Tag Archives: commission

I had an enquiry recently from a rather cross man who has had his house on the market for six months.  In that time, his agent has only managed to produce one viewing.  Given that his asking price seems at first glance to be perfectly fair for the size and location, I listened carefully to his tale of woe in order to discover the reason for the total lack of interest in his house.  I didn’t have long to wait….

I asked him to talk me through what had happened so far, and he began his story with his negotiation on the agent’s fee.  “She wanted 1.75%!” he exclaimed with disgust.  “No way was Ia prepared to accept that,” he sniffed, “I told her I wouldn’t pay a penny more than 1.25%, and she eventually caved in” he added proudly.  I think he wanted me to congratulate him, but I moved swiftly on to his photography, which I thought was pretty awful.  The rooms looked dark and poky, and the outside of the house was very shadowed, and had been photographed at some very unflattering angles.  “I was offered professional photography”, the seller explained, “but the agent wouldn’t include it in his fee; she wanted another 400 quid for it!” he exclaimed,  astounded.  “I told her to take the pictures herself, and she did”.  So what about the brochure, I asked.  “That was another thing”, he said, heatedly, “the agent wanted me to cough up for that too!”

“What was he proposing?” I asked, but I knew what was coming….. “Well she expected me to pay £250 for a glossy brochure but everyone knows they don’t make a difference” he said, pleased with himself.  “The one she’s done on the office printer is pretty impressive actually”, he added.  I could just imagine it….

Had he noticed anyone driving slowly past the house, looking interested, I asked.  “They can’t”, he explained, “we live behind big gates; you can’t see the house from the road”.  So the photography and brochure were going to have to work hard to tempt viewers to pick up the phone.

So far, this seller had cut the agent’s fee to the bone, and used a cheap brochure and poor photography to market his house.  He’d fallen into The Seller’s Trap.  Is it any wonder that to date, only one viewer had been tempted enough to come to the property?

It’s a tough market out there at the moment, and your house really has to stand out from all your competition.  Here are the 3 golden HomeTruths’ rules to get you sold:

  1. Don’t negotiate on your agent’s fee, unless it’s upwards.  Incentivise them by offering over his commission fee, by at least 0.25%
  2. Always always always use professional photography.  At an average of £400, it can return 100 times your investment in your eventual selling price
  3. Pretty brochures DO sell houses!  Look at the types of brochures premium brands use to sell their goods, and compare the value of the product to your house!

Look at the commission fee you’re paying your agent: are they really being paid enough to want to sell your house?  Don’t forget 1% of nothing is nothing! You need to create an ally, and keep them onside, so pay them well.

And if you’re not sure your photography and brochure are up to the task of selling your lovely house in an very challenging market, give me a call.  I’ll tell you whether they are good enough, and if not, what you need to do about it.

If you’d like my help to sell your home more effectively, please answer a few short questions here and if I think I can help you, I’ll be in touch.

What to read next: Sales Progression Management – what is it?

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….when you learn from it, of course!

What was the first thing you did when you decided to put your house on the market? If you diligently booked three appointments with estate agents, to obtain three valuations, you are not alone. Most sellers do just that, then choose the agent who they a) like best, b) provided a valuation of around the figure you were expecting, or just above, and c) offered a reasonable commission. Sound familiar? Relax – they are all perfectly good reasons for choosing your agent. You may even be able to add to that list d) sold a neighbouring property and e) came recommended by a friend.

So when a year down the line your viewings have completely dried up, and your agent is no longer returning your calls, you’re left scratching your head, wondering what on earth you did wrong. Well, let’s look at the criteria a little closer:

a) Liking – of course, it’s very important that you like, and therefore usually trust, the agent you select to sell your house. After all, it’s probably your most valuable asset, so you need to believe that he is 100% on your side, and determined to do his best for you. But – and it’s a big but – it’s rarely the valuer who is selling your home. It’s the admin lady answering the phone, or the viewing rep showing your buyers round. That confident, professional, trustworthy chap who spent an hour with you and secured your contract, he’s off securing other contracts, not selling your house.

b) Valuation – a good valuer does his research; a great valuer reads your signals. Even if you don’t think you are giving anything away, some carefully worded questions will quickly ascertain your motivation and expectations. The more he wants your business, the higher the valuation will be, and the more he will charm and flatter.

c) Commission – you may have felt very pleased with yourself at negotiating with the agent and securing a great sale commission. But at what price? Is he incentivised financially to sell your house above his other clients’ properties? Is he going to try to cut corners on advertising, brochure and accompanied viewings? And perhaps most importantly, if he allows himself to be so easily beaten down on price, do you really want him negotiating with a buyer on your behalf?!

d) Sold a neighbouring property – try to discover the back story here; it may have been a fluke, a local buyer already interested, or a big drop in price. Remember – the sold sign is only part of the story.

e) Recommendation – as above, find out exactly what the agent actually did to deserve the recommendation. Maybe your referer’s daughter works there, or they own shares, drink in the same local, or (forgive my cycnism) receives an introducer’s fee.

None of these criteria were wrong. In fact, they are all very good reasons for choosing your estate agent. However, on their own, these checks are not enough to sign on the bottom line. If your house hasn’t sold, it’s time to move on. When you select your new agent, ask more questions, seek evidence, do some digging. You may also find my blog on 7 Questions to Ask Your Estate Agent useful.

After all, a mistake is not a mistake if you learn from it.

If you’d like my help to sell your home more effectively, please answer a few short questions here and if I think I can help you, I’ll be in touch.

What to read next:  7 Questions to Ask Your Estate Agent 

What to do next: Sign up to my Selling Secrets https://www.home-truths.co.uk/selling-secrets

 

In their fascinating book Freakonomics, (subtitled “The hidden side of everything”) Levitt and Dubner explore the issue of estate agents’ commissions.  They propose that one way of discovering whether an estate agent is doing their best for their client, is to measure the difference in the results achieved for their clients, and those of their own personal home sales.

The results were not particularly surprising, at least, not to me.  (Incidentally, the best property brochure I’ve ever seen was produced by an estate agent to sell his own house.) It turns out that an estate agent keeps their own home on the market an average of ten days longer, and sells it for an extra 3%.  (On a £500,000 home, that’s £15,000.)  The book goes on to explain, “when he sells his own house, an agent holds out for the best offer; when he sells yours, he pushes you to take the first decent offer to come along”.

The authors believe that the difference in the agent’s commission between an asking price offer, and one say, 10% below the asking price, is so little that they will recommend the offer is accepted.

Let’s look at some figures: assuming a sales commission of 1.5% on a house worth £500,000, the seller will pay the agency £7,500, about 5% of which will go to the sales negotiator, or £375.  If an offer is received of £450,000, the negotiator’s commission will plummet to £337.50.  So he stands to lose £37.50 against the seller’s loss of £50,000.  Now imagine that this particular house has been on the market for a few months, it’s two more weeks until payday, and his girlfriend’s birthday is looming.  What is he going to do?

When the seller asks him for his advice on whether or not to take the offer, what is he going to say?  The negotiator would much prefer a certain £337.50 than a possible £375, and who can blame him?

Either we need better-trained, highly-motivated, somewhat altruistic negotiators with the integrity of a nun, or else we need a better system.  And for me, and all those sellers out there, it can’t come soon enough.

If you’d like my help to sell your home more effectively, please answer a few short questions here and if I think I can help you, I’ll be in touch.

Candle and books at the top of the table Estate agent commission

When you first sign up with your estate agent, if they are doing a good job, you feel special.  After all, they really wanted to be instructed to sell your house, perhaps against stiff competition, and so they almost certainly tried hard to impress you, and in all dealings to be courteous and professional.

However, when you receive an offer on your house, it invariably seems as though the agent’s allegiance has switched to the buyer. How can this be?  You’re the one paying their commission!  Something subtle has happened here, so let me try to explain.

Firstly, when the agent wants your business, ie the instruction to sell your house, he will charm and coax you until you sign on the dotted line.  He’s won your business and he’s happy.

His next task is to find a buyer for your home, so now he’s winning business of a different kind.  It’s the turn of your buyers to feel special and seduced, and his aim will be to keep them on track and so that they make an offer.  When they eventually do make an offer, the agent’s focus is still on them, and not on you –his client –  whilst he cajoles and persuades the buyer to raise their offer to a point at which you accept it.  If there remains a gap between the two figures, he may well put some pressure on you to lower your expectations in line with your buyer’s offer.

In the US, this doesn’t happen, because each party has their own agent, ie a buying agent and a selling agent.  These two agents negotiate between themselves, at their client’s instruction, so you never get the problem that we experience in the UK – that of an estate agent’s conflict of interest. At HomeTruths we believe that at such a crucial moment in their house sale, the seller needs impartial, honest advice, and that’s where we come in.  Because we’re working for the seller, and only the seller.

A client of ours in Norfolk recently achieved £20,000 more than he expected simply because we gave him confidence in his asking price, so against huge pressure from his agent, (not selected by us, I hasten to add) he held out for the full asking price, and got it.  Had he taken his agent’s advice, it would actually have cost him £50,000!

If your home is under offer, and you’re not sure you’re getting best advice from your agent, why not give me a call?  Pick up the phone now – just think, five minutes on the phone could save you tens of thousands of pounds.

If you’d like my help to sell your home more effectively, please answer a few short questions here and if I think I can help you, I’ll be in touch

What to do next: Sign up to my Selling Secrets https://www.home-truths.co.uk/selling-secrets

Vintage-kitchen1

Estate agents have it bad these days, (you ask them) . Not enough houses coming to the market; not enough buyers registering; over-optimistic sellers; over-cautious buyers. They’re competing for the best properties, and slashing fees to secure the instruction.  Where 2% was once achieveable in most areas, even the better agents are reluctantly shaking vendor’s hands at 1.25% to list a £500,000 property. But then what happens?  They can’t afford to produce one of their lovely, ‘Country Life’ style brochures – the client gets four fuzzy sheets from the office printer. That fabulous professional photographer is ditched in favour of ‘Sean our junior negotiator who got a nice little camera for Christmas’.  And print advertising?  Forgot it – way too expensive.

Before you start feeling sorry for our hard-up estate agent in his two-year-old BMW 7 Series,   He’s doing ok – it’s the admin lady, and the viewing reps that’ll really feel the knife.  And not to mention the vendor, unable to attract even investors with his sorry excuse for a marketing campaign, if you can even call it that.

Stop!  It doesn’t have to be like that!  Our first rule at HomeTruths, is pay the agent what he’s worth.  If we’ve selected the agency, I can tell you that he’ll be worth every penny of the 1.75% or more, he’ll be charging you.  And for that, you’ll get stunning professional photography, a gorgeous glossy brochure with detailed (and accurate) floorplan, his best attention including, where possible, accompanied viewings by one of the partners or senior managers. After all, you’ll be paying for it in commission, and we’re going to make sure that you get the best service possible.

So, before you jump in to hard-nosed negotations with your potential agent, stop and think. Then call Sam.  Because our agents don’t cut corners, at least, not on my watch.

Kitchen image courtesy of www.homesandgardens.com

If you’d like my help to sell your home more effectively, please answer a few short questions here and if I think I can help you, I’ll be in touch.