Estate agency is on the face of things a very simple business, so why do fees differ so much when we’re all the same? I’m going to be very honest on what our costs are, where our time is spent and hopefully if you read this, you’ll be better placed to choose an estate agent based on what value you wish to receive.
As with everything, you simply don’t get something for nothing. The key for a would-be seller is working out where that value is and which parts you as a customer would most benefit from.
To try and help you understand what goes in to a house sale, I’ve decided to simply tell you. No sales waffle, just an article on what we do and why and how much it costs. There are only so many hours in the day and every hour costs.
So what goes in to a free valuation? It’s free for a customer, but it costs every business to deliver.
Although the house-value is a part of a valuation, the appointment is really more about how to maximise that individuals circumstance financially, stress-wise and risk-wise within their time-scale. So what goes in to being able to give that advice?
If you’ve seen our news page you’ll know we study the local market incredibly thoroughly. This is done on a daily/weekly/monthly/quarterly/and annual basis. I apportion 8 hours a week specifically to learning. I set my colleagues a target of 2.5 per week. This learning ranges across what is impacting price on specific property types, local market figures for instructions, sales and prices; business, linked property market conditions, marketing stats, mortgage criteria, rates, our own success/failures, property portals, new legislation, lease updates, buyer mentality, current news, psychology of moving, buying, what’s affecting solicitors speed and the list goes on and on. This learning forms the back-bone of our ability to give advice at each step.
Aside from the combined hours of research to keep up to date, it’s likely a further hour goes in to research specifically about a property and competition it will face if it comes to market. Factor in say an hour for travelling to, carrying out and coming back from the appointment. There’s another 30 minutes of work on research (once you know the property exactly) on the back of the appointment and then 30 minutes ish (depending on the type of sale) in order to form the most effective marketing plan.
No, this part is not a cost you wish to think about as a customer but no matter the agent, to carry out a valuation with all the valuable knowledge behind it is time consuming and a cost.
For some agents, approximately half will result in a property going to market (it’s as low as 30% for some corporate agents), so the true cost is realistically very high.
It’s expensive to become and stay an expert. My view on my learning is that if I’m not an expert at what I do, is what I’m telling people actually advice and what value does it have?
So valuation is over, what happens when you’ve chosen your estate agent?
Now it’s time for a bit more research if time has passed between valuation and instruction. Have things changed? Even if it’s only a week, I will spend half an hour re-assessing the competition that property is going to face and see if it impacts our marketing plan.
You know the energy performance certificate you need doing? We have a chap we use for our vendors and he charges £50. Some estate agents will charge circa £100 (or more) for this as it’s a way to claw back some of their costs. I find £50 is reasonable for the provider and the client, but some estate agents have deals with providers where they’re doing it for £30 and the cost to the client is £100. Not every agent will look to make a profit at this stage.
The quality of marketing your property receives will have a direct impact on every aspect of your sale from here on in. Not a small impact but thousands of £’s worth of impact. I’m not going to keep banging on about learning, but to understand property marketing is not a two second job.
So what are our costs? I’ll attend a mark-up with the photographer to ensure we get the right pictures. I work very closely with Richard to get exactly what we need. We’ll set each room to ensure it’s spot on and it will take circa 1-2 hours for photos alone. To get the right standards of photographer we’re looking at circa £100. I could send the photographer alone without my guidance, but the result is never the same and this part is so serious. Any corners cut at this stage are straight out of the owners pocket.
Once we’ve got beautiful photos we then need beautiful brochures to show that property off. There’s some important psychology to using high quality brochures when selling property. Again, it’s circa £100 for us and it’s an upfront cost.
It’s also about 30 minutes to an hour to write a description of the property. Then changes. Then final sign off.
So we’re at about 7 hours of time and £200 in cold hard cash to get your house on the market and that’s at the bare bones.
Can we do things cheaper than the above? Of course, but only with compromise to our clients and their pockets.
From here it’s all about selling the property as effectively as possible. We’ve got a plan and we put that plan in motion. We run a list of 300 to 700 buyers at any one time. In order to sell a property as quickly and effectively as possible, we spend many hours maintaining frequent contact with this database so that the second we’re instructed, we’re speaking to buyers that are in a position to buy. Bad database = nobody to sell property to and it doesn’t keep itself up to date.
This process is combined with what the marketing of the property drives to us. We advertise on our own site, along with Rightmove and Zoopla, the two main property portals. Both are very expensive, Rightmove far more so than Zoopla, but both are necessary to give the greatest possible coverage. We then promote traffic to our site via social media and other methods.
For ease of simplicity, let’s assume there are two routes your sale goes down:
Route one, everything is going swimmingly and the marketing and our database have generated high quality interest. We filter out all the time-wasters and book 20 viewings with the best quality of buyers. It’s 15-30 minutes per viewing depending on property size excluding travel. After 20 viewings we’ve got 5 that wish to do second viewings. We organise these and carry them out. At every single step of the way with a sale we have to ensure we’re getting good quality feedback about how the market is taking to the property. It’s imperative in giving best advice throughout the negotiation phase. We carry out the five second viewings and offers start coming in.
You don’t want to be turning down an offer you should really be taking and likewise you don’t want to be taking an offer you should be pressing higher. I see our work as part guaranteeing the highest price but also as an insurance policy to make sure no mistakes are made that could be costly.
Route number two. The initial marketing doesn’t work as well as expected and buyers aren’t taking to what they see. With us phoning everyone we know the reasons why and this starts being logged. We book say 3 viewings and carry these out. None of the 3 wish to proceed with purchasing the property but we have solid feedback from them.
So what do we do now? We work out where we stand, what is happening and rectify it. 3 days in to a sale we start getting feedback from property portals in relation to marketing stats. I know these stats like the back of my hand so get really good information from them. This combined with feedback from our database puts us in a great position to correct what is happening. Having experienced these situations many, many times in my career and subsequently sorted them out, I know the options and how to determine the best way forward. We discuss this all with our client. It’s an open and honest discussion.
There are many, many reasons as to why a property doesn’t fly off the shelf in the first 3 days. Identifying these things early is the single most important factor in ensuring that client still achieves the highest price possible. Most estate agents don’t review the marketing, but many estate agents simply can’t afford to make it part of their service. If you’re left on the shelf to go stale, you’ll lose any hope of the top price.
After altering the marketing and making a few adjustments to the physical property, enquiries start converting to viewings and offers come in. Again, we’re perfectly placed to negotiate these offers in the best manner as we’ve so much information on how the sale is going. You want high quality advice at this stage? It only comes on the back of knowing the facts and knowing who you’re negotiating with.
Offer checking. We check everything from the buyers position and the entire chain behind them, their mortgage situation etc. On the back of all the hard-work, we want the sale to go ahead.
Sale agreed! Woohoo.
You want a recommendation to a decent solicitor at a fair price? You got it. Again, this stage is often used as a money-making exercise in the same way the EPC situation is by estate agents. The choice of solicitor is very important. I’ve seen sales fall apart due to poor quality solicitors. Imagine your purchase or sale falling apart after you’ve paid out £XXX’s on surveys etc. Why risk it?
Once a sale is agreed we put in more hours of office work than at any other point. It’s behind the scenes and we don’t generally shout about it too much, but it takes a LOT of hours to ensure a sale goes through as quickly as possible. We’ll liaise, chase, harry and update everyone along the way. We could save money and not do that, but then we’d be putting our sales at far greater risk. I’d rather do the work and ensure we get paid on one hand, but it’s a service that is so important to the people moving.
Where we’ll add huge value in this phase is if there is a problem. To varying degrees, 80% of our sales will have issues that need our intervention to resolve. This could be a buyer taking to a survey badly, a mortgage issue, a time-scale issue, a chain issue, a deposit issue and on and on and on. From my experience, solicitors aren’t always the most positive influence on a sale. I’ve seen all sorts of very minor issues be formally communicated between solicitors that have caused near blazing rows. We’re there on hand to resolve these, take the work from the solicitor and get things rectified before they put a sale at risk. We have an incredibly high completion rate for the sales we agree.
There are many, many ways in which we could save our costs throughout this stage but none of them are things that I see as being a compromise I would risk.
If our client is buying somewhere and they want our help finding and negotiating that purchase? They’ve got it. In order to be an expert at selling property, by nature you need to be an expert at buying. We’ve got loads of tips, advice and methods of ensuring you get a property for the best price possible. I’ve visited properties with our vendors to give my perspective.
The fee you pay an agent will not guarantee the service you will receive. Just because they’re expensive it doesn’t mean they carry out the above. Estate agents are sales people. By very nature it’s their job to persuade you that they’re the best company to act in selling your home for you. I know estate agents that charge a lot and cut near every corner they can. The one thing I can guarantee is that you can’t do the above for less than £3000 (in our area) per sale over any length of period and remain in business.
I honestly do wish it was cheaper for people to move, but the only way is to cut something from the above that will cost you more in your sale price. Or at the very best make it far riskier.
If you’ve got any questions about the above, I’m always more than happy to have a very open and honest discussion on it.
MD & Founder
Mr Green Estate Agents