Q. How come estate agents charge so much?
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A. Not surprisingly, this is a question we get asked quite often – despite the fact that compared to the rest of the developed world, agents here in the UK don’t actually charge very much at all.
As to why agents charge the sort of fees they do, the first thing to bear in mind is that as an industry, we work almost entirely on a contingency - or no sale, no fee - basis. Generally speaking, roughly a quarter of all sales fall through – not, in the great majority of cases, because the survey throws up a major problem or anything of that sort, but simply because either the buyer or the seller changes their mind. This effectively means that agents don’t get paid a penny for any of the work they do on one in every four instructions! Understandably, the fees charged for those sales that do complete successfully therefore have to be set at a level that reflects this wastage.
So, on one level there’s an obvious way for agency fees to be reduced, and that is if vendors were prepared to pay for all work done on their behalf – irrespective of whether the sale actually happens. Somehow, however, I don’t think that is ever likely to catch on.
Alternatively, if vendors were prepared to pay upfront, on a non-refundable basis, for expenditure on things like press and internet advertising, board erection, printed marketing materials, mailing costs and so on…then the professional fees we charge could likewise be significantly reduced.
However, all this rather misses the point, which is that a decent, professional estate agent actually does a great deal for his or her money. They value the property, they give advice on how to prepare it for sale, they market it, their knowledge and experience are constantly at their client’s disposal – for example, when evaluating competing offers -- and ultimately, they find the buyer.
But it doesn’t stop there. A good agent is also actively involved all the way up to exchange - chivvying other transactions along where there is a chain involved, getting estimates for any remedial work thrown up by the survey, and so on.
So, all in all, I believe a good agent delivers very good value for money indeed! But then, I would say that, wouldn’t I?