Estate agency fixed fees: the way ahead?
A fixed estate agency fee whatever the selling price? One Edinburgh solicitor estate agent has decided that that is the way ahead
An Edinburgh based solicitor and estate agency firm is bucking conventional practice by offering fixed price estate agency fees, whatever the value of the property.
Mov8 Real Estate charges a single fee of £600, including VAT, to sell any residential property. This compares with a typical 0.75% commission on the selling price, plus VAT, a total of £881.25 on a £100,000 property and £4,406.25 on one selling at £500,000.
Managing director Robert Carroll made the decision after concluding that it was unfair to charge the seller of an expensive property a much higher fee than the seller of a lower value property, when the work involved was much the same.
Instead his firm offers a menu system, under which clients pay separately for the services they choose, such as ESPC advertising or printed schedules. “However, if you don’t want these things then you can pay just £600 to list and sell your property”, he says. “Even if your property is worth £1,000,000.”
“More expensive properties don’t necessarily take more work to sell. What differs is the additional services that property sellers request, and more often people who are selling more expensive properties want additional services, such as custom-designed property particulars, accompanied viewings or floor plans.”
In return for a low fixed estate agency fee, MOV8 asks clients to pay up front; the fee is not conditional on a sale. Under the prevailing system, even where the whole service has been delivered, if a client changes their mind about selling or raises their price expectations unreasonably, the agent receives no fee.
The MOV8 system does of course add to the client’s outlays up front when they may already have had to pay the home report fee. While admitting that this will not suit everyone, Carroll has found that many are willing to bargain in this way when they hear the rationale.
He explains: “I believe that the current system of feeing is unfair both to the client and the firm that delivers the service. Our new fee structure is based in being remunerated fairly at the point of delivery of service. In return, if our client is committed to selling and isn’t testing the market, they save a small fortune.
He adds: “To charge an up-front fee you have to provide demonstrable services and value up front.” In other words, you have to have a very good answer to the question, What do you actually do for your estate agency fee?
The MOV8 approach is, before a property goes on the market, to advise the client on the likely value, take photographs and prepare the marketing materials, put a For Sale board up, advertise in Rightmove, Zoopla and other online outlets as standard, send details of the property out to several hundred buyers on its buyer database and organise the home report for the client.
“In other words, when estate agency is done proactively, the majority of the time and expense that goes into marketing and selling the property is long before the property goes on the market. In some cases we are able to sell properties without even advertising them, simply by sending the details out to our database of buyers”, Carroll says.
After that, whether the property sells is largely down to market conditions and seller’s expectations on price. The only risk that a client might see in this system, says Carroll, is that the agent might provide a substandard service after the property is on the market; and MOV8 provides a detailed service level agreement and a money back guarantee on their fee in the event that they fail to deliver the promised level of service.
Carroll does not necessarily believe it will be easier for a solicitor than for a non-solicitor estate agency firm to adopt this system; what happens next is for the market to decide.