How is it possible to get more for your sale, whilst the market is actually running at a discount to asking price? How do some agents make more for the seller when so many others just seem to want to just get the deal done, whatever the price?
It’s the dry argument agents have all heard countless times before at dinner parties: “Doesn’t the agent just show the buyer around, are they really needed anymore?”
It seems that many people do believe there isn’t much ‘value’ associated with the agent in the UK. It’s understandable when so much of the value paid by the seller is left off the table and not spent on motivating the agent with higher commissions. In many agencies it's a volume game, no single deal is worth a tremendous amount to the agent. The result has been a whittling away of service, and fees and general discontent amongst agents and sellers alike.
With broker (self-employed) agency models where commissions are high (up to 90% at Moveli) it has been interesting to reveal that the proof is indeed in the proverbial pudding. For those unaware: a 'Brokerage' is a relatively new type of agency in the UK that allows agents to work for themselves on a platform.
According to recent data from Zoopla the average discount to asking price is 4.5%, making the average sale 95.5% of asking price.
Over the last 12 months at Moveli our sale to asking price has been over 101%. Making a real terms return for our sellers of 5.5% or about £56,500 extra based on our current average sale price. You don’t have to have a beautiful mind to work out that that translates to more than 4 times the average UK agency fee of 1.25%.
It would be a very interesting exercise to gather the data together for all of the brokerages operating in the UK and find out if it is a collective truism that higher personal commission, does indeed equal a higher sales price. And even more interesting it would be if that more years agency experience multiplied that even further. Now that would be something!
Funnily enough we have begun to discover that sellers are more than open to paying a sensible fee, provided that they can see the value in the return. In fact our average fee percentage has been creeping up also, +3.6% in Q1 2023 compared with Q1 2022.
When everyone's selling vanilla ice cream at the same price it’s not long before sellers realise that it’s just going to come down to the price and who they 'like' better. For too long fees have been eroded and who can blame the agents? They themselves probably haven’t really a clue why the seller should choose their agency over 'agency X’, and if they do, do they genuinely believe it enough to turn down the offer of the instruction at a cheap fee? Probably not in our experience.
As more and more experienced agents move away from their high street positions into broker models it will be interesting to see if a two tier system begins to evolve. One where it becomes public knowledge that a broker may cost you more than a high street agency but the price you will likely achieve will be higher, as will the service.
Recently I was chatting to some friends of mine in the industry. One who was no longer an agent joked that;
“Being an agent is about being as ruthless as possible, whilst at the same time appearing as nice as possible.”
I agree, if you are paid a low basic wage and a very low personal commission per deal. You spend your time running around desperate to piece deals together - whatever the cost. If that means telling your buyers what your seller will sell at (as has happened to me countless times when I was looking to buy) or telling your sellers that that’s the best offer you can get from buyers, it’s no surprise you start to unravel ethically.
It’s time that agents are no longer perceived as wolves in sheep’s clothing, it will be better for the the clients, and the agents. For that to happen you either need sheep with no teeth or a wolf with no fleece. Both sound pretty diabolical, and neither would you want looking after your sale. The solution is the restructuring of the commission such that its weight is put into the hands of the selling agent rather than the agency. As it is with the broker models. So that it becomes transparent where motivations lie and so they become aligned with the seller.
The other option, resorting to the nice chap from your local agency who happily, and quickly reduces their fee to win your business is a trap that best selling author Jordan Peterson has warned us about before:
‘If you think tough men are dangerous, wait until you see what weak men are capable of.”
It’s not that all agents in high street agencies are bad, or that they won’t get you a good price for your property. Some are incredible agents, and some agencies are very attuned to providing the best service they can. It’s just that when it comes down to it, it’s starting to look like an experienced broker on a high commission is more likely to get you not only more for your property, but more for themselves too. And that is the basis of a sound client service relationship.
If you're considering selling your property and looking for expert advice on how to achieve the best result, do get in touch: 020 3150 0733 / hello@moveli.co.uk
Perhaps you're an experienced estate agent looking to provide a better service to your clients? Contact us here for further information on the platform, or email: joinus@moveli.co.uk
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