Estate agents – why they really are worth every penny
It is a cliché to say of an estate agent, “they do nothing for their fee”. Of course they do, and so frequently, they actually pay for themselves.
Spending just fifteen minutes in an estate agent's office the other day, we could witness for ourselves once again just how constantly active they are. Phone call after phone call. Customers popping in, calls of advice being handled, client frustrations at the fact that their property is not selling quite as easily as all homeowners think theirs will. And remember, estate agents can spend months and months trying as they might to sell your property – and having given you the freedom to do just this, you then withdraw your instructions and they end up having worked for free.
Just calculating the hourly rate for all these months of work, or the loss to them of all the abortive deals that do find buyers because the chain elsewhere has a collapse, and you start to see how their fees averaged out to the office is not as significant as they might seem.
Add in the insurance they must carry, the monthly fees paid to Rightmove (and the other property portals), press advertising, printing, rates, rent, overheads, wages, and you will see that a lot of commission – and not upfront fees either – needs to be earned to make their business work – and to allow them to offer all their work for a 'no sale, no fee basis'. Few service businesses offer that perk, but estate agents do it to help you – the home seller.
Take American real estate agents for example. They charge on average 6%. In the UK, on average estate agents charge just 1.5 – 2%. If you think American real estate agents do some of the legal work, then fine, add on the entire UK conveyancers fees to the UK estate agent commission, and you barely reach even 3% still. And in the UK, we have Government guaranteed property deeds through the Land Registry.
These statistics put our UK estate agents in a competitive light.
But how often do we overlook what estate agents actually do. It is simply not the case that “they take a few photos and then Rightmove takes over”. Here is just a layman's view of what they do:
- Visiting you to discuss the property, walking the boundaries, and taking photographs.
- Perfecting your printed sales details.
- Featuring your property in a wide variety of property related advertising media all carrying a charge – online and offline.
- Handling walk-in, postal, email and website enquiries.
- Accompanied viewings with interested buyers (first vetting them for time-wasters).
- Providing periodic feedback on how the marketing is proceeding.
- Advising on necessary adjustments to the price/sales tactics.
- Negotiating with those who make an offer, either to advise you that they are not serious/worthwhile or to ensure they up their offer (which is where they so frequently pay their way by squeezing best price, more ably than had any of us perhaps attempted a sale and accepted a lower offer).
- Once an offer is accepted, they prepare agreed terms and circulate to all parties and their conveyancers.
However, and this really is an overlooked part, it does not stop there. Estate agents play a key part during the conveyancing which follows an agreed offer.
There are some superb estate agents out there who really do team up with the conveyancers and keep the legal process running smoothly and promptly. Estate agents have the advantage of being able to go behind the conveyancing solicitors (whereas lawyers are only permitted to speak lawyer to lawyer and not directly to clients) and they can speak to the buyer in person, and up the chain to the other estate agents. They can act as middlemen to chase for information which conveyancers need, some even cut their fee if it means helping a party out on a small cost that unexpectantly arises (e.g. legal indemnity insurance).
These estate agents, just like the conveyancing solicitors, appreciate that being prompt is what keeps sales together. A slow link in the process can lead to people getting cold feet and the chain can abort. Indeed, let us be honest, neither the estate agent or the conveyancing solicitor receive their quoted fee unless exchange takes place, so why delay?
Of course, the quality between estate agents varies, as it does between conveyancing solicitors. But in both cases, and certainly actively encouraged by estate agents with their 'no sale, no fee' method of charging, you decide if they are demonstrating quality, and if not, you move on to a better one.
Seen in this light, estate agents can play a crucial role in finding a buyer, achieving best price for your house, but also keeping the subsequent legal chain moving – all under risk of them not being paid because they offer 'no sale, no fee'.