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TODAY'S OTHER NEWS

Agency charges buyers not vendors - and it’s set to expand

A regional estate agency that markets homes without charging the vendor is set to expand next year.

Midlands-based Chosen Home explains its business model to vendors this way.

“We work hard to get your property noticed by more buyers than with traditional estate agents. This means that buyers are willing to pay a purchaser fee to secure the property, as they know that if they don’t, someone else will.”

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When challenged as to whether this leads to lower offers from buyers to compensate for the additional ‘sale fee’ the agency says: “Our properties are selling at around 99 per cent of asking price against the UK average of 95.6 per cent so you are likely to get a better sale price with us than the average agent.”

Now the firm, which operates in Birmingham, Sutton Coldfield and Stourbridge currently, is expanding into Solihull in 2022.

Director Nicki Ash says: “When we launched in September 2020, we did so in Sutton Coldfield and Stourbridge, focusing on the areas where we had a strong contact base and extensive local knowledge. 

“Our concept of not charging the vendor to sell their home saw us gain a strong foothold on the market throughout the West Midlands, and within 12 months, Chosen Home became one of the region’s fastest-growing independent estate agents, earning a reputation for providing exceptional customer service and first-class sales packages. 

“We always intended to broaden our regional footprint as the business grew, and with an ever-increasing number of enquiries about properties in Solihull and its surrounding villages, we decided fairly quickly that it was the next logical step for our growth.”

And she adds: “We are keen to take our business model, which sees us sell a vendor’s property free of charge, into the region to kick 2022 off and mark the next step in our development.”

  • C B
    • C B
    • 16 December 2021 06:54 AM

    What happens if a buyer makes the best offer, but refuses to pay the fee?

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    CB based on what they put on details, if a buyer refuses to pay the sale doesnt proceed. The seller clearly doesnt want to pay the fee and has been attracted to this agent as they know the agent gets the buyer to pay. Buyer refusing to pay gets treated like any other sale where you move on to the next person. Here is what they have on their website....
    Purchaser Fee
    Chosen Home Limited charge a purchase fee of 1% plus VAT of the selling price which is payable by the purchaser on completion of the sale and is to be a condition of sale in the contract. It is for the sellers lawyers to collect this fee with the purchase price on completion. The estate agents costs must be sent to the estate agents by telegraphic transfer by the sellers solicitors prior to keys being released.

     
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    I can see why this idea is working at the moment in a sellers’ market, but I’m not sure how well it will go down in a buyers’ market.

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    Buyers' market? What, in 2026?

     
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    So who’s the client? This surely blurs the line as to who you’re working for? 🤷🏻‍♂️

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    How is it that all these different models all claim better customer service? Not sure how they can substanciate that. Reach more buyers and sell at a higher percentage of the asking price. They can't all be right surely. Perhaps in the affluent areas they mention it stands a better chance of traction than cheap chimney pot areas where buyers will have more choice.

  • Mike Lewis

    So they claim to be acting for the vendor and achieving "99% of the asking price", yet they are charging the purchaser.
    Unquestionably a conflict of interest!
    Agents acting for purchasers/tenants is not unusual, we do it all the time on the commercial side but we can only act for either the vendor or the purchaser, not both.

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    This is laughable and one of the worst ideas I have come across. Total conflict of interest and who the hell is the client? If a buyer has legally completed then the agent cannot hold on to the keys if the fee is unpaid....

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    Does nobody realise that if the buyer is paying £2400 (1% + VAT on a offer of £200,000) then they will simply make an offer of £24000 less than they otherwise would of. This is no different to a modern method of auction and actually the vendor could end up with less this way. In fact, they have a 2 bed apartment in Bude for £795,000. So nearly £10,000 fee which will adjust their offer. So, the agent does NOT get the maximum price for the house as the buyer will subtract this fee from their offer

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    Get your point but in the current market, your suggested approach would likely lead you to be unsuccessful in securing a property, particularly where there was competition. Buyers' market - totally different of course.

     
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    If the seller pays the fee then it nets out the same. And if the agent has won the vendors business then having this model works for the agent and the owner can tell his mates he sold his house for free.

     
  • Richard Copus

    Like the "modern" method double speak seducing sellers. It'll all come out in the wash when the market changes and the first action for conflict of interests raises its head.

    Samantha Sullivan

    Hit the nail on the head there.

     
  • Roger  Mellie

    The vendors are the loser in this fee structure. I've been on the buying end of the Modern Method of Auction and I was frequently told to bid lower to account for the buyer's fee, which is 6K!

    This is popular up north where fees are low.

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    Will just push accepted prices up even further … duh!

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    So the buyer refuses to pay the fee and the sale process has almost completed to the final stage where the contracts have not quite exchanged, the vendor is so far down the line with the purchase of their next home and the chain is almost broken, the power is in the hands of the buyer who refuses to pay the fee therefore, will the vendor buckle and pay the agents fee just to get the deal complete or will the agent move on to the next buyer who may or may not pay the fee and by that time the vendor has lost the purchase of their next home. Hardly a good service who in the right mind would pay top price or offer anywhere near the asking when they are paying a 1% premium to buy. It may work for the odd low value investment property with the process in the same way a sources fee. It's very similar to the Modern Auction except they have the clients all bidding whereas private treaty once the property has an offer accepted the other buyers will have moved on, so in fact the agents is really trying to discredit the traditional agent’s normal trading practice by trying to reinvent the wheel. One agent in the town fighting against the rest I know who would win in the end.

  • C B
    • C B
    • 16 December 2021 14:31 PM

    @lee russell

    What happens if the seller wants to accept the offer though? The agent can’t force the owner not to accept it.

    There must be a provision in the terms that says if the buyer refuses to pay, then the seller pays the fee?

  • Glenn Taylor

    Its a conflict of interest. The buyer would sign a fee contract of course at the beginning of the sale, but I dont believe you take a fee when you are acting for the other side as you are duty bound to get the best price for the person you are acting for. Propertymark should ban such activities.
    You can always get a fee from the buyer if you are acquiring the property and not advising the seller but this isn't the same.
    Conflict of interest meaning
    a situation in which a person is in a position to derive personal benefit from actions or decisions made in their official capacity.

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    • N W
    • 16 December 2021 16:19 PM

    spot on!

     
  • Glenn Taylor

    Demand PropertyMARK investigates

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    Why - they are totally toothless

     
  • Samantha Sullivan

    It's a sale on ransom. The agent is providing a service to the seller, not the buyer, the seller is their client. However, a buyer paying a fee is pretty much blackmail, if they don't pay the fee they won't get the house. Now that my friend, is not good is it.

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