Whether I’m coaching individual estate agents or simply discussing the various challenges that we face on a daily basis with colleagues or agents around the country I’m (too) often confronted with a common refrain when offering advice…
“It’s different where I am.”
Now I fully accept that each village, town and city around the UK has its own peculiarities, challenges, and benefits – that much is obvious. However, when it comes to choosing an estate agent most, perhaps all, potential sellers have basically the same needs from the company or individual they choose to sell what for many is their most valuable asset… and believe me it’s VERY rarely the lowest fee.
Let me share with you a recent experience which is typical of many conversations I have with agents who are convinced that clients in their particular location are somehow “different” and focussed on paying low fees.
“People in my area just won’t pay more than 1% plus vat and many of my competitors charge .75% INCLUDING vat.” I was told. “Everyone around here just wants everything on the cheap – it’s just that sort of an area.”
With propositions such as this I normally start with what I refer to as a “fact establishment phase”, which is what we did. Interestingly our analysis proved that it was indeed true that many of the agents in this particular big town did actually charge 1% (+vat) and there were even a few (well actually one!) that offered a fee of .75% including vat. I was also told that one estate agent offered to sell a home for free, though upon further investigation this was not actually the case – surprise, surprise! So far you might be of the opinion that the agent had a point and that compared to other locations around the country, this was indeed a “different” market place operating under different rules to the rest of us.
The next stage of our analysis involved checking the market share of available and sales agreed properties of the various agents in the locale and guess what? There was a clear correlation between the fees charged by estate agents and market share and that correlation was the complete opposite of what was expected. The cheapest agents generally had a much smaller market share than the more expensive agents who actually tended to dominate listing and sales volumes compared to the cheapest ones. In my experience this is a very common situation and I would go further. I would suggest that charging higher fees and offering better marketing and service levels actually INCREASES the chances of securing instructions and ultimately sales. Consequently, I would contend that this exercise demonstrated causation not just correlation.
I’m not sure that my client was fully convinced, even when faced with what I considered to be overwhelming evidence to support my view.
Which brings me to my main point, the “cheap fee issue” really is in the mind of estate agents and is not normally in the minds of potential sellers. Sure, nobody wants to pay too much for any service but what is too much? There will always be buyers of goods and services that want to pay less and I am reminded of the quotation attributed to John Ruskin…
“There is hardly anything in the world that some man cannot make a little worse and sell a little cheaper, and the people who consider price only are that man’s lawful prey”
And there you have it! In my experience, most people are looking for value and not simply a cheap price or fee. If you as a professional estate agent and salesperson are unable to convince a potential seller that your proposition isn’t worth a little (or even a lot) extra, I would respectfully suggest that the problem is with you and not with the customer. It may be that your proposition is not actually worth the additional fee or that you have failed to communicate key the differences of your services effectively. Either way it’s your problem, not the customers!
Furthermore, I believe that this contention is indeed universal, certainly not geographically specific and consequently I have a three word response to those who say “It’s different where I am”…
IT IS NOT!
Simon Bradbury is a consultant specialising in securing new instructions and runs a (very) small estate agency powered by eXp.
I’d suggest that convincing vendors an agent’s competence is worth paying more for is mostly subjective. A few are prepared to pay premium fees for a service or product, believing the myth that the more expensive, the better the quality and value. But the message from nearly every agency is the same – expertise. Claims that are never fully substantiated along with empty promises that are often broken.
The only thing worth paying more for is Character. The implicit trust in an agent’s character – knowing for sure that they want more FOR you than FROM you.
That’s rare in agency throughout the world but even more so when 1% makes it a transaction instead of a relationship.
So long as it remains a transaction, fees will remain low.
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I agree
I have heard the same old thing from many people who are not estate agents – just advisors – for ever
The fact is all agents say exactly the same thing
” We know the local market”
“We are very experienced”
” We have buyers for your house”
“We give a more personal service”
“We are on *** web sites”
“We do great photography”
“We accompany viewings”
“We give helpful feedback”
As a property developer I ask a number of local agents to offer a valuation and pitch
I have used Savills in the past who wanted to charge 2%
We agreed at 1.5% they were very good
I have also placed instructions with other agents charging 1.5% -a higher fee than than their competitors who have been utterly useless
Before I ask for a valuation I go to the agents offices and pose as a buyer to see what response I get
I also send an email enquiry
If it is followed up by email and not a phone call I do not consider that agent
When I visit the offices I am also looking at the age of the staff – I am not interested in instructing an agent who has staff who are all children who have never bought a house and still live with mummy and daddy
In one town I have done a few sites in the best agent with by far the largest market share offers me 1% and has always manged to get a higher price that quoted by their competitors
I have had strong local agents offer to do a low fee for cash
When I was an agent in the 80s it was a sales job
In 1985 I was a director of a corporate company
Our negs all had a fully expensed company car
The top performers had an XR3i
Back then the good negs were earning 25-30k
Managers 45-50k
Our sales staff were on the phone all day long
With the advent of the internet EA has stopped being a sales job
Now is a basic admin job – nothing more
The only sales element is in gaining instructions
Companies now do not want to, or unable to pay good salaries
I saw a report recently that said the average salary for a neg is 25-30k
That level of income is not going to attract top quality staff
Motivated people can earn more in other careers
In effect all agents do the same thing
They take some photos and put them on websites
They wait for enquiries and follow up on them
They show the buyers over
When they get a sale they progress chase
I have recently had a number of calls from firms using AI – I have to say that the AI asked all the questions I would expect a good neg to ask and followed up perfectly
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Simon, great piece, and you know better than most that it is true. When you asked for my help on a particularly nutty instruction, I came through and what got it over the line was a system built to win saleable instructions that will actually complete.
Which is where I would go one step further than the fee debate.
Big fee or small fee, it matters not if the property never completes.
The real skill is winning the right instructions, at a fee you are happy with, with the confidence they will complete. Everything else follows from that.
I recently took a listing at 1.5% against a competitor offering 0.75%. Executors with a duty to achieve best value chose the higher fee. Completed in 6 weeks. They achieved £30,000 more than the nearest comparable.
That comparable is where the story gets interesting. We won the buyer away from it. That property eventually completed 14 months later for £30,000 less.
Same buyer pool. Same market. The difference was knowing before we took the instruction that it was saleable, pricing it correctly from day one and preparing it properly.
The commission from that single transaction repaid the agent’s investment in my system and paid his subscription for the next 71 months.
Not luck. Not a fee conversation. A value conversation built on evidence.
Agents who crack that don’t worry about what competitors charge. They already know the answer.
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Thanks Robert – and you are absolutely correct that the support you provided with your system definitely helped me get the instruction and ultimately the sale! The facts that you provided were impossible to argue against even for the most cynical seller!
Love the proposition that agents and sellers need to have… “A value conversation built on evidence.”
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Always an interesting conversation. Build trust and people will pay a bit more. I’ve always liked the next part of Ruskin’s quotation: ‘It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money — that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot — it can’t be done.’
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