On Rightmove, price reductions are becoming a daily occurrence with agents across the capital spending more of their time trying to sell their stock and successfully progress their sales. The market has changed, but more importantly, the industry has changed, so what might this mean for 2018.
When the market gets tough, the true value of a hardworking estate agent becomes apparent. With the number of sales falling through naturally increasing, as more buyers have a change of mind, often caused by uncertainty, there is often much work to be done to get the client over the line. Choosing an estate agent who has to perform if they are to be paid, should give you an incentivised agent, prepared to work harder in the interests all concerned, not least their own. The No sale No fee business model creates a results-driven business, which was until recently the norm. Now there are other options, ones that appear to be cheaper – the “online agent.”
So what about these so-called online agents (in truth we are all online, that is providing we have a website and market properties on the leading property portals); what service should you expect to receive when agreeing to pay an agent regardless of the outcome?
Typically, the initial point of human contact will be responsible for setting the price, creating the advertising and putting the property on the internet. Unless your package includes a certain number of viewings, these will be down to you, which is fine if you have the time and know what questions to expect. When you have negotiated and accepted an offer, other parties will become involved, most likely based in a call centre somewhere else in the country, which is where the continuity of a “local expert” starts to break down. However, if everything goes smoothly, without issue, you will sell your property and make your move, except it’s never that simple, not even in a strong seller’s market, let alone a slowing and changing market.
The reason a high street agent has an office full of staff is to make sure there are enough hands to the pump for the job in hand; covering valuations, viewings, marketing strategy reviews and updates, dealing with offer negotiations and overseeing the progress of the sale; then there’s staff holiday cover of course. The point being it takes a team of people who work together day in day out to efficiently handle the selling of a property. We use the word “selling”, as opposed to “marketing” because that’s what we need to do if we are to be paid, whereas having your property placed onto the market is the only thing you will be guaranteed with a pay upfront type of service.
Even if you defer payment “the fee” still becomes payable whether the property sells or not, which in fairness is the deal both parties agreed to at the outset, there would be no promise to actually sell the property.
Perhaps 2018 will see companies operating the “Buy before you Try” model, increase their prices and could sellers face a reduced level of service when the number of hours required of the agent increases even further? If a sale falls through, everything needs to be done again, from the beginning, but there’s no incentive for the agent who has already secured their fee – it’s guaranteed anyway; therefore what would you say becomes more important to them, working on a property that is offering no extra reward than what is already a certainty, or spending time chasing up, and meeting potential new clients, yet to sign up?
Working to the No sale No fee business model creates an incentive to price correctly, offer beneficial and sound advice, and a focus on helping the seller choose the right buyer with the best chance of a successful sale – through to completion. If there are problems during the transaction, a solution must be found, and quite often it’s the agent who will be proactive in finding such solutions. Having invested many hours over a period of time, the No sale No fee agent will want to make it happen; it kind of becomes a self-policing situation for the seller.
A neighbour on my mother in laws road is trying to sell her property with a well-known “no commission” charging agent (obviously there’s a fee to pay, but that’s how they market their service). Two months on and the property is still for sale, so has the agent now lost any of their motivation, given the “fee” has already been secured anyway? Well, the fact people turn up to view with a set of keys, on their own, pretty much answered that question for me. Even if a seller agreed to this, we would never operate in such a way. How awkward do potential buyers feel turning up and letting themselves into the seller’s home, and what about safety and security? What if someone falls down the stairs, or perhaps they forget to properly lock the back door? And does the seller’s insurance, or the agent’s for that matter, cover this kind of situation?
As the market continues to change, the efforts of an estate agent will become more and more important, and I think other examples of poor service will come to light next year. There will be plenty of estate agents who have only ever experienced a seller’s market, so when the going gets (really) tough, some will seek opportunities in a different profession. It will be interesting to see how things pan out over the coming 12 months when once again it will be the “tough who need to get going” if they are to ensure their clients receive the best advice and a service to match.