Agency closure blamed on online agents’ rock bottom fees

My sympathies to the individuals suffering.

However from a business perspective, take some responsibility and don’t blame others for your own failures. Did the agency fail to deliver true value to their clients, or did they fail to demonstrate that value?

• Paul Robertson
• 25 November 2021 08:17 AM

Are you for real or just plain ignorant or know nothing about business?

As an estate agent for 25 years, running my own estate agency for 15 years I totally understand and sympathise with this former business owner. We provide a high street service which means high street costs and outgoings, to manage such outgoings (like every business) we need a certain amount of revenue that we need to generate, without that revenue business cannot operate. If I operate from a bedroom or a garden shed then i would need less revenue to operate as my outgoings are much less.

I also have employee wages, rent, heating, electric, fuel, pensions, HMRC compliance, insurances to cover which all take a certain amount of money to cover. How do you expect any business to run if a hybrid with a "local agent" working from home comes in and does a fixed fee of £999 (which includes vat) undercuts you by a few hundred pounds?

Do you think in this economy with fuel increases, household increases and debt rising a client cares if you will call him daily or weekly if he/she can save a few hundred pounds by going with an hybrid agency that advertises on the same portal sites at much less cost because there is no over heads. Not every estate agent is in an affluent geographical area or in an area that does not care about how much it costs to sell a property.

After 25 years of estate agency I am also getting out and doing another professional that will make me alot better off without the hassle or race to the bottom on fees.

Show some respect

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• Max Boyne
• 25 November 2021 16:08 PM

Absolutely right Ben, there are plenty of agents thriving because they understand the concept of value. The second that a business or owner mentions price, or economic conditions, you know that they don't get it.

@Paul Robinson - Your entire comment is redundant. If the value you are offering is the same as an online agency, then of course the client will take the cheapest option. What does 'High St service' even mean? What is your competitive advantage? Why should a client choose you over any and all other possibilities available to them? If the answer to that question is 'price', then you were screwed from the beginning.

If you don't understand the concept of value, going into another industry won't achieve anything. You'll simply join the race to the bottom there too. I suggest reading NO BS Price Strategy by Dan S. Kennedy as a matter of urgency.

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• Ben Hollis
• 25 November 2021 21:39 PM

@Paul Robertson
You’re only viewing business from the business’ point of view, not the customers.

Why should a client hire you? Are you better than other cheaper agencies? Demonstrate it. You’re either failing to perform, or failing to demonstrate your value.

For example, if clients ever mention fee (which they rarely do if we’ve done our prep properly) we charge 1.8%, no exceptions. Most others locally charge less. We collect the data on the other agent’s performance (asking vs achieved prices) and can evidence we achieve on average 3.3% more. So the other agents could be FREE and you’d still be better off by 1.5%.

In the last three years (since getting my head around that) we’ve never lost an instruction on fee. So ‘cheap’ is not competition.

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It is tough out there but if your mindset tells you to drop your fees to match the parasite ‘cheap fee agent’ change your mindset. When ‘every’ agent in our area is charging 1% or less we are still charging 2%. We have the £999 fees to contend with and Strike doing it for free too but you have to add value to what you do. If the vendors seriously want to sell their greatest asset via the agent that charges the least fee it’s your job to educate the vendors! It’s not how much the vendor pays in fees that matters but the amount of money the vendor will end up with in their pocket at the end of the transaction that counts. Educate yourselves and then educate the vendors.

• Paul Robertson
• 25 November 2021 08:44 AM

Paul

I am fully aware of the benefits of using a knowledgeable local agent compared to a hybrid and also to make vendors aware that it is not the fee that is important but the sale price one will get for their home using an agent that cares about their actual sale price. However it is not just my estate agency v hybrid, in our town we have 6 well run and technological advanced estate agents, now if one reduces their fees it puts pressure on the rest to follow suit, why? because we end up losing to that agent that has now reduced their price, this is the race to the bottom, if one agent panics and reduces their fee then you are guaranteed other will follow, if you hold firm you end up being the most expensive and yes you may with 2/3 out of 10 but that does not sustain a business.

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It is a free market and the consumer expects more for less. The internet has certainly shown us that we must sharpen up. The best example I can offer is Blockbuster. I am always harping on to the FD about "The Blockbuster Effect".
We are not a hybrid agent, but we did make huge changes to our operations because of Covid. Pretty much every agent we go up against have gone back to their old ways, so it's no wonder the death knell is close when agents can't, won't, or don't know how to change.

Learning the skill of maintaining your fees is crucial. It’s all too easy to ‘match’ others but it destroys your business. Spend time educating yourself and learn how to keep your fees higher. We are against Strike regularly with their FREE offering and yet still walk away with fees well in excess of £10,000. You simply need a better mindset, honestly!

Can't blame others for their failures when there are thousands of high street agents still doing well and many who have diversified, I bet they never ditched Rightmove before their staff??

Closing now after going through the SDLT holiday boom strikes me as odd. The Gov't has been extremely generous to us during the covid problems. Will assume the owners took their eye off the ball and stopped training/motivating their staff and gave up. I remember in my early days, we had jokers like Debenhams property shop and others advertising £99. Those cheap companies were always a joke and still are. Your High St premises are a huge advert with free accommodation. The market is there to grab providing you have the right attitude to grab it. Delegate the small issues, train, motivate get out there chasing the properties and fees. Your tax bill should be your biggest headache not the overheads. I blame the owners, sorry.

Made me laugh, not the sad news of the agent closing but the image of the new version of estate agent eating toast , feeding the kids , while having a phone in the other hand trying booking a valuation for a fee of peanuts when I am paying thousands in tax and wages and countless ineffective social media platforms working tirelessly for my team to earn good commissions, teaching many who ironically go on to work from home. And thats the point where do these online people get trained, yes by us true professionals.
The High Street is far from dead and will prevail.

Whilst agent continue to support Portals like Rightmove that allow these online agents to list on their sites the more they will keep increasing your fees to subsidise and support them.

So so sad to see this and I wish Andy and all at Maitlands well for the future

The working traditional world is changing very fasy post C19 but there is a huge demand for talented people out there right now and of course always the option now to go it alone

Ironically at eXp UK with now circa 250 agents on board we are finding Vendors actually are happy to pay a higher fee in many cases to a trusted dedicated local agent, and I feel the days of the cheap totally online agents/do it yourself are done

We need regulation asap and this will grow the real value of a good agent whether employed on The High Street or Self Employed

• James
• 25 November 2021 14:47 PM

Do you really think "regulation" will be anything other than another cost for agents and agencies to strip out even more profit? Regulation is not going to be a shortcut to less competition, neither will it result in higher fees.

We are already regulated... you have to be a member of a regulatory body and sign up to their codes, you have to have Client Money Protection, you have to have PI, you have to register with ICO , with HMRC, the list goes on and on. None of which prevents shoddy / poor agents operating in the marketplace. Neither will it stop agents competing on fee with their competition in the mistaken belief that "market share" is the golden ticket.

The reason eXp and similar models are doing well on fees is because their agents are offering a different product and having different conversations with their potential client base. Critically they are also their own boss, and as such can act in a far more discretionary manner on a pitch than their corporate colleagues who are typically being targeted on how many instructions they win irrespective of profitability.
Its a different way of working.

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It is sad to read this story, it really is. I am also sorry to see some of the reactions, in particular the first comment which is quite frankly unnecessary.

It is however, yet another story of how we are being complicit in the destruction of our own industry.

There is a deep irony that as an industry we fight tooth and nail for our clients when it comes to negotiating with buyers, but are far too quick to compromise on our own fees to win the listing.

We need to change the narrative, we need to respect ourselves more, we should respect our competition more and we should work far closer together, especially the independents.

When you speak to agents / brokers from other countries particularly those with MLS systems it is fascinating to see how they happily work together in their clients best interests, but more importantly how their representative bodies and / or regulators actually help to defend their fee levels at local and national government level. Over here our membership bodies keep flogging us useless badges to stick on our websites and windows in the knowledge that it makes absolutely no meaningful difference.