Will Clark, Director of SellMyHome.co.uk takes aim at the commission based fee structure of traditional estate agents
One of the biggest costs faced by people selling their homes is shelling out 1.8% of the price of their property on estate agents commission.
To put that into perspective, if you’re working with a traditional estate agent and sell your home for £400,000, you’ll have to give your estate agent £6,650 for their services. It’s a considerable amount of money to have to spend on estate agent services, and it seems unfair that customers whose houses sell for higher prices should have to pay thousands of pounds more than people whose houses didn’t sell for as much – both are still getting the exact same service. That’s one of the reasons why more and more people are seeing the benefits of using an online estate agents – we charge a fixed fee, so whether you sell your house for £300,000 or £3,000,000, you’ll still pay the same amount of money to us for selling your home – it’s the fairest way to do things because both customers are getting the same service – the cost of the home shouldn’t come into how much they have to pay.
Freakononomics Debunk the Estate Agent Commission Myth
Freakonomics suggest that using a commission-based estate agent to sell your home doesn’t actually help get a higher price for your property because by waiting longer to get $10,000 more on the price of your property, they won’t benefit that significantly financially – Freakonomics’ statistics show that out of the extra $10,000 the agent would only make a further $150. Agents would rather sell the house quickly than spending a lot of time on it, because they don’t want to spend a week’s worth of work for just $150. It is very telling that estate agents on average leave their own homes on the market a week longer, and make more money from the sale than non-estate agents do.
Since we’re incentivised by providing great customer service rather than commission or making a quick sale, you can be assured we’ll do our best to get you the right price for your property and not rushing the sale.
It’s not only online estate agents and our customers who are seeing the benefit and fairness that comes with using fixed fees– this week a high street estate agent has started using fixed fees to differentiate themselves from their peers. It’s a valiant and innovative move, but it’s a surprise that more agencies haven’t picked up on it sooner and done the same thing. If one’s doing it though, I think it will only be a matter of time before others see the benefit and change their fee structures too.
If one house is worth £450,000 and another one is worth £250,000, why should the person with the more expensive house pay more for the same service? Or, does the person with the £250,000 receive a worse service?
It’s no secret that estate agents aren’t liked by the general public and lots of that animosity comes from customers feeling as though they’ve been overcharged for the services that they are receiving. Perhaps if more traditional estate agents followed the model that their online counterparts have pioneered, the negative opinion of estate agents could be changed. It would mean less customers feeling as though they have been ripped off. It would level the playing field in our industry because savvy digital consumers would swiftly realise, through word-of-mouth, which agent offers the best customer care and best service.
It’s time to do away with inequality through commission and change to a fee structure that makes things fair for everyone – and fixed fees are definitely the way to do this. With an alternative option finally available, customers are being drawn in by the affordable fixed fees that online estate agents are offering. It’s only a matter of time before high street estate agents will have to change their approach if they want to keep getting customers.