Cheap estate agent fees could cost you your project manager
Until recently, selling a house could be a costly affair with estate agent fees being as high as 3% plus VAT, maybe higher.
However, with the recent onslaught of online estate agents undercutting their fellow brethren, fees can be as worryingly low as £99 plus VAT, probably even lower.
And what a powerful advertisement that price is. We all like a bargain after all.
But…is it false economy?
When we instruct an estate agent, we hope they will attract the very best price for our property. We count on their time and skill to squeeze any buyer for their highest offer.
But how do we maximise our chances of that? Do we incentivise them with a decent fee, or do we pay them rock bottom.
For example, a property is on the market for £400,000. An offer comes in at £380,000.
Two estate agents – how much effort and time will they invest in negotiating an improved/higher offer… £385,000 comes in, then higher…£390,000 comes in…then higher….£395,500 is settled on. They made you £15,500.
1. Charging 1.5% commission – how likely will they be to invest the time to secure £15,500 for you – and they take, £7,119
2. Charging £1,000 – usually upfront – how likely will they be to invest the time to make you £15,500, taking just £1,000.
You paid £1,000 commission, but how much of the £15,500 will you lose?
The role of project manager – after the buyer has been found
Never see an estate agent as just finding a buyer. Always ensure the one you pick will be very hands on throughout the legal work right through to the day of completion. The very best estate agents secure the deal by finding a buyer, but then they keep involved with the lawyers to make sure the deal does not fall apart. It is their deal after all, the deal they recommended that you accept. They vetted the buyer’s finances, they examined the buyers chain (if selling themselves) and you are paying them to be your deal/ project manager.
They will update you at least weekly on how the buyer is getting on with:
1. Instructing their conveyancer
2. Returning the conveyancer’s signed paperwork and giving their conveyancer money on account of work/searches
3. How promptly they organise a surveyor to show actual commitment
4. How promptly they arrange a mortgage valuation of your property
5. Chasing your buyers conveyancer in case that lawyer is overworked and going slow
6. Updating you and your conveyancer with what they find out
7. Never letting your buyer/their lawyer have more than a week of silence/inactivity without a chase
8. Getting involved along the chain of buyers and sellers to help agree a timescale to complete
9. (Some will even deliver legal documents for speed – but that is over and above and a rare find)
Without that involvement, your sale could drag and the buyer sees another property and ultimately your sale aborts.
Two estate agents. 1.5% (£7,119) and £1,000. Who is likely to be a willing project manager and invest the time.
Sure, there are poor performing estate agents just as much as conveyancers, estate agents who mimic a project manager, who simply tick boxes by calling you or your lawyer asking questions but not actually helping.
But what is invaluable is one who performs 1-9 above, and one who will assure you they will.
Good luck – invest wisely.