Estate Agents Fees

Do you actually know how much it will cost to sell your property by using an estate agent?  A recent survey carried out by online estate agents www.scottishhousemove.com/ showed 32% though estate agents charged 1.5%, 45%thought 1% while  12% though 2% and 11% though something different.

In the same survey a whopping 68% thought estate agents actually charged too much.  One other question asked 104 recent buyers of property if they had actually walked into the estate agents office that sold them the property.  Only 4 of these buyers ever visited the office that was selling the property they bought.  Well known statistics show over 90% of buyers looking to buy property use the internet as their first starting place.  So if no one actually walks into high street estate agents these days, do estate agents need to be there?

More and more estate agents seem to be moving their operations online and taking their office off the high street and you can understand why.  An average shop on a UK high street can easily cost over £100,000 per annum in rent and rates alone.  Add on top of that staff wage, cars, etc a high street office can cost £300,000 to run.  So a high street agent has to pull in £300,000 just to break even. 

You have to remember that English and Scottish estate agent work on a different basis.  The vast majority of English estate agents carry out all the viewings on all the properties they are selling, while in Scotland an estimated 85% of sellers do the viewings.  Estate Agents in England tend to charge more that their Scottish counterparts but as they probably do more work that is understandable.  Certainly in England online estate agency has taken off more rapidly than in Scotland.

So if 90% of buyers look online first if very few buyers ever visit an estate agency office, why do we need agents on every high street?  Some established estate agents in Scotland are now moving off the high street and online like http://www.scottishhousemove.com/.  Traditional estate agents will argue that they have the local knowledge and have a large list of local buyers.  But if this was the case they would sell every property in under a week and we know they don’t.  Having a high street office is now really a costly marketing tool and this means estate agency fees on the high street will still average about £2,000.  Online agents by and large make a one off charge of hundreds of pounds and this is paid upfront.

What about private for sale websites that you can sell your property for free on?  Probably the best known is Channel 4 property Guru Sarah Beeney’s website topilo and this has thousands of private seller’s properties on it.  There are many more out there.  The issue here is as these sites are free there is no marketing budget to advertise their sites and they remain very much anonymous amongst property buyers out there.  If the public have never heard of your site they will  never visit it and therefore the private seller will  not sell their property.

The arrival of the major property portals like rightmove, prime location and zoopla who between them have over 2 million properties for sale, means that they can spend a million pounds on brand awareness.  They make sure the public know their websites are the places to look for property in the UK.  These websites are only open to estate agents, so private sites are not able to advertise on them.  Online estate agents and traditional high street agents spend thousands of pounds advertising with portals.

So will online estate agents conquer the world or will high street agents continue to have 95% of the market?  Certainly there is more awareness of online estate agents and in Scotland Home report providers like www.allscotsurveyors.com/ are also moving online to lower costs. 

Home Reports

Writing this on the 2nd December 2010. Two years have now passed and as Online Estate Agents we would like to share our opinion as to whether Home Reports have been a success or failure.  To found out more on Home Reports visit our website at www.scottishhousemove.com.

Lets look at the reasons for introducing them.  Stewart Maxwell (by the way Mr Maxwell actually attended my wedding - this was the first time I met him) a SNP member of the Scottish Parliament raised a private members bill for there introduction, which was passed by MSP's.  In my view they were introduced for two reasons

1)  To give buyers a clear picture of what they were buying.  Might sound simple but as most buyers only obtained a mortgage valuation when buying property, this survey was limited.  Very few people instructed a Scheme 2 survey. this survey gave a full view of the condition of a property prior to purchase.  So this could only be a good thing for the buyer.

2)  To stop multiple surveys.  In the Scottish market prior to the slow down, offers over was commonplace.  If you wanted £200K for your property price it at offers over £180K and see what happens.  Some areas would mean you paid 10% over the asking normally but others e.g. Glasgow West End or say Newton Mearns 40% was not uncommon.  Estate Agents would have several closing dates where buyers would make a sealed bid.  The most bids at a closing date I saw was 45 offers and each one of the offers had carried out a survey or at least paid for a transcript of another bidders.  So you could have paid £500 and missed out on a property.  Now multiply this by 3,4,5 or in some cased more.....

So has the introduction of Home Reports dealt with the above two issues?  The Scottish Government seem to think so.   I will steal a few facts from their interim report

60% of buyers found them useful
20% found the Energy Performance Certificate (EPC) and questionnaire useful
150,000 home reports had been carried

One of the real interesting facts was about what sellers paid.......

32 per cent of sellers paid less than 300 pounds and 45 per cent paid between 300 pounds and 500 pounds. For properties usually at the top end of the market, 18 per cent paid between 500 pounds and 800 pounds.

I think this is flawed info.  With most High Street Estate Agents charging a minimum of £350 I believe the figure of 32% who paid less that £300 should be nearer 10%.  It is still possible to get Cheap Home Reports from companies like http://www.allscotsurveyors.com/ who are like ourselves internet based and therefore can lower the cost.

Lets look at issue 1 - Buyers be aware

The Home Report details the condition of the property.  All the surveys are carried out by RICS qualified surveyors who detail things such as condition of the roof, guttering, dampness issues, structural flaws, walls, floors, joinery, electricity, gas etc etc etc.  These are then graded 1-3 and comments noted beside them.  In a lot of cases (in fact in many many cases) surveyors caveat their responses by saying "We found something that may be an issue but suggest you get a qualified person to look at it".  But at least this is a warning not all is well.

So yes this is good news for the buyer as they can see if their is any major issues before a purchase.  But be aware of the grading.  We sold two flats in the one close recently and two completely sets of answers from two different surveyors came out.  Surveyor A gave the roof a 2 and noted a few bits on pieces of damage but gave the close a 1 and no mention of dampness.  Whereas Surveyor B gave the roof a 1 and never noted anything but gave the close a 2 and mention dampness.  Same close two different replies??

Issue 2 multiple surveys

This has probably been negated by the crash anyway as very few properties now go to closing dates.  So potential buyers get the home report free of charge and decide what they want to pay.  As the Home Report contains a valuation, very few buyers pay over the valuation, in fact a very high percentage negotiate prices under the home report valuation.

The Scottish Government noted yesterday that in 30% of sales a further survey was required.  This could be for two reasons, the home report provider is not on the banks lending panel (all lenders have a list of surveyors they trust to provide surveys - if you are not on their panel they will not lend you money on the basis of that surveyor) and therefore they will instruct their own.  Who pays for this other survey?  I have found it is split equally between the banks, seller and the buyer. 

What about the refresh survey?  Even if a survey is carried out by a surveyor on a banks panel if the report is over 3 months old, they will not accept and the sellers needs to get a refresh done.  This involves the surveyor returning to the property and doing a quick update.  The bad news is the seller has to fork out another £100 plus vat....

So have they been worth all the cost and hassle to sellers?

YES & NO.

For an estate agent they have probably been a good thing.  I remember not so long ago when you visit a property and the value is £100K before you walk in the door.  You have just sold 5 similar properties all for this figure and the owner thinks their property is worth £120K because their garden is 3 feet bigger!!!  Remember these days?  Now a surveyor today would value it at £100K on the Home report and the seller is therefore more realistic in their expectations.  Job done.  Who needs a valuer these days?

It must also be a good thing for the buyer and seller that issues about their property are raised at the start of the process.  We have found many sellers who see issues on their home report and carry out repairs before putting their property on the market.  From a buyers point of view, you have the confidence that the property you have bought is not falling down.

On the cost side two things are happening, as new entrants come to the market the major Scottish surveyors may have to reduce their prices as internet start ups continue to gain market share.  The banks need to start accepting reports at least 6 months old as well or what is the point in having a valuation on the report?

The EPC no one understands either, just a document with some numbers and pretty graphs, but it is EU policy so they are here to stay....

So from the view of ScottishHouseMove.com a good thing with some minor issues.  However, with the Scottish Elections in 2011 will they be here for good?

Tips on how to sell your property

Tips on how to Sell your Home

Ever wondered why your property is not selling while your neighbours are?  It may be that your estate agent is not being honest and telling you what YOU NEED TO KNOW.  Some estate agents are afraid to offend you but if they do not tell you the truth and point things out that may stop your property selling, you can have as many viewers as you like but it won't sell.

At http://www.scottishhousemove.com we want to sell every property we market and is therefore vital to get your property in ship shape condition prior to the board being erected on your property.

So here we go:-

First impressions are vital. Tidy gardens, or close, and have a clutter free porch.

Clean up your house and make it clutter free. Consider some minor redecoration to make the place look ‘fresh’. Although, do not spend too much on this.

Dripping water from taps suggests faulty or worn out plumbing – sort it out.

Make sure property is well lit and bulbs are fitted (inside & out).

Don’t cram ‘stuff’ into cupboards and wardrobes. Storage space can be vital to a possible buyer.

Let the sunshine in! Open blinds & curtains, clean windows and let there be light.

Bathrooms sell homes. Scrub it, clean it and let it shine!

Dream spacious bedrooms are what buyers look for. For a spacious look get rid of excess furniture. Clean colourful bedspreads and fresh curtains are a must.

Get rid of the booby trap – flailing extension cords, slippery rugs, low hanging lights and any items left on the stairs.

Keep pets|out of the way and try to reduce pet smells to a minimum.

Turn down the stereo and TV. Loud is no good!

If you choose to conduct viewings yourself be friendly and let the conversion flow naturally. Viewers want to concentrate on your home.

Never apologise for any shortcomings you think your home may have. If someone makes a derogatory comment, ignore it and move on. 

Please don’t try to sell your ‘extras’ you no longer need – furnishings etc.. You may lose out on the ‘big’ sale.

If a viewer wants to talk price, quickly direct them to your http://www.scottishhousemove.com estate agent to negotiate price.

http://www.scottishhousemove.com estate agents are trained price negotiators. Let them deal with your viewings, we are confident you will appreciate the difference.

Clean & tidy

Light neutral decorative colours

Heated house for viewers

Clutter free rooms – spacious as possible

Shared areas (hallways etc) to be clean & tidy

No pets or pet smells

No noisy neighbours (if possible)

How much?

At http://www.scottishhousemove.com/ we are always trying to stay ahead of our high street competitors both on price and service.  We ask all our potential sellers to compare our rates with high street agents but do you know how hard this actually is. 

We set ourself a task.  Call 50 Scottish high street estate agents and ask them 3 things.  How much do they charge for a Home Report, how much do they charge for a marketing fee and what is their commision.  We told them our property was valued at £150,000.  The reason we told them the value was so they could not tell us we cannot comment on what we would charge until we know the value of your property.

Anyway the results in our view show how much estate agents simply want to get their sales people out to sellers houses.

42/50 gave Home Report prices over the phone (these ranged between £470 - 620)
38/50 have their marketing costs (these range between £235 - £470)

But amazingly only 13/50 gave us their sales commision.  37 estate agents even though they knew our house was worth £150,000 refused to give us their charges.  When pressed why most of them could not give us a figure they came up with the same excuse it depends on the location (why, do you charge me more for being in a better/worse location?), the value (well we told you it was worth £150K), the valuer (i.e. their salesman) decides the commission (so if you tell him you have 4 other agents out he will come and go, if you hint it's only them they up it?).

This is a service industry, their are no real variables in our view.  That is why we publish our prices.  The same service for all our sellers big or small houses.  The general view of what it costs to sell is around the 1% mark plus vat.  But some of the corporates who have a strangle hold on areas do and will charge 1.5% plus vat.  So a house worth £150,000 can cost a seller over £3,000 to sell.

So don't count on trying to find out how much your high street agent charges until you have to sit through a long sales pitch from the valuer (remember the valuer is an estate agents salesperson).  So come on you high street estate agents why not start being upfront with your customers and tell them what you you charge?

Can't see it happing can you?

UK House Prices

Are property prices really rising in the UK?  Here are http://www.scottishhousemove.com we think prices have remained flat if not dropped in the UK in 2010.  However, most agencies who report on property prices agree that prices have rises year on year.

In October 2010, rightmove the UK’s largest property website recorded a 2.9% year on year change.  However, while both the Halifax () and Nationwide () reported rises they were on a smaller scale.

Rightmove had some other interesting stats regarding the market.  November sellers cut their asking prices by 3.2%, the biggest monthly drop since December 2007.  Falls now recorded in 4 out of the last 5 months, as year-on-year price growth heads for zero.  24,028 new sellers coming to market per week, down 9.1% on previous month yet still outstripping muted mortgage approvals by 2 to 1

Unseasonally high number of unsold properties and longest ever time on the market mean sellers face tough competition, while winter buyers hang back waiting for bargains.

So are property prices really rising?  Ask an Online Estate Agent  or any other estate agent and they will tell you the same story.  Prices are very much static and in most areas prices are dropping as sellers reduce their prices in order to secure a sale.  Buyers especially those who have sold or are in no chain are bargaining hard and seeing thousands knocked off asking prices.  Is it just the time of year we hear you ask?  Our sellers are using any reduction in their asking prices to secure a reduction on their purchase, which in our view is what you have to do.

So what about the prospects for 2011? Will cautious sellers come to the market or not?  Well as in every other down turn in the property market, people still need to move.  Family’s need larger properties, the owners of the big house need to trade down, the young couple want to move in together, the old couple who want to move out to go their separate ways, so the market trundles along.  But it does not look good for 2011.  VAT goes up to 20% in January 2011 and public sector jobs are under threat.  And on that thought what is the Government doing to stimulate the market?  Nothing in my view.  Banks need to start lending or be forced to lend.  Government needs a clear strategy or even a strategy would be a good start. 

Some corporate estate agents are even having Christmas sales in their offices to sell their stock.  In our view this is simply so they can get some sort of commission, rather than a real effort to sell their client’s property.  In fact we calculated one branch in one week knocked off £550,000 across their clients asking prices.

So are prices actually increasing?  Maybe in London, rich Arabs and others are buying due to the value of the pound but outside London we think not.