Are Estate Agents Missing The Point? It’s Not All About the Price!

House prices have long been used as a way to measure the health of the property market. However, focusing exclusively on pricing risks overlooking other important factors which can be hugely telling about the sector as a whole. As we drift towards Brexit, and face the uncertainty of the UK’s impending departure from the European Union, house prices are a hot topic of conversation. But are estate agents missing the point by concentrating solely on prices, in the current climate?

The property sector has been hugely affected by the referendum result already, with its impact being seen via selling times, pricing, completion times and many other factors. Another key area in which the impact of uncertainty has come to light is estate agent fee models. The battle between traditional estate agencies, charging fees based on a percentage of the agreed sale price, and newer online competitors offering for a fixed fee rages on, and competition in the sector is fierce.

The vital question to consider here is this: are we comparing the same product? Traditionally, estate agents have charged a percentage of the agreed sale price as their fee. This fee usually covers many aspects of the sales process, from initial valuation to marketing services and management of viewings. Agents would also be on hand to answer buyers' queries, and steer them in the direction of suitable properties. This fee model is still going strong at huge numbers of respected estate agencies. But it’s no longer the only option.

Several new online estate agency businesses have emerged, aiming to disrupt the status quo with a new way of charging vendors. Typically, such businesses charge a set fee which must be paid whether or not a house sells. Unusually, this means that an estate agency can still profit from unsold houses.

For buyers and vendors alike, a sale is of course the primary focus. And that’s why this trend towards fixed fee agents may well prove problematic for the industry as a whole. In light of existing uncertainty due to Brexit, we could well see a move away from such offerings, as vendors begin to narrow down on what really matters. Selling their home.

Cut-price selling fees may at first seem like an appealing option to vendors, but the key requirement is of course the sale itself. A vendor doesn’t just want cheap commission. For the vast majority of vendors it’s far more important that an agent can sell a house at an acceptable price, within a reasonable period of time. If that property fails to sell completely, then the fee is of no consequence.

For this reason, homeowners should be asking prospective agents a few more questions before they rush into any decisions regarding their agency of choice. Vendors would do well to enquire about an agency’s performance statistics, asking for qualitative data and real results. Likewise, estate agents should be prepared to answer these questions, and provide much more information to inquisitive potential customers.

Questions might include:

• How many properties similar to mine have you sold in the last 12 months, and how long did these sales take?
• Did you realise more or less than the property’s valuation in similar sales?
• How many chains fell through over the last 12 months?

Uncertainty has made it more difficult for UK homeowners to find buyers, and with buyers increasingly hesitant to commit to purchases, it’s more important than ever that homeowners partner with an effective estate agency that they can trust. Asking for information about an agency’s performance and it’s ranking versus the local competition is a great way to start the conversation, and get a better understanding of what’s really being purchased when a commission fee is agreed. Estate Agents need to be prepared, rank your branch here for free

Focussing on house prices exclusively can be dangerous, as there’s so much information that those figures won’t reveal. Instead of looking at prices in isolation, it’s important to consider key insights such as completion times, and the success rate of property chains in recent months. Without this information, would you trust an agent with the sale of your most valued possession?