A poll of 1,000 agents this month shows that the majority are charging between 1% and 1.4%.
The finding comes from estate agency trainer Richard Rawlings who did the research during a Rightmove webinar.
The poll results show what agents themselves said of their fees in an industry environment.
They were not specifically asked to say if their percentage fees included VAT or not, but Rawlings believes it is extremely likely that the agents were quoting their fees net of VAT.
He said: “While this is not specified, most agents only raise the VAT issue when quoting to a client, not within the industry.”
His figures show:
6% of agents polled charge between 2% and 3%
18% charge between 1.5% and 1.9%
61% charge between 1% and 1.4%
15% charge less than 1%
Rawlings said: “About a quarter of all agents charge more than 1.5%. That’s 60% more than those who charge less than 1%.
“In my view, for those who charge more than 1.5%, this has nothing to do with location or competition. It’s about skills, attitude, confidence and the deliberate commitment to charge a decent amount of commission in order to secure their future.”
How is 1-5% 60% more than 1%?
””…has nothing to do with location or competition…”
So in locations where prices are lower you don’t expect the percentage to need to be higher?
I would be interested to see much more information around these stats. Which agents are most profitable? Which agents have highest turnover? To come out with a single statistic that is mathematically incorrect and not back it up with any other information is just thinly veiled marketing.
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It isn’t mathematically incorrect – you’ve misunderstood the point. The poll reveals that 24% charge over 1.5%, which is almost a quarter of all respondents. This in turn is almost 60% more than the 15% who charge less than 1%
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Thank you Shaun – I was just questioning my own figures and had the calculator in my hand as you replied with the right response. EDM, this was a blanket question to the 1000 or so Rightmove webinar attendees so one can only assume a reasonable locational and agency type spread. My point is that irrespective of location, competition level or even property price, there are agents who are perfectly capable of commanding a much higher fee than others – even if their offering is not that dissimilar. Have a great day.
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Ok. Thanks. So I understand the maths now even if it was not particularly clear and somewhat ambiguous. I would still love to see a detailed study showing location versus fee versus average price versus turnover versus profitability. That would give much more insight into how the agency world operates at its best andwho is paying for what.
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Thanks for your comment EAMD. You could spend a lifetime trying to find some correlation between these things. I have studied this internationally for over 20 years and I can tell you there is little correlation between agency fees and locational property price, with fees in New York (more or less London prices) being about five times what they are here. If they are cheaper in some areas than others then that is a cultural thing among agents, not property price. Having said that, I would say that more expensive properties (say £1m plus outside London, £3m plus in London) tend to attract higher fee percentages, not lower, as they are being sold by people who expect to pay more for everything they buy – car, holiday, clothes, restaurant – so why would they want a cheap agent? 2.5% is not uncommon in this category. And given that estate agents actually “do” more or less the same thing (ie facilitate a move) it’s not really about the service on offer either – more about the appeal of the individual pitching the business.
Re turnover/profitability, I don’t think there is currently enough turnover of stock to be able to take a “stack’em high sell’em cheap” approach (fees that is, not property price). Those agents with the greatest market share are by no means always the cheapest. Cheap is only attractive when applied to a commodity. Good agents are working hard to de-commoditise it! They are charming and persuasive and a joy to work with.
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Mr Rawlings
Further to your previous mentioning of this ‘poll’, on 16 January, to which I posted a question, which remains unanswered.
I’m sure that this was a simple oversight on your part – so I’ll ask again.
“In my view, for those who charge less than 1.5%, this has nothing to do with location or competition. It’s about skills, attitude, confidence and the deliberate commitment to charge a decent amount of commission in order to secure their future.”
Six percent charge 2%+
Fifteen percent charge less than 1%.
Pray tell – which are making the most profit?
I look forward to your response… assuming it doesn’t suffer a second oversight.
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Sorry PeeBee – I didn’t see your comment on 16th. I don’t always keep such a close eye on these blogs as I know you do!! Thanks for your question though. I haven’t done a full analysis on this, but hopefully my answer to EAMD above might go some way towards answering this. I also suspect that those agents who have significant market share and who also happen to be cheap did not secure their market leading position by being cheap, but because they were good at securing business in other ways. Not to say that you can’t have a low fee/no fee entry point in order to remove initial barriers and then upsell the full service at a higher fee from there.
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“I also suspect that those agents who have significant market share and who also happen to be cheap did not secure their market leading position by being cheap”
Thank you for your response – however nobody mentioned “being cheap”, Mr Rawlings.
Nobody mentioned “market share”.
Just percentages.
And, as you may have gathered from the question, I’m 98.93% certain that percentages – in the context you relate to them – are totally irrelevant.
To you (credit: Barry Chuckle 1944-2018)
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I charge a Fixed Fee for my area my fees are much less that 1%, however, RM said they can help me and show me ways to increase my fees. I wonder why???
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HIT MAN
If RM are offering this to you, they are offering it to everyone.
I’d like someone to show me the value in that.
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I’ve just had a letter from RM with increased fee, I emailed them given my notice and the area rep called me and asked to help, I told him that the new fees were to much and not value for money, he asked how much I charge for sales and said that I was too cheap he suggested I increased my fees, to afford to pay RM fees. In other words pass the cost onto customer, he said he would help me and show me ways on how to increase my fees! I keep my fees low to get business I am good at selling property and my fees are reasonable, why should I increase my fees just to pay for RM?
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“…why should I increase my fees just to pay for RM?”
If you want to know my response to this, HIT MAN, look me up on Twitter.
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The agent across the road from us is proudly displaying selling fees at 0.5% in their window to attract business. We, by comparison are charging 2% and yet we are listing and selling more property than they are! If you’re an agent charging cheap fees have a word with yourself, it’s all about perception. You’ll no doubt be telling your staff and friends that you ‘have to’ to compete. Utter tripe. Grow a pair, learn some new skills and command a bigger fee, it goes directly onto your profits and it’s a no brainier!
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