Are Estate Agents worth the money they charge?
The short answer is…… No.
That might sound controversial, coming from an Estate Agent but there are two good reasons for this.
There are many agencies that are just simply “not very good”. What they do is act as a “middleman” between your property and the property portals and bring nothing to the table in terms of knowledge, experience, professionalism, negotiation and marketing expertise. These types of Estate Agents are those that should be avoided and certainly aren’t worth the commissions they command for doing nothing short of sitting back and waiting for the phone to ring.
However, there are some very good Estate Agencies out there who will work incredibly hard and use every resource at their disposal to not only help you achieve the best price for your property but also provide a superior service, guiding you from start to finish providing expert advice and actually keeping the sale together once solicitors have been instructed to make sure it reaches completion. These types of Estate Agencies are out there and if the job is done properly, you will find that they are worth MORE than the commission they request, a lot more.
Before I reveal why I feel a good Estate Agency is more than worth the commission you pay I’d like to “plant a couple of seeds” which I hope resonate with you.
Firstly, when it comes to selling your property, quite often we are talking about the sale of one of the most valuable and cherished assets you will own in your lifetime. That is a BIG responsibility for you, an Estate Agent or even an “online agent” to be left to deal with.
Secondly, the nationwide fall through rate (properties which do not reach legal completion once the sale has been instructed) is currently at around 33%. This means that even once your property sells, taking into account the national average, it has a one in three chance of falling through and you having to start the process all again…
So, why is a good estate agency worth their commission?
Let’s take a look at just some (otherwise we could be here for a long time) elements involved in a successful sale and what goes on behind the scenes in the most reputable and successful Estate Agencies:
One of the important factors has got to be the presentation of your property.
A golden rule in selling anything is that higher demand equals a higher price and the only way you are going to generate the most demand in your property is to ensure it is presented its full potential.
What does this require?
Wide angle photography (professional photos are even better), an engaging property description, room sizes, floor plans etc. etc. Every one of these needs to be showing your property in the best light. A good agent will spend time on making sure that your property stands out and is presented to its full potential which is essential in both slow and buoyant markets. In most market conditions, your property is likely to be competing with several other similar properties for the same buyer so it needs to grab the attention of any potential buyers otherwise you could be waiting a long time for that sale.
Then there’s who will actually be dealing with the sale of your property. A good Estate Agent will invest in local staff who know the area well and have a wealth of experience in property. There’s a continuous journey of training and development involved which means that not only are agents asking the right questions when speaking to potential buyers but they’re recommending your property at every single opportunity and can expertly negotiate to ensure you achieve the maximum sale price for your home.
Most “online agents” don’t actually employ their own staff. They’ll outsource this to huge call centres based 100’s of miles away who have no idea about the area your property is located or if they have other similar properties available with them. Plus, when they’re not answering calls about property, they might be cold calling about personal protection insurance plans or the latest Government energy saving schemes. I know who I’d rather have dealing with the sale of my home.
If you’ve had the pleasure of arranging a valuation with an Estate Agent, you’ll find that most will want to talk to you about three things:
1) The value of your home
2) Their commission for selling your property
3) How they will market your property
Out of all three of these, the most important by far is the marketing of your property. The reason being is without excellent marketing, you’re probably not going to sell (only 50% of homes for sale in 2015 will actually achieve a sale) and you’re certainly not going to achieve the best price if you do.
When it comes to marketing your property, there are two areas which a good Estate Agent will take full advantage of – proactive marketing and reactive marketing. Reactive marketing consists of making the most of their own property website, the national property portals, the local newspaper publications, online SEO, newsletters, property magazines, video updates, handing out sales particulars etc.
If done well, this alone is going to bring about some interest but who is picking up the calls from these lead sources – an outsourced call centre member of staff based 100’s of miles away or a local, passionate estate agent who is working hard to get your property sold and can identify all the opportunities thanks to years of experience and training?
However, to achieve your full potential a proactive agent will be doing a number of things to generate more demand for your property. Ringing out your property to their database of registered buyers, speaking to customers that have viewed similar properties in the past, recommending your property whenever somebody registers interest or requests to view a similar property etc.
It is in the proactive marketing where most sales are made and the best price is achieved. Estate Agency always has been and always will be a people business. A good Estate Agent knows this and spends a lot of time building relationships with local buyers and sellers so that they can sell your property. 85% – 95% of property buyers will purchase a property within a five mile radius of their previous address. It’s all about the local marketing and the agent’s local presence.
Yes, the internet plays a part in a successful sale but it is only one piece of a rather large jigsaw puzzle of which all pieces must be fully utilised to ensure that you not only achieve the best possible price but do so in a timescale to suit you with the least amount of stress and hassle.
A final point I’d like to expand on for today is what happens once your agent has actually found a buyer for your property. As I pointed out earlier, the national rate of fall throughs for property sales is around 33%. It is indeed a worrying statistic. The last thing you want to happen once you’ve gone through the process of locating a buyer and accepting an offer is to have to have the whole process start all over again.
A good estate agent recognises this and will have some sort of Sales Progression process in place. Sometimes the sales negotiators deal with this, which isn’t ideal as they should really be concentrating on getting your property sold. It can mean that both the selling of properties and sales progression is sub-par as neither can be fully focused on.
Taking it one step further, a great Estate Agent will have their own Sales Progression Centre with experienced case handlers whose sole priority is to make sure your property reaches completion and keep you in the loop every step of the way. You will often find that agencies with this type of set up have a much lower rate of fall throughs due to the fact that they can identify any potential problems early and have the experience to deal with them quickly and efficiently. Establishing the lower chain and the upper chain – liaising regularly with buyers, sellers, conveyancing teams and solicitors is a time consuming business and can quickly turn sour if not handled correctly.
In short, there is a huge misconception that all it takes to sell a property is to get it listed on Rightmove and wait for the calls to come in. I’ve highlighted just a few key areas in this article as there is a LOT more involved but hopefully I’ve been able to reveal a bit more of what goes on behind the scenes and what really needs to happen if you expect to achieve the best price – in a slow or buoyant market.
With regards to commissions, the UK has some of the lowest Estate Agency fees in the world. In America, you would expect to pay somewhere in the region of 5-7% of the sale price and even upwards of that in Australia. In fact, the services of an Estate Agent are more expensive in Afghanistan than they are in the UK which brings some sort of perspective to the issue.
I can only speak for Hannells when I say that a good Estate Agency offers an incredible value for money service when you weigh up all of the above, plus the many other factors we haven’t talked about which are involved in a successful property sale. Especially when considering the fact that we can often achieve £1,000’s more on the final sale price and the extra peace of mind, assurance and experience you have access to whilst your property is on the market. We often sell properties for members of staff and even Directors at other local Estate Agents in the area which is a tell-tale sign of our service at Hannells.
Sure, there will be a presence from lesser forms of Estate Agency such as “online agents” as there are owners who will always go for the cheaper option (even though most of the time you pay a fee up front regardless of whether you sell or not). But do you really want to leave the sale of your most expensive asset to the cheapest bidder? Where’s the incentive to get a great price and deliver a fantastic service. It’s simply not possible. Sure you may save a couple £100 on your fees, but you could well be losing £1,000s on the price you actually achieve.
As a local, independent family run agency, we value our customers and we’re always looking for ways to improve what we do, whether it be our property presentation, marketing or customer service. That’s a value that you won’t find in many other agencies and it’s why we help more people to move in Derby and the surrounding suburbs than any other agency. We’re determined to provide our buyers and sellers with the ultimate moving experience.
Instructing a good Estate Agent to manage the sale of your property should be seen as investment in ensuring a great experience and a great price rather than a cost. Plus, you won’t have to pay a penny of the commission until the property is sold. There are very few industries, if any, that will employ this business model due to the risk of not actually receiving any commission if the property doesn’t sell.
So, if you’re thinking of buying or selling in Derby, don’t settle for second best – talk to Hannells.
Benjamin Brain
Managing Director
Hannells
P.S. For those of you that saw the recent Episode of Sarah Beenies “Selling Houses” where she encourages the general public to sell “Online” – we thought it quite a coincidence that she just so happens to have her very own online “agency”.
