and product offering, but for some reason don't respect themselves or their staff enough to charge for it.

    We prioritise market share / number of listings and turnover, in the mistaken belief that somehow it will turn into profitability. It doesn't... it leads to a race to the bottom on fees and increasingly questionable valuations as agents set about buying their instructions at ever more fanciful prices.

    Business owners are then forced to lower wages for staff or in some cases invent a way to slash their costs... like recruiting agents on commission only and branding them "self-employed".

    We need to stop apologising for being estate agents, we need to respect ourselves and our staff far more than we already do. The majority of estate agents up and down the country are good, diligent and hardworking. Managers, business owners and valuers, should have the back bone to turn down business from those who would cheapen and belittle their labour by offering a pittance in return for the sale of their most valuable asset.

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    Totally agree, unlike other countries that respect and trust their real estate agents and happy to pay the fee's for some reason we are rated among traffic wardens (no disrespect to traffic wardens) and the public think estate agents are out to screw them.

    As mentioned I have never had ONE complaint made against me in 20 years yet sometimes the way I am spoken to when giving a FREE valuation is sometimes sit there and wander what the hell am I doing having to try and justify my worth.

     
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    Shame you're getting out Paul as you sound a decent chap ! It also reflects a " tale of two worlds " as I find it unbelievable that your average fee is just £800 ........ours is £5000 ! We've never had a better time in 20 + years of selling houses but of course retirement comes to us all so I wish you well Paul and good luck !

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    Thanks Freedom

    I am looking forward to it, the hybrids here are on average £999 so to survive we had no option to go slightly under this due to Geographic's and population size.

    We were always a % previously but again when your fighting against a £999 fee and depending on where you are based money talks even when you explain to sellers that they could be losing on the sale price depending on the agent they just don't get it.

    Sorry, yes I just noticed, I am not retiring lol, I have just created a better business in another field that works for me and makes me more money :)

     
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    He didn't mention retirement, just getting out of the industry.

    'We've never had a better time in 20 + years of selling houses', let's check back in six months shall we?

     
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    Property Pundit.......I could leave the industry tomorrow as a multi millionaire......it really doesn't matter...thats what 20 "successful" years of selling houses does for you :) Love your "negative attitude" though !

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    Must say I left because I got bored with he same conversation with vendors about fees
    Just the same conversation 10 times day like that film groundhog day

  • Rob Brady

    Show value in what you do and your identity to the dormant market about it, not just people looking to sell tomorrow as they will never know the difference. Don't just stick your properties on the portals as you're not vital in the process and advertise that you just do professional photos, floorpans, matterport , are on all the portals and social media as everyone says that. You could says its our team that makes us special but thats what everyone says. If it is your team, allow them time to become the faces people warm to but in all of this its about being VITAL.

    So many agents I see round the country increasing their fee to what is being said in this article so there is a change..... one side who has worked out how to market to the public and not just houses vs people who dont who are fighting cheap fee agents.

  • Andrew Stanton CEO Proptech-PR    Proptech Real Estate Influencer

    I am not so sure about this low fee thing. In 1985 when I started some agents were charging 1% which on a three bed semi was 1% of 48,000, £480 + VAT. Even with annual inflation in 2021 1% of that now £379,000 three bed semi, is still a higher fee, £3,790 + VAT. Back in 1985 the agency I worked for had a scale fee of 2.25% + VAT, and in the small village we were in - we dominated, even though there were two 1% agents.

    Why - great service, great team, structured business model, weekly KPI's and no fuzzy business, just focus on listing, selling, exchanging, any other activity is for the birds. Great teams throughout the UK make huge profits annually replicating that model, often the core members have spent decades at the same desk. The general public may well be more tech savvy in 2022, than in 1985, but bottom line they want service, which is why since 2017 I moved from analogue estate agent into Proptech and its numerous verticals, as digital can deliver service at speed and volume. Humans are expensive and can not work 24/7 like software does.

    With Proptech-PR we have dealt with over 90 clients, some large real estate corporates, many outside of the UK, and Paul Robertson, the thing that you are up against is not so much the 1% agent - it is the huge transformation of how property is being done, in all of its guises, plan, build, sale, lease, asset management.

    Residential agency in the UK is a tiny business, based on a 'cottage industry model' - 70% of agents are one or two branch agencies, and that is its weakness, just as the lettings industry is being 'bought up' with large interests amalgamating the landlords and tenants, soon digital will allow similar monied interests to leverage their way into the cottage industry model of residential agency, and make it more efficient for all stakeholders.

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