Our story on sale by tender proved an interesting debating point in the industry.
However, it is concerning when the consumer media take up the case rather more emotively, as below, painting it as “double profits for estate agents”.
Indeed, how does the agent make their money? “By charging the buyer a massive fee, that’s how.”
The piece continues: “A quick Google search shows Haart estate agents marketing a property in Essex for sale by tender. The agent’s note said the buyer would need to pay Haart an introductory fee of £4,200 on top of the sale price.”
The article concludes: “However, with the housing market looking positively insane in certain areas of the country, who knows what desperate buyers will do to secure the house of their dreams?”
Does this mean that agents are greedy and opportunistic, which is the clear implication here? Or does it mean that agents have to operate, perhaps innovatively, in whatever type of market happens to exist at the moment?
One thing we do know is that agents do not need an image problem right now. Or, indeed, at any time. Your thoughts welcome.
Comments (4)
JTS – it works well in the purchase of, for example, prime property for HNIs, which I have also been part of in London. There though, the purchaser is the client and have instructed the buyer's agent. The issue here is that the home seller is the client (vendor) but the fee is being taken from the applicant purchaser.
The system where buyers pay a fee can be useful in some circumstances, for instance if the seller needs a committed buyer who can readily exchange, and maybe cannot afford to pay an agency the commission on sale.
Many agents would probably disagree with this model, but i'm sure if it was well organised, it would work just as effectively as the more traditional model.
I raised this initially re: Ward and Partners in Kent and you kindly picked up on this story. To give an example, they have a property on Sale by Tender in a popular village at £350,000. The Sale by Tender pack states the buyer has to pay a 2% plus VAT (£7,000 plus VAT) admin fee for the agent opening the envelopes in their office, with the vendor present. The vendor is charged £150 plus VAT.
It is a scandal.
It is also a complete conflict of interest. The vendor is the Client as he/she has signed the property sale instruction yet the agent will be working hard to ensure the buyer purchases in order to get a massive fee for no effort on the agent's part in relation to the buyer really.
This gives ammunition to the online agents, as high st agents such as Ward and Ptnrs (Arun Estates) are being viewed as charging a massive fee for effectively opening an envelope.
We have developers here in London telling us to "no fee get it from the buyer" We have off plan developments paying half on exchange and half on completion in 5 years time. Are you kidding? Who wants to wait 5 years for their salary? Agents have to start growing a pair.