It often makes me choke when I learn how
much the estate agent is to be paid in commission on the sale of a
property. Often fifteen
times more than my fee and for much less effort. On top of this the agent may also be receiving a
referral fee of around £200 to £300 from the solicitor he or she has
recommended. Yes, you could accuse me of jealously, and yes, perhaps I should
seriously think of a career change.
It is also I suppose a sad indictment of my
profession when one looks at how the Law Society has allowed such a situation
to arise. Solicitors were at one time paid
according to a national fee scale, so depending how much a property was worth
their fee would be calculated accordingly. Unfortunately an inept professional body combined with
outside competition has led to many solicitors undertaking property
transactions for less that the cost of a family ticket to gain entry to Alton
Towers.
So how can an estate agent justify such a
large fee? It is true that the
cost of advertising and employing staff is high. It is equally fair to concede that difficult to sell
property can often create a long running financial burden for the agent. However there can be no justification
for an agent calculating a fee based on a percentage of the value of the
property. This is outdated and has
no relationship with effort or ‘value for money’ considerations.
I would perhaps be less harsh in my view if
I could be convinced that most agents deliver a high and efficient service for
the home seller and buyer.
My experience suggests the opposite. There are a large number of agents who consider
their role is nothing other than to advertise property, to introduce a
potential buyer to a seller, and to then look to the solicitor acting for the
seller to collect their fee at the end of the transaction for immediate
banking. These agents
are not keen to assist during the sale transaction and spend most of their time
playing one solicitor off against another.
I am sorry but I expect an agent to be more
pro-active and to do everything possible to assist the seller and the selling
solicitor in making sure the seller’s experience in selling their home is
pleasant and stress free.
There are a number of administrative tasks
during a transaction that an agent could undertake. They could help with the
delivery and signing of documents such as the contract and transfer. They could play a larger role in
collecting replies to inquiries and also helping to coordinate exchange and
completion dates. On the
whole there are plenty of ways the agent could in collaboration with your
solicitor help to speed up the process and to put it bluntly do more to justify
the high fee charged.
At present our experience is that many
agents actually contribute to delay through constantly calling the office for
pointless updates as well as giving home sellers unrealistic expectations about
how long the process will take to complete.
I did have an attempt to stand up to local
agents. About six months ago
I said I would only collect the agent’s fee from the client and meet the extra
work and cost of passing this money onto the agent if the agent paid me
£50. I did add
that if the agent referred a couple of clients to me each month I would waive
the fee. What reaction did I
receive? Well it was if
World War 3 had broken out. ‘What
right do you have to demand payment?’
‘You are not allowed to do that!’ ‘We will report you”. It was as if I had
committed a crime. The
agents just did not get it. For a
fee of around 1% of their fee (or some referrals) I was offering to continue to
collect their fee from the client (even no there is no obligation on me to do
so) to preserve their cash flow and to minimize their bad debt. They could not see that
given how my fee structure had been squeezed the extra cost to me of collecting
and accounting to them was beginning to impact on my bottom line.
All but one agent refused to pay and I now
tell clients that they must pay the agent direct. It’s a shame more solicitors do not recognize that this custom
of collecting and paying the agent’s fee is no longer financially
sustainable. In a climate where the
likes of Ryan Air are looking to
cover the cost of any extra administrative task however small surely its time to break away from
outdated and unnecessary conventions?
At the end of each transaction we send out
a client feedback questionnaire and on this we ask the client to give a rating
on their agent. We always
send the completed form to the agent and invite comment. Not one agent has come back to us. It seems the majority of agents just do
not care.
Will anything change? This is unlikely to happen as long as
homeowners continue to pay scale related commission. As long as the agent continues to receive such
high fees why would the agent wish to change anything?
