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It is time to establish fixed fees

by Tony Addinall

Agents who raise their fees in the downturn are, in the eyes of the public, exploiting it rather than responding to it with legitimate concerns, so the industry needs to reach a consensus.

A recent newspaper article questioned the audacity of agents who increase fees during a market downturn. A number of agencies have opted to do so, while others have said they intend to follow suit. Hallelujah, I say – at last agents are taking a stand.

We have long had the scorn of the general public, who seem to think that all that needs to be done to sell their property is to stick up a board in the front garden, make a couple of phone calls and, hey presto, their property is under offer.

Fee levels

All we do then, of course, is invoice them and sit back and wait for the money to come rolling in. As most of us professional agents know, nothing could be further from the truth, which is why it is crucial that agents retain their existing fee levels and even consider increasing them, to ref lect the additional work they are having to do for clients during the market downturn.

Agencies, like any business, are trying to make a living in what is an increasingly challenging market, so why do some decide to offer cheap fees in order to get properties on to their books?

Agencies’ costs, like all business costs, have increased, be it with rent, rates, staffing or f leet. And, with transaction numbers falling to about two thirds of what we have written historically and house prices still reportedly falling, we automatically generate less income on a percentage basis, anyway.

On a more personal level, agents have household costs like the rest of the population, relating to our mortgages and bills. Moreover, many agents are paid a relatively small basic salary and rely on commission to meet these costs – and this is no laughing matter when their commission levels have plummeted to frightening lows, due to lower transaction volumes. Agents, too, can lose their homes.

Many of the newer agents will not have seen this sort of market before and it will come as a shock but we’ve been here before and came through it to live another day. It just means adapting the way we work, making cutbacks where necessary but, above all, doing what we are paid to do and that means proper negotiating and offering best advice to our clients; in other words, earning our commission.

Decent rate

Agents offering a good service, know what they’re talking about and employ quality people deserve to be paid a decent rate for their services.

Ideally, I’d like to see all UK agents coming into line with their counterparts in Europe and the US, who charge fees of anything up to 10%. But the British public will never accept this and so we have to be a little more realistic.

Fixed fees are one way to appease the public. This could be based on the marketing price of a property rather than a percentage of the sale price. The standard fee should be the equivalent of 3% for multi-agency. A discount can be discussed for a sole agency agreement.

Fixed fees can help clients budget more effectively for their move and the big advantage from our point of view is that, with falling values, we can be paid a commission in relation to the initial asking price.

With reductions of more than 10% commonplace, it means our fee isn’t reduced in line.

After all, the majority of the marketing is done as soon as the property is taken onto the market and, if the property is valued correctly in the first place, there should be little or no need for reducing the asking price, so everyone’s a winner.

Salesmanship

I would like to challenge all agents to come together and make an agreement and commitment to set our fees at a level where we can all make a living and stay in business. How about winning instructions on good old salesmanship and the service you offer and not on the fact that we’ll sell a property for a pint of lager and a packet of crisps?

Finally, it’s time for agents to work together on a local basis, rather than being at loggerheads with their competitors – surely market conditions are enough to contend with for now.

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