High street estate agents in London earned £1.1bn in fees last year – an average of £9,384 per property sale and up 23% on 2013.
As this is reported by both the Daily Mail and the London Evening Standard, it’s obviously true.
In Kensington & Chelsea, agents earned £73m in commission, with £70m being earned just down the road in Westminster.
Both the newspapers carry research from online agent HouseSimple, which has recently had a £5m injection of funding from Carphone Warehouse founder Sir Charles Dunstone.
HouseSimple chief executive Alex Gosling says you would be hard pressed to find a high street estate agent in London “without a Cheshire cat-sized grin on their faces”.
But of course the real message from HouseSimple is that London’s property sellers were paying their agents too much.
“Properties in desirable London boroughs were practically selling themselves, and yet high street agents stubbornly kept their fee levels high,” said Gosling.
“Many sellers were probably asking the same question: ‘Why am I paying tens of thousands of pounds in fees to you when the first person to view made an offer which I accepted?’”
He claimed that 2% of home sales are currently done through online estate agents – but if 20% of people had used them last year they would have saved £210m in fees.
This is a familiar argument to high street agents.
Just as it’s an equally familiar counter-argument in the industry that online agents have yet to demonstrate any savings at all (in fact the reverse) if they don’t get the best price for their client; or if the property fails to sell but the vendor has nevertheless paid money up-front.
Unfortunately, these are very difficult points to get over to the public.
And if you take a look at some of the comments on the Mail’s story, you will see, yet again, just how difficult.
The story attracted posts such as: “Money for nothing. They barely do anything to earn this money. They don’t earn their fees, they just charge them. They do no work for that level of fee and should be capped.”
There is undoubtedly room for both online and high street agents – consumers are fully entitled to choice – and there is certainly a debate to be had.
But it is a great shame when the consumer media discussion constantly misses the point by concentrating on price and not value – and never, it seems, on an informed understanding of what agents actually do to earn their fee.
The Daily Mail report with comments is here
There was also an ITV London news piece about the HouseSimple claims, which is worth watching if you have five or so minutes to spare.
Comments (36)
Okay… I hate to admit this, being usually the boring-as-chuff ‘Statto’ on EYE – but I’m struggling to get my head around these figures.
These Simple folk are saying that FEES PAID on property sold in the Capital rose by 23% from the previous year. Same Simpletons state that SALE PRICES rose by 13% on average in the same area. I get those – read and understood – it’s just the maths that’s causing me brainache. You see – Simple Simon and his calculator seem to be at odds here – ‘cos they ALWAYS do these calculations based upon the apparent “average” Fee of, what is it – 1.8% plus the dreaded?
So HOW can the percentage between houseprice and Fee increases be anything OTHER than the same number?
I’m not even going to waste my energy asking for the source of the figures they quote…
Great points…..I see Paul H has explained to you how to like your own posts!!!…….4 in 2 hours is a record for you?
Actually, wilko – it’s something I am virtually never guilty of!
I ‘Liked’ one yesterday in error – hit it instead of ‘Reply’ – so believe it or not I immediately ‘Disliked’ it to balance it out!
Yeah… I’m sad like that… ;o)
And just as an aside it was me who originally told a certain Mr Jury how he could log out and love himself even more!
Wasn’t it Simon you told Peebee, then everyone at Choices towers and EAT did just that? Whoever it was it is fairly obvious one of them has twigged how this Business media should work, the other seems determined to cover themselves in vexation as if petty point scoring is going to add to their share of the sludge at the bottom of the pond to become the biggest Catfish.
“Alex Gosling says you would be hard pressed to find a high street estate agent in London “without a Cheshire cat-sized grin on their faces”.”………Probably say the same for the vendors they acted for as well.
He really should know better than to try and knock established agents in the most expensive parts of London…..vendors there love the high cost agents. If he wants to impact on those areas he will have to whack up his prices massively before he gets taken seriously. Perhaps a “Housesimple signature properties dept” £5k upfront, put on a few international property websites etc……?
Looks like A&N Media and all their minions are scrabbling to get their snouts in the trough. No doubt boyed up at the excitement of having vendor’s details fed directly into their database from hapless and unsuspecting agents. Each of them are getting a little moist at the untold wealth they expect is coming their way.
Very possibly but what can respectable and honest agents in the industry do about it? That article is an advertorial , a reaction to OTM and it has the full support and backing of the A&N Media whose nose is being bloodied by Agent’s Mutual. There is no balance to the story and very few of the readership will realise it is simply a self promotion of a market sector the group is inextricably linked too. There is a genuine envy and ignorance about Estate Agency professionals and it is grounded is simply not understanding Selling property is different to selling product. Journalists are not stupid people but the part of their brain capable of understanding agency is apparently missing. Unfortunately that is of little consequence they can publish what they like and it becomes fact, no matter how corrupt or biased is their content.
Agree with all of that Robert. The problem is that many commentators do not understand the industry, and are fueling their opinions based on a general disliking of agents. Most of the media seem to have been swept along with it.
This seems more nepotistic than merely being swept along in blissful ignorance Paul. The journalist who wrote the piece , the editor who sanctioned it, the group that published it are all in bed with Zoopla! And according to a post I haven’t verified from last Alex Chesterman is investing in this market sector. One thing AM ought to be doing as a strong affinity group is calling in your own cavalry to defend your own group interests and perhaps sway some of the fence sitters with a meaningful display of clout! Name and shame this disgraceful piece of journalism for what it is; an advert!
Seems to me the only real demand for online estate agency services is from the people running online estate agency services. Them, and the do-it-yourselfers who would never use a high street agent anyway.
“If 20% of people used an online agent”
sounds more like this is the sales target needed to justify a 5m investment.
I would rather the article said if 20% of people used an online agent I would have a smile lke a Cheshire Cat.
great that the daily mail now publish business plans but let’s not forget Zoopla run their property search engine.
So I wonder who Charles Dunstone would sell his Holland Park home through then?!…..
Good point.If anyone has a smile on his face it is sure to be Charles Dunstone and his 100s of millions! I wonder if his company had a helping hand with the demise of one of his major competitors (phones4u) ? Why don’t the traditional estate agents who built and paid for Rightmove gang together and insist that the plug is pulled on Housesimple in the same way the plug was pulled on phones4u? They can then use the 5 million to create their own portal rather than spend it attacking traditional local expert estate agents who paid 100s of millions to build a platform to help property movers…not save the on liners £10s of millions at our expense!
Now that would be justice wouldn’t it Mr Dunstone.
Mmm…so a billion pound company went bust over night because the ‘suppliers’ stopped supplying….could this be a precedent for the future?
Of course what’s not mentioned is that in the first six months of last year prices increased so much that only a locally based agent would know it’s real value, and an online agent using comps could be out of date and cost the seller thousands and in some areas tens of thousands.
Just one example from many.
Paul H – you’ve got seven ‘Likes’ already… you would have eight but EYE doesn’t allow you to ‘Like’ twice.
Mine’s on the original Robert May comment, if you want to know where it is… ;o)
I’ve got 9 now mate! Must be doing/saying something right 😉
Yes… he did! ;o)
As you know, i’m a big fan of liking my own work too.
Yeah, well… I suppose someone has to.
Awww… you’ve found the ‘Dislike’ button too, I see…
I’ve been thinking about this for a while and phoned an online agent the other day pretending to be a customer. They advised me to get 3 agents round to do the valuation because it’s free and then use their services. I was astounded. Surely this proves how inadequate their service is, and is an awful way to do business.
“They advised me to get 3 agents round to do the valuation because it’s free and then use their services.”….Yep parasitical isn’t it!
I squirelled 5 agents about 11 months ago and, with the exception of one (who happened to be based locally) all said similar ie “use local agents to get a free valuation-then use our online services” It made me think about devising a valuation contract that makes £150+vat payable if vendor markets with an online agent within 6 months of our professional valuation services……on reflection, and it’s been proved right, potential sellers see the warning signs when this type of thing is said……they are not daft and it re enforces their belief that high street pro agents know what they are doing whilst onlinies don’t.
I already have one done up for that exact figure too! They are by no means a threat in my area yet (or most areas to be fair!) but there has been the odd one that’s crept in, so any I go out on that I know online has been called I pop one in my bag.
The first one I took it to refused to sign it as they clearly knew they were going online so I politely left leaving no valuation.
Second one happily signed it and I ended up with the instruction.
Saved me a lot of wasted time
That’s brilliant, did you check out the legalities, as I never got round to that?
legalities? I’m not familiar with this word? lol
I did speak to one of our solicitors on it, he said you are allowed to charge for a valuation if you wish, it’s just that none of you do. He ended it with “If they sign it, it’s legal!”
It’s a very simple form to be honest with wording similar to the multi agency section on contracts
I see, it’s just when I mentioned it a few people said it might break some legislation connected with restrictive trading?
Without a doubt it will! Which is why I always mention it to them on the initial phone call that there will be a charge for the valuation which will be refunded should they instruct us, then it’s not 😀
You can picture all these online agents scratching their heads at this …… Penny dropped yet…..
So, before I make my comment, I admit to a massive conflict of interest! However, why is it when certain agents are dealing with their suppliers, the concept of value is thrown out of the window, and only price is considered. However, when it comes to their own services ‘media discussion constantly misses the point by concentrating on price and not value – and never, it seems, on an informed understanding of what agents actually do to earn their fee’. I know this is PIE making this comment and not an agent, but I know agents around the country will agree with the sentiment above. A tad hypocritical?
I dunno, You give a budget boy a D list business celebrity investor and off they go knocking out press releases, someone else will do the numbers today I’m sure, the billions of pounds this lad has calculated divided by number of branches and all that.
Point is, those that can be bothered agree budget agents have 2% of the market at best which means they have replaced what we called before the Internet ‘private sellers’, and the ‘it’s all goin’ on line init’ lot keep saying ( with Derek Trotter levels of optimism) that in 5 years they will have nailed it……..problem is some of them have been saying this for more than 5 years – Jonnie
I say Jonnie for a fella who was mocking the Butty boy for his eagerness to post you seem to be getting up early these days:)
fair point Robert, the older I get the earlier I get up, dogs were walked by 07.45 – Jonnie
Uffa Fox’s dad told him “as you get older you need less sleep, put the early hours to good use” I am often sat here waiting for the early shipping forecast to come on!
It is probably only you and I on this forum Robert that wore yellow wellies and know who Uffa Fox was!
It’s Brer Rabbit’s pal, innit?