Estate agents that take an upfront fee do so to ensure that their costs are lower than High Street agents.
An upfront fee means that you’re paying for your own ad and the work that goes into it. The amount that you pay is consigned to your transaction alone and does not end up subsidising the failed transactions; the aborted sales that still have to have their costs covered.
An upfront fee though, means that the agent doesn’t then have an incentive to sell the property, surely?
You might presuppose that but the reality is very different.
Estate agency is easy. It’s a reactive business that involves posting an ad online and waiting for the phone to ring. You cannot force buyers to buy something that is too expensive/small/dated or in the wrong place for them. Essentially, selling a three bed semi is not like being suckered into ‘up-sizing’ your McDonalds.
There are currently 1.2 million homes on the market unsold in the UK. Around 95% of them are listed with High St agents that have a ‘no sale-no fee’ approach. If ‘incentive’ was the be all and end all, every one of those properties would be sold. Wouldn’t they?
But in any case, all agents are surely aware of their legal obligations under the Estate Agents Act in ensuring that they work in the best interests of their fee paying client in achieving the highest price possible?
As an interesting little anecdote to this, here’s a quick story about one of eMoov.co.uk’s current properties and the very recent journey that it has taken under our care.
We first listed a grand house in Primrose Gardens, London NW3 on 25th April. Over the next 15 days six viewings were arranged and two offers received. One of them was for the £3.25m asking price from a City solicitor whose wife has fallen hook line and sinker for Primrose Gardens’ charms.
Job done! And a fee saving of £78,000 in estate agency fees for the owner who paid us just £295 plus vat.
But there’s a significant encore here. A day or so after receiving the £3.25 offer and the owner agreeing the deal, we received another offer. This time from a certain celebrity couple who has viewed the house some days prior and a bid of £3.3m, some £50,000 more than our clients had expected, especially as all of the local agents that had visited the property had valued it lower than the asking price that we had begun at.
With £3.3m now on the table, City solicitor, through gritted teeth, has begun a determined campaign to grab the initiative back. The toing and froing between him, ourselves, the owner and the celebs has so far accounted for dozens of phone calls and emails and an inordinate amount of time taken by one of our Directors in steering the deal to an end that will most benefit the eMoov selling client. Evening conversations between parties, Saturdays and Sundays too.
Each day this week has promised a conclusion to the deal, a deal which is fast resembling something akin to the protracted nature of a lock of European finance ministers.
5pm tomorrow (Monday) promises to be the deadline for ‘best and final offers’ several days after the original offer was made.
We could have given up at ‘full asking price plus £50k’. But we sensed that both interested parties want this house very much and that they are prepared to fight it out and we, for our £295 plus vat, are obligated to be referees regardless of how long things play out for.
That is what we do. We’re estate agents after all, regardless of whether we charge a fraction of their unjustifiable cost or not.
PS: We’ll keep you informed as to how ‘The Battle of Belsize Park’ ends.