Estate agents have had a tough time since the financial crisis started five years ago.
But those agencies which battled through look set to be rewarded as the market which has been stirring slowly into life during 2013 looks set to enjoy an even bigger turnaround in fortunes this year.
Market confidence is rising, lender mortgage restrictions appear to be easing and the Help To Buy scheme has seen sales finally increase.
Yet, while the economy is improving, another threat appears to be lurking on the horizon.
Since the internet first became established 15 or so years ago, there have been number of businesses set up to bypass the role of estate agents by getting the seller to market their own property themselves.
Yet, while the number of DIY sellers is increasing, erosion of the market share of traditional estate agents has been limited.
However, this week, EAT came across a release from a cash-buying company questioning whether estate agents were needed at all.
The tone was set in the first line which said: "We are still seeing estate agents that are charging up to 5 per cent in fees for selling property, even though there really is not a lot of work involved."
It then continued: "A traditional estate agent is likely to take photographs, write descriptions, put up a board, and deal with the rest over the phone. It really is just an administration process, and if that process is done correctly, an estate agent can get paid a handsome fee for very little work."
Enough said - and you can probably work out the rest.
The release states that the UK property market will turn to services such as its own or take a more DIY approach when vendors realise just how much they are losing out in fees to estate agents.
And it quotes an unnamed managing director saying: “The property market is ever changing, and the ‘for sale by owner’ route is something that a lot of vendors are now turning to instead of paying fees out to estate agents. Vendors are sometimes scared about dealing with a sale themselves, but once they realise that there is not a lot to it, they are prepared to take the brave step and go it alone.”
There you go - all that professional training to achieve something where there is "not a lot to it". You have been forewarned.
Of course, this is not the first time we at EAT have seen this kind of attack on the workings of the profession.
The instinctive reaction is to ignore it - but let's consider the point it is making as it is the unlikely to be the last time we will see the role of estate agents arbitrarily pulled apart in this way.
It may well be easier than ever before for private individuals to sell their own property yet it is unlikely that estate agents have been affected in any significant way.
Nonetheless, this does not mean agents should become in any way complacent as the scale of threat will only continue to increase.
The profession needs to ensure that it is able to demonstrate to sellers the advantages of the expertise of members who are able to advise properly on all aspects of the process.
That knowledge, gained from years of understanding how the market works, is key to ensuring the future of the estate agency profession.
Sellers who will always be receptive to saving money wherever they can may well be able to forgo commission with a DIY sale - and a rising market will make this easier.
However, even in that situation, a professional agent could offset their fee and still save the seller money by using their skills to achieve an even higher price.
And that is always persuasive.
Comments
Mr Wells - your contribution to the debate is welcome!
Here's the thing, though - look at the very title of the piece. The inference is that ALL Estate Agents - dinosaur Agents like moi who tread the 'traditional' pathway; the 'Onlines' who set out their stalls as being the trendsetters, and the 'hybrid' Agents like your goodself are all at risk of imminent extinction brought on by FSBO or, worse still, STFFA websites.
You will note that I covered this in my first post - but, as usual, the debate sidestepped to the usual and I got reeled in and posted a second time. Rude not to, wouldn't you say...? ;o)
As you say, I talk about 'niches' in the market. Well, these are the smallest of niches - more like cracks in the plasterwork - but I would suggest they are the cracks which cause more damage to our 'reputation' than they will ever to our cashflows as don't they all fall under the same umbrella as we do, as far as the public are concerned.
Over to you...
Good morning and a happy New Year to you all!
Hound, PeeBee - good to see that "post trading" has got off to a flying start in 2014...
I will make a brief contribution to this thread but I will not be getting involved in any lengthy debate about whose business is better - blah, blah, blah!
First stop for those new to this - let's set the scene...
Harwell Estates are not an online agent we simply choose not to work from a High Street premises but instead choose to work from a very smart business centre located in a rural area known as Little Holtby which is equidistant between Northallertton, Bedale, Leyburn and Richmond which are the areas we predominantly cover.
But to be honest though, we are rarely there due to the fact that we are usually out on appointments or drumming up new business through networking and proactive marketing.
This is the main reason why we chose not to support the running cost of a High Street premises which would look great but not so great if there was nobody sat behind a desk - which I see all too often while out and about in my area!
We also offer a "full estate agency service" which includes brochures and accompanied viewings, etc, etc...
With regards to which model is best, (upfront, part payment or NSNF) I guess it's what works for the individual business.
Some very successful High Street agents will win great fees all day long which will help cover the typical "High Street" office expense while still delivering an acceptable profit.
National online agents generally charge reduced upfront fees while at the same time offering some packages which also incorporate a success fee because they rely on a fast revenue stream to support their portal costs.
Harwell Estates offer all three because our brand is about choice...
We let the client choose whether they want to pay all upfront, part upfront with a success fee or nothing upfront but with a traditional commission due upon exchange.
It is therefore down to the client which option is proving to be the most popular and the most popular at the moment is part upfront with a success fee upon exchange.
We advertise all our fees on our website if you are interested or don't already know what we charge...
www.harwellestates.co.uk
At the end of the day it is all about offering a great service to your clients while running a profitable business and we do offer a great service to our clients even though our fees are regarded as cheap - there is a difference though between cheap and good value for money!
As far as profit is concerned, we are a new start business (8 months to be precise) so our first milestone is to cover operational costs before we make profit but we are there now and 4 months ahead of our target.
So, in summary...
Spend more on your business - generally speaking you will have to charge more for your services.
Spend less on your business - generally speaking you can pass on the reductions to your clients and charge less for your services or charge the same as the above and increase your profit margin.
I know which option I would go for - oh, of course, I forgot, I decided 8 months ago!
As I have always said, it's about choice and the clients will ultimately decide the fate of the Estate Agent as we know him/her today - in the same way people can now choose how they want to order music or DVD's or book a holiday or arrange car insurance...
Thank you PeeBee for branding us as "niche" and on this occasion I will not challenge you because that is exactly what we are - the turning point though is always when niche becomes mainstream because everyone wants a slice of niche!
Some of the most successful bands were at some point niche.
You gotta roll with it, you gotta take your time, you gotta say what you say, don't let anybody get in your way...
Have a great 2014 all!
Good morning and a happy New Year to you all!
Hound, PeeBee - good to see that "post trading" has got off to a flying start in 2014...
I will make a brief contribution to this thread but I will not be getting involved in any lengthy debate about whose business is better - blah, blah, blah!
First stop for those new to this - let's set the scene...
Harwell Estates are not an online agent we simply choose not to work from a High Street premises but instead choose to work from a very smart business centre located in a rural area known as Little Holtby which is equidistant between Northallertton, Bedale, Leyburn and Richmond which are the areas we predominantly cover.
But to be honest though, we are rarely there due to the fact that we are usually out on appointments or drumming up new business through networking and proactive marketing.
This is the main reason why we chose not to support the running cost of a High Street premises which would look great but not so great if there was nobody sat behind a desk - which I see all too often while out and about in my area!
We also offer a "full estate agency service" which includes brochures and accompanied viewings, etc, etc...
With regards to which model is best, (upfront, part payment or NSNF) I guess it's what works for the individual business.
Some very successful High Street agents will win great fees all day long which will help cover the typical "High Street" office expense while still delivering an acceptable profit.
National online agents generally charge reduced upfront fees while at the same time offering some packages which also incorporate a success fee because they rely on a fast revenue stream to support their portal costs.
Harwell Estates offer all three because or brand is about choice...
We let the client choose whether they want to pay all upfront, part upfront with a success fee or nothing upfront but with a traditional commission due upon exchange.
It is therefore down to the client which option is proving to be the most popular and the most popular at the moment is part upfront with a success fee upon exchange.
We advertise all our fees on our website if you are interested or don't already know what we charge...
www.harwellestates.co.uk
At the end of the day it is all about offering a great service to your clients while running a profitable business and we do offer a great service to our clients even though our fees are regarded as cheap - there is a difference though between cheap and good value for money!
As far as profit is concerned, we are a new start business (8 months to be precise) so our first milestone is to cover operational costs before we make profit but we are there now and 4 months ahead of our target.
So, in summary...
Spend more on your business - generally speaking you will have to charge more for your services.
Spend less on your business - generally speaking you can pass on the reductions to your clients and charge less for your services or charge the same as the above and increase your profit margin.
I know which option I would go for - oh, of course, I forgot, I decided 8 months ago!
As I have always said, it's about choice and the clients will ultimately decide the fate of the Estate Agent as we know him/her today - in the same way people can now choose how they want to order music or DVD's or book a holiday or arrange car insurance...
Thank you PeeBee for branding us as "niche" and on this occasion I will not challenge you because that is exactly what we are - the turning point though is always when niche becomes mainstream because everyone wants a slice of niche!
Some of the most successful bands were at some point niche.
You gotta roll with it, you gotta take your time, you gotta say what you say, don't let anybody get in your way...
Have a great 2014 all!
Good morning and a happy New Year to you all!
Hound, PeeBee - good to see that "post trading" has got off to a flying start in 2014...
I will make a brief contribution to this thread but I will not be getting involved in any lengthy debate about whose business is better - blah, blah, blah!
First stop for those new to this - let's set he scene...
Harwell Estates are not an online agent we simply choose not to work from a High Street premises but instead choose to work from a very smart business centre located in a rural area known as Little Holtby which is equidistant between Northallertton, Bedale, Leyburn and Richmond which are the areas we predominantly cover.
But to be honest though, we are rarely there due to the fact that we are usually out on appointments or drumming up new business through networking and proactive marketing.
This is the main reason why we chose not to support the running cost of a High Street premises which would look great but not so great if there was nobody sat behind a desk - which I see all too often while out and about in my area!
We also offer a "full estate agency service" which includes brochures and accompanied viewings, etc, etc...
With regards to which model is best, (upfront, part payment or NSNF) I guess it's what works for the individual business.
Some very successful High Street agents will win great fees all day long which will help cover the typical "High Street" office expense while still delivering an acceptable profit.
National online agents generally charge reduced upfront fees while at the same time offering some packages which also incorporate a success fee because they rely on a fast revenue stream to support their portal costs.
Harwell Estates offer all three because or brand is about choice...
We let the client choose whether they want to pay all upfront, part upfront with a success fee or nothing upfront but with a traditional commission due upon exchange.
It is therefore down to the client which option is proving to be the most popular and the most popular at the moment is part upfront with a success fee upon exchange.
We advertise all our fees on our website if you are interested or don't already know what we charge...
www.harwellestates.co.uk
At the end of the day it is all about offering a great service to your clients while running a profitable business and we do offer a great service to our clients even though our fees are regarded as cheap - there is a difference though between cheap and good value for money!
As far as profit is concerned, we are a new start business (8 months to be precise) so our first milestone is to cover operational costs before we make profit but we are there now and 4 months ahead of our target.
So, in summary...
Spend more on your business - generally speaking you will have to charge more for your services.
Spend less on your business - generally speaking you can pass on the reductions to your clients and charge less for your services or charge the same as the above and increase your profit margin.
I know which option I would go for - oh, of course, I forgot, I decided 8 months ago!
As I have always said, it's about choice and the clients will ultimately decide the fate of the Estate Agent as we know him/her today - in the same way people can now choose how they want to order music or DVD's or book a holiday or arrange car insurance...
Thank you PeeBee for branding us as "niche" and on this occasion I will not challenge you because that is exactly what we are - the turning point though is always when niche becomes mainstream because everyone wants a slice of niche!
Some of the most successful bands were at some point niche.
You gotta roll with it, you gotta take your time, you gotta say what you say, don't let anybody get in your way...
Have a great 2014 all!
From a certain Mr Wells' Tw@tter page:
"Another interesting story from EAT about the future of estate agents - what are your thoughts..."
Interesting that there is no comment from the man himself.
There again - he simply knows what would come his way and doesn't want to have his loyal 'followers' see him get his @$$ kicked.
Again... ;o)
Industry Observer - hello and HNY to you also, Sir! :o)
It is unclear whether you have taken the quote you are referring to as being penned by me, or, as is the case, one that I had lifted from the above story.
You are correct - it IS a 'fragmented' industry. However, blaming this on the fact that there are so many individual businesses within it is I would suggest totally incorrect.
There are Rules, Regulations, Legislation and Laws that Estate Agents are empowered to work within the boundaries of.
"Expertise" is always going to be an issue - new entrants to the industry CANNOT have the experience of that of an 'old hand' - but that does not mean by any stretch of the imagination that they cannot be every bit as effective in the job and in many instances better than those who have rested upon laurels gained decades ago. EVERY Agent was a rookie once.
And, of course, levels of competency tend not to differ between the various models. Those that scoff that 'yer average' Online Agency is run by a 12-year old from their bedroom are only fooling themselves in trying to score points over the 'competition'. It is as plain as the nose on your face that there are some very savvy players running these companies - and whilst I may not agree with their points scoring efforts, I respect that they are simply giving back what they receive... and doing it very well, I add!
I repeat what I have said many times before. Online Agents, 'hybrids', Quick-Sale companies and the likes satisfy niches in the market. Maybe those niches WILL, in time, grow - may even become the 'traditional' way of the future - but we are in the here and now, offering our services TODAY, where the majority of transactions are handled by real staff in a real office that real people can visit to their hearts' content - and therefore I pitch my tent accordingly.
And, in most places, IO, people who USE the services of an Agent know WHICH Agent to use - and why.
NO amount of 'corporate hype' and self ego-massaging of our industry, which is what I believe is being hinted at in this 'story' as the way forward, trumps reputation gained by success or failure on the streets.
People simply won't read it - or won't believe it. We aren't dealing with fools here.
Afternoon PeeBee,
Why do agents play a numbers game with listings? seems to me that happens mainly in the corporate world, and is easily explained, pressure to perform, targets etc..... Me, I'm not going to waste money marketing something I'm confident won't sell, and I've never been afraid to turn an instruction down if a vendors expectations are totally unrealistic. I want at least a sporting chance of getting my fee.
I still rather like the 'hybrid' model, but with the all important local factor, which I think is what Matt Wells is aiming for, (not necessarily with a high street presence) don't like the idea of agency operating from a totally remote call centre.
I'm just old enough to remember when I started in the industry (just before the Pru started waving blank cheques about) that the company I started with still took some instructions on an agreed marketing fee up front basis, although of course NSNF was fast becoming the norm.
Easiest of your questions to answer, a few posts down, as to whether you're just a cynical old estate agent, well of course you are, and we'd expect nothing less ;)
It's worth remembering that consumers in any market demand value for money through prompt service, high standards, a brand they can trust without question, reliability and not necessarily just cheaper prices.
Why else would you pay £45K for a BMW as opposed to £25K for a Ford. They both do the same job on the face of it.
If agency owners focussed on delivering all of the above, consistently, then those businesses will attract not only more business but better fees for doing it well. The question is how to work smarter, more effectively and at a lower cost per transaction without compromising on the quality.
I fully appreciate that this is easier said than done, however there is nothing here than cannot be achieved by almost everyone within the industry. Those that don't will wither on the vine and very quickly.
Hound
As you know I agree wholeheartedly that the NSNF model is a ridiculous situation, and that it obviously DOES impacts on the cost to the 'successful' sellers.
Here, however, is the thing (or things...) as I see it.
Firstly, the majority of potential vendors 'like' the idea that if they do not sell their home, it costs the nothing to try. Sadly, it has been with us for four decades that I remember - so I doubt that there are many property owners that will be using the services of an Agent that does not expect this T&C to be standard.
Do you think that many Agents actually know (...or, for that matter, care...) how much each abortive instruction costs them? My experience is that the answer is definitely 'NO' - and that is experience of Branch Managers to Owners! Those that say they DO, have very different ways of calculating that cost also - making the whole exercise woolly at best.
This leaves two very important questions:
1. "How much would an Agent have to charge to cover abortive costs?"
2. "How would an Agent then have to amend their current pricing model to incorporate these figures?"
Those Agents (mainly the Onlines, but we also have the Mr Wells-type 'hybrids' of the world) who offer total up-front payment or part'n'part terms are, I would suggest in the vast majority, NOT 'winning' business through "being the best" - they are BUYING the business by "being the cheapest" - thereby effectively underselling themselves and undermining the industry as a whole.
Tell you what, in all of this, I REALLY don't 'get'. Those Agents who, whilst operating the NSNF model ALSO operate the ridiculous 'numbers game' approach to listing property.
Someone care to explain THAT to me in a way that it actually makes financial sense?
@PeeBee:
"The profession needs to ensure that it is able to demonstrate to sellers the advantages of the expertise of members who are able to advise properly on all aspects of the process."
The problem is exactly that. So many members do not or cannot demonstrate these advantages thus perpetuating the impression amongst many consumers that agents are not worth what they charge. This perception amongst consumers is very real and commonplace and it has not happened by accident.
The fragmentation within the industry is largely to blame. With around 12,000 separate businesses, including lettings, is it any wonder that expertise and standards differ so much.
If consumer opinion is to change and what else really matters, wholesale changes and evolution are essential ASAP.
@ House of pain
I find it interesting that you appear to wish to judge how good an agent I am by the fact that I'm arguing the case that the business model on which most of us operate is a nonsense.
If you've worked in agency for any length of time, you will no doubt be aware that by and large the public perception is that agents do very little to earn their fee, and when you look at our business model, there is of course a basis in fact for that perception. The case I am trying to present is that in an ideal world, it would be better all round both for agents and sellers if our clients actually paid for the service THEY get, and not for our failures as well.
I suspect that if it ever came to pass that we got back to the way agency worked many years ago, before no sale-no fee, and sellers made an up front contribution to marketing costs, and a percentage on successful sale, it would sort out the men from the boys, it would actually make the business even more competitive, and dramatically improve standards, as we, as an industry would really have to provide the service we were being paid for.
"...this week, EAT came across a release from a cash-buying company questioning whether estate agents were needed at all."
SO... the purpose of EAT is (or should I say, WAS, until last week, apparently...) to publish ALL news relating to our industry so that we don't have to hunt for it - yet the 'release' you refer to is left on the shelf where we cannot then post our own responses to its' content, and you string together an abysmal précis with your "How to fight an invisible enemy" to-do list which, frankly, is as much use as t!ts on a bull.
For example: "It may well be easier than ever before for private individuals to sell their own property..."
Is it? REALLY? You're having a giraffe. It MAY be 'easier' for "private individuals" (we in the business tend to call them "clients", "customers", "vendors" or even "friends", Mr Journo...) to MARKET their home - but it remains that SELLING it (if there is any 'selling' in what we do...) in 2014 in most parts of Britain is FAR from "easy" if the owner wants, as most do, to achieve best value for their home.
"The profession needs to ensure that it is able to demonstrate to sellers the advantages of the expertise of members who are able to advise properly on all aspects of the process."
The profession has been "demonstrating" this for generations, Mr Journo - but I'm certain that as I type this, you are working with a "service provider" who will magically pop up with the new Hovis in this very respect...
Or am I just a cynical old Estate Agent?
I love coming on here just take in the air of negativity! Stop whinging and start selling. Rather than spending time trying to re-invent the wheel and thinking of 'clever' posts get off your backsides and go meet some people.
@hound
What's all this fee business? You must be an extremely poor negotiator trying to make a case for bringing fees down. I'm glad you're not selling my gaff!
@ Elaine P
Of course it does, as does any business. Any customer paying for any product or service will be aware that there are costs involved in either providing that service, or manufacturing that product.
The point here of course, is that on average, half of the properties that come to the market don't sell for one reason or another, as I'm sure you well know, and industry averages dictate that you only market one in every three properties you value. With ALL of the core activities of the business being offered 'free' unless successful you still have the situation that successful sellers pay for all of those core activities.
Have a look at your last completion, work out what it actually cost, including your time, for JUST that property, add a fair amount for office costs etc, and of course a fair element of profit, and compare that with what you actually charged. Then go show your figures to your vendor and see their reaction!
The point is made below about two business models unfolding here:
1. low cost and low service level agency (typically operating from industrial parks with cheap rents - possibly even off shore) offering optional additional services like accompanied viewings etc and
2. high service level agency for the cash rich or time poor
The same has already happened in the travel market, with the Expedias and Lastminute.coms supplying the bulk of the market and high quality niche holiday providers (like PowderWhite etc) offering high quality product & service.
The key to 1. will be reach and exposure. Marketing across the net will be a given, and the rest of the process will be price sensitive (and success will be determined by the effectiveness and efficiency of systems/call centre processes), and 2. will require highly personal service which justifies the hefty fee.
Unfortunately the mid rump of the UK industry seem to be playing into the hands of the new model - take the ongoing growth of Express in the North for example (the lower cost, service lite option) by continuing to refuse to innovate and punish selling consumers by restricting exposure of their properties (this Agents Mutual project could do more to damage UK estate agency than any recession could).
Its time the industry woke up and decided which of these services it wants to provide (some will operate in both segments of course) and adjust their models accordingly.
I know what I'm advising my clients to do...
an increased level of co-operation in a managed and sustainable way that allows all parties to benefit in terms of profitability and effectiveness.
????
as long as you know what your on about industry observer.....
Believe it or not most people know how hard we work,,,you can fix your car yourself but why risk it??
It appears that a number of debates are being voiced here simultaneously and many of the points made are very valid within the context of the typical business model.
However, whatever the method of charging, whether or not an agency chooses to be internet only or a clicks & mortar operator, the fact still remains that the over capacity duelled with a lack of large scale cost management in the market dictates that fees are levied at a level which allows an agency to turn a profit for its owners despite the number of players in the market place, not because of it.
Sadly, it appears that that the consumer is willing to accept this situation in exchange for a ‘ no sale no fee’ offering. I believe that this tool was initiated by Taylors [Countrywide] back in the 70’s.
As @Hound pointed out there is a dire lack of economies of scale within the industry, save for the majors where regional costs and marketing costs [e.g. portal discounts, currently very topical] are shared across groups totalling around 950 offices in the case of Countrywide for example.
If in ‘Utopia Land’ agents across a wide geographic region were willing to form say buying groups and/or marketing groups, synergies and cost savings could quickly be found. This would add to their bottom lines and/or benefit consumer pricing, whatever the owners’ preferences.
It is true to say that suppliers to the industry; landlords, advertisers, portals, vehicle suppliers etc. are benefiting from the lack of buying clout held by the 18,000+ competing businesses within the highly fragmented agency and lettings industries. The Majors of course have cracked this aspect of the business to substantial cost advantages. [Yes, I do have inside experience of this, No I’m not a Major and I am not advocating a franchise model before anybody asks.]
Apart from the advent of the internet and related technologies, agency practices and the prevailing competitive attitudes within the industry have not really evolved over the past 60 years. I believe the way forward is an increased level of co-operation in a managed and sustainable way that allows all parties to benefit in terms of profitability and effectiveness.
15 years of the net…………….why is this revolution that can save the public millions taking so long?
@ MCS
In the 'old days' before some bright spark started offering 'no sale-no fee' an agent would agree a marketing budget with a client, which would be paid as an up front payment. The 'human nature' is largely down to the way we as an industry have 'educated' the customer.
In every other situation people expect to pay for the service they receive. A little for instance, I've just had some windows replaced, I was asked for a 20% deposit on placing the order, with the balance payable on completion of the work, didn't turn a hair when that's what I was asked to do, as it's what I was expecting, and I had trust in the company to deliver. If only it was the same in agency.
@hound,
Does a garage not include all its overheads in its hourly rates etc. including the cost of customers coming back because the fault hasn't been fixed, insurance costs for damaging customers cars, indemnity / warranty costs, the receptionist, training costs for the apprentice, the advertising, the cost of the sales function that pitches for insurance work, lease car contracts etc. that they don't get awarded, the rent on the premises even if some of it isn't being used, the wages for the man that does the body shop quotes but doesn't win every job and spread these costs over all customers?
@ Hound on 2014-01-08 13:19:25
.....My ideal world? an up front marketing fee, with a realistic percentage on completion....
There is much sense in what you say. But how does one get round the 'human nature' in most people and their view of up-front payments of any kind and the draw of some agents with their no sale-no fee and only 0.5% commission? It's the same old story.
@ Elaine P
If the garage operated like that, the percentage they charged would be calculated to take into account the cost of their failures, as our fixed percentage is.
So you would end up paying well over the actual cost of the work they did for you, as we expect our sellers to do.
Do you really think that's fair?
@Hound
What if the garage charged a percentage of what my car was worth and only if they mended it to my satisfaction?..........also a percentage that is fixed regardless how long the mechanic takes, regardless of how difficult or easy I am as a customer and that of a specialist advisor(s) that I appointed
Industry Observer is correct as far as he goes, but to take it one stage further,
The whole business model is a nonsense, I can think of no other industry where so much is offered 'free' with the net result that fees for those who sell are twice what they need to be as they are picking up the bill for all the abortive work and marketing agents do. We all also know that there are not the economies of scale in agency, unlike retail, so the result of a big chain, with area staff, regional offices etc etc is just another cost passed on to the successful customer, again making fees far higher than they really need to be, when the reality is that it is what the man on the spot does for the customer that matters.
Imagine, if you will, the scenario where you go to collect your car from the garage, and when presented with the bill, you are told that they've had another customer's car in, that despite spending lots on new parts, they have been unable to fix, so they've added the cost of those parts to your bill. What would your reaction be? Yet we expect our successful sellers to accept a similar scenario without question!
I don't really think that anyone really trusts an Estate Agent, we all know our industry's sorry reputation. The local estate agent is not dead yet, but I think we will see more and more decamp to off high street premises.
My ideal world? an up front marketing fee, with a realistic percentage on completion. legislate to get rid of cross selling, thus removing the temptation for those less scrupulous to force mortgages or conveyancing on their clients.
The result, a far more professional industry, in which only the quality locally based agents would continue to trade, and where the customer can genuinely feel they've got value for money and can trust an estate agent.
The real problem with the estate agency industry is that there is too much capacity chasing too little business in any given area. The same is true of the conveyancing industry where significant convergence is already under way.
Example; in my local area [210,000 population, 96,000 pots] there are 67 agency firms with associated costs; 67 rent & rates bills, probably 134+ cars, 200 staff and principals, 67 photocopiers, 67 phone bills, 67 Rightmove subscriptions, PI insurance, newspaper costs etc. etc., the list, as you’ve probably guessed by now goes on and on.
Whilst I believe in healthy competition and a free market does a business model with 67 duplicated costs really make good business sense? Any business analyst worth his salt would immediately say ‘NO’.
Estate agency is a notoriously competitive, fragmented and non-co-operative market place to the detriment of both the consumer and the profit line of its participant [the agency firms]. Does there really have to be this much duplication of costs in such a localised market?
I am not necessarily advocating a reduction in the number of agents, but instead a focus on costs and a co-operation and sharing of costs amongst agents would improve their profits whilst reducing the cost of moving for the consumer.
A Win-Win scenario.
@Consumer - I couldn't agree more.
The internet and the likes of Rightmove have opened up the knowledge pool to all and has effectively dissolved the mystique surrounding ‘what agents do’. From the history of completion prices to information on the whole house moving process, there is virtually nothing that cannot be found on the web.
As to the argument that agents offer their clients years of experience; how many times have we been greeted by a young, fresh faced and inexperienced representative who has never bought or sold a house in his/her life?
My experience of the estate agency business is that firms are keen to secure a sale at any reasonable price, not the best price for the seller in order to secure a typical 1.5% fee amounting to £6,000 + £1200 VAT (400K property). The £7,200 cost of transaction margin leaves a lot of room for sellers to take the DIY route.
That said estate agency/house selling will probably evolve further into a distinctly twin track market place:
1) DIY low cost model for that part of the market where property types are commonplace and in regular supply and where the value of a property can easily be determined from information on the web i.e. HM Land Registry.
2) A highly personalised, tailor made service covering the entire end to end process for clients who are either time short or who own an individual style of property where the real value is truly in the eye of the beholder.
What is certain is that evolution never stops and those that ignore this simple rule of life do so at their own peril? Just look at the Hoover and Dyson scenario.
"Despite whatever is pumped out by journalists the property owning public trust Estae Agents to advise them on value and work to achieve the best price for them. Nothing else matters."
Do you truly believe that? I would say the property owning public WANT to trust Estate Agents to work with the owners interests in mind, but I think you are deluding yourself if you believe they actually do trust us.
I spoke to a client yesterday who contacted me after another agent told him he has been concentrating on distressed sales for the last year and they are jumping off the shelves, so if the vendor was willing to drop the price by 20% he could sell it really fast.
Now that is how you build trust eh!
"up to 5%"!! That's a not dissimilar to the "up to 20mbps broadband speed" as advertised by my broadband provider!
Despite whatever is pumped out by journalists the property owning public trust Estae Agents to advise them on value and work to achieve the best price for them.
Nothing else matters.
Un distressed vendors are generally too smart to sell 10 or 20% below market value so this story is simply spivery.
This is an issue which has been raised many times - I wrote a blog on it a while ago and the points still stand (at least, in my view they do)
http://www.estateagenttoday.co.uk/news_features/Eric-Walker-Blog
Well, if Agents Mutual impacts on RM & Z - they may just make the process that little bit easier for vendors -
Agents - be careful what you wish for!!
"A traditional estate agent is likely to take photographs, write descriptions, put up a board, and deal with the rest over the phone. It really is just an administration process, and if that process is done correctly, an estate agent can get paid a handsome fee for very little work."
In a bull market, which looks to be looming, they still collect that handsome fee even if they make a pigs ear of it.