UK estate agents receive the smallest sales commission across eight of the world’s biggest property markets, resulting in them taking home the second-lowest income, only out-earning agents in Malaysia, according to new research.
iad UK has analysed the average residential estate agent sales commission in eight of the world’s leading property markets to see which countries have the highest-earning agents, and how agent earnings differ from one country to another.
The data shows that the highest estate agent commissions are achieved in France, where the average fee stands at 5.8%.
Agents in the USA and Italy are both charging average fees of 5.5%. In Spain, the average is 5%, followed by UAE (3%), Malaysia (2.5%), and Australia (2.3%).
At the bottom of the pack is the UK where the average agent commission is 1.2%.
With a current average house price of £289,824, the UK is home to the third-most expensive market on the list, but due to such a low fee, agents are only generating an average of £3,420 from each sale. Only agents in Malaysia (£1,966) are taking home less money than they are in the UK.
In monetary terms, the highest average commission is enjoyed by agents in UAE where the average house price is £712,227. WIth a 3% fee, this creates earnings of £21,367 per sale.
American agents earn £15,927 per sale, and in France, they’re taking £12,101.
Lee O’Brien, MD of iad UK, said: “We’ve long known that agent fees in the UK are low, but it’s still striking to see them in comparison to other countries. Our agents are clearly not being valued highly enough, or valuing themselves highly enough.
“It’s the result of a race to the bottom that has taken place over many, many years, where agents compete for instructions by boasting the lowest fee. These issues were exacerbated with the arrival of fixed-fee agency models.
“Why is it that we don’t respect our agents enough to believe they’re worth proper payment, but they do in other nations like France and the US? It’s an unwanted state of normality that we’ve got to shake off. I have been an agent for over 20 years and know the good agents work incredibly hard and deserve proper reward.”
Are you charging enough? UK estate agent fees amongst cheapest in the world
One day (maybe) the industry in the UK will recognise that the only way to lift standards in agency is to charge proper fees (2% minimum) and generate revenues which allow business owners the opportunity to pay, train and retain well educated employees who earn sensible salaries for the long hours and stressful situations that come with the job.
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The key phrase in this comment is ‘well educated’. Estate agency is a notorious bottom-feeder when it comes to educational qualifications. Someone needs to demonstrate that you need a decent level of educational achievement to sell a house – so far no one has done so successfully, outside of commercial agency.
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But the problem is, the educational achievement coming out of schools now is not the type that is needed for estate agency. This is a service and people driven industry, the same as the FOH restaurant/cafe businesses. Knowing pi, algebra, the periodic table, the inner workings of Chaucer’s mind and why Shakespeare put a specific word in a particular place has no bearing on this industry.
Having common sense, a knowledge of the industry, the ability to talk and actually listen to people, being able to deal with people from all walks of life as equal is what is important in this job.
But these are seen as ‘unimportant’ in the scheme of things, and so they are belittled and ignored. Yes, maths and english are important, of course they are but those can be taught by doing them every day. With many of the soft skills, if you don’t have it, you don’t have it…
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It’s not rocket science. There are zero barriers to entry, the sector has far too many agents to choose from, the majority of agents, especially corporate agents, offer a poor quality service through inexperienced, poorly educated and low paid staff, and very few agents have true USPs. Is it any wonder public perception is that the EA sector is commoditised?
Answer is simple….compulsory licensing linked to much higher service levels and much higher moral and ethical standards applied towards both buyers and sellers.
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Countries with higher fees, such as Australia, require agents to be trained and have licenses etc. In the UK, a low barrier or non existent barrier to become an agent, and low standards, equals low fees, and a low perception of agents by the public. It’s a circle.
As much as we don’t like to admit it, introduce strict licensing and kick out the chancers, car booters, life-stylers, crooks and dimwits. What you’re left with, will be a profession that is worth more than it currently charges.
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Spot on.
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Yes, absolutely. Labour have said they will act on licensing of agents if they are the next government. However, they probably do not really know how agency works and as soon as the civil servants who do have an idea point out the pros and cons of this, I suspect it will be quietly dropped!!
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Licencing, or at least some form of qualification is a good thing though. Then you can have Estate Agents in the office, as well as Sales Negotiators, who are un-qualified estate agents basically.
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A qualification is by no means an indication of skill. I’ve spoken to many morons over the years who are “qualified” and vice versa.
Forced licencing for anyone who lets out a property (landlords, housing associations, councils etc…) would actually be a good thing. However we all know it will just be aimed at PRS & agents only.
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I love to admit it. Our sector is full of awful companies. Get them out or get them to upgrade through meeting high licensing standards.
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In this respect, wouldn’t it be wonderfully refreshing and an indication of leadership and ambition if a dozen or so of the industry’s leading employers came on to this site today and committed that from the 1st of Nov, no one in their organisations would quote fees of less than 1.5% (for a modest start) plus VAT for sole agency on any sale instruction in the UK. This would NOT be a cartel arrangement-but simply a demonstration of their desire to see agents beginning to move slowly towards what other agents are paid elsewhere in developed economies.
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And – just asking on behalf of the consumer – what extra value would we be getting for our extra cash from 1 Nov?
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I’d say that the UK consumer is already receiving from the vast majority of agents-blinding value compared to vendors in almost every other part of the world! I’ve been privileged in my business life to see agency in action in many countries in Europe and elsewhere where fees are MATERIALLY higher-but the service being given is very often FAR below that on offer in the UK.
The public haven’t driven fees down. Agents have.
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Well said! Only until their is universal acknowledgement of how poor quality the majority of service levels and ethical standards are within the EA sector can we even begin to turn the tide on fees.
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Sorry folks but I’m like a stuck record on this topic.
1. Fees need to be index-linked to Rightmove annual fee increases
2.Referral fees should be comprehensively banned enabling staff to focus on their primary responsibility.
Effects:-
1. Will quickly cause a public outcry and rioting in the streets (shame it hasn’t already)
2. Fees will naturally drift back up to sustainable levels reflecting the skill and reputation of successful agents. Cross-selling would no longer subsidise agency fees as they do now.
I can dream can’t I ?
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You want to look in the North West, agents quoting 0.3-0.75% on a daily basis, its embarrassing. As you say’ its a race to the bottom’ and these agents are market leaders, nuts.
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Neither Knight Frank nor Savills will negotiate on their fixed fee scales of 2.5% and they operate at the top end where minimum revenue per sale is £25,000 (on a £1 m property). Is anyone saying this is not enough? The ‘problem’ is the bottom end, dominated by the ‘hire anyone with pointy shoes and a shiny suit’ brigade. They cannot demonstrate added value over and above a Rightmove listing, so why should they earn higher fees?
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Malcolm I can categorically tell you that is not true – both KF and Savs will drop to 1% at the drop of a hat in Oxford….
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That’s true in Essex too, or it was when I was working in the high end property sector. It may have changed now, but Saviils were dealing at 1%. But that’s OK, it should be about nominal fee rather than % fee.
It takes no more effort or marketing spend to sell a house for 1.2m rather than 1,7m, so there is no justication for a huge fee difference in nominal terms.
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Sadly that is definitely not the case. Knight Frank, Savills and even Foxtons now, reduce their fees to get instructions. Admittedly if you are selling houses at £10m, a 1% fee is still £100,000 but it should be £200,000+! I agree we should all stick to a minimum fee, but there will always be somebody that will drop their pants to win the business and if the big boys are doing it, what chance for the smaller agents?
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I’m intrigued: ‘should be £200,000’ – what added value will I be getting for the extra £100,000?
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You should be getting an agent that through his/her knowledge and years of experience and training, is going to achieve a higher price for your property, which is ultimately what all “consumers” want. In addition to that, you also need to factor in that very high value properties can take several years to sell and require additional very costly high-end advertising and expertise. As a “consumer” you should also bear in mind that agents are human. If they have 2 similar properties on their books, one at 1% and one at 2% which one do you think they would rather sell?
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After over 40 years of experience my answer to the question “If they have 2 similar properties on their books, one at 1% and one at 2% which one do you think they would rather sell?” is simple – the one with a ready buyer. The commission is irrelevant. Money now vs. money later always drives estate agents’ thinking – of course it does, it’s the broken business model every agent insists on sticking with.
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I think you miss the point Malcolm. In this scenario the agent has the “ready buyer” and the buyer likes two of their instructed properties. If he sells one, he/she gets his/her percentage of a 1% fee, if he/she sells the other he/she gets his/her percentage of 2% i.e. should I sell one and get half the fee I would receive for selling the other? Ultimately they will want to sell both, but that is not the scenario here. I have been an agent for over 35 years and managed many different sized teams and multiple offices, the business always wants as many sales, market domination and return business over many years. The sales negotiators want to sell as much as they can, for the best price and get paid the best salary for it.
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The race to the bottom was evident way back in 1993. We were a small independent agency causing waves in town with our 2.5% sole and 3.5% multi agency fees. Our average fee was circa £4k, competing against the large nationals doing £500 inc VAT (Yes, inclusive of VAT!) Our books were full of saleable property, accurately priced with decent fees and we had a great time. For those vendors that dismissed us attracted by an over valuation and cheap fee, were very welcoming of our well timed calls after several weeks of no calls, no viewings from their own agent. It was the agent they dismissed who kept in touch! We welcomed them back like old friends, with open arms on a multi agency agreement at 3.5% on the basis that they would accept offers around our original market appraisal.
Some agents are their own worst enemy. Stand up for what you believe your service is worth, it will pay off in the end. The good agents don’t need me to tell them this.
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I think the reason everybody but Malcolm can’t see the point is because Malcolm is sat squarely on top of it.
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