Things are looking up for the UK property market and, unfortunately, therefore rather gloomy for estate agents. How so? When things are somewhat tough estate agents can attempt to sort of justify their high fees by demonstrating how long it takes to sell a property, how much effort has to go into the process and how few transactions are ongoing from which to net the spoils of their labours. (I use the term ‘labours’ very loosely indeed however).
But now, if we listen carefully, we might just be hearing the popping of celebratory champagne corks at the news from the Centre for Economic and Business Research. And that news is? According to the Centre house prices will rise 16% by the year 2015. It really ought to be the best news any estate agent could hear, after that drought in sales since those happy, happy days of 2007, and with all the doomsaying since then from pundits and economists alike. But it might not be the best news in the world for traditional estate agents in their overpriced, overstated high street branch offices, because once their job becomes easier once again, it’s going to become increasingly difficult for them to justify their outrageously high commissions.
Outside London, a typical selling fee can lighten the wallet to the tune of around 4,000. And in London, we’re looking at almost twice that amount. When house prices start their climb back upwards, the property bandwagon is going to become a very popular place to jump. Transactions will become more frequent, more plentiful and much faster, but the amount of alleged blood, sweat and tears put in on any given working day by any given James, Justin or Julian will still leave them with enough energy at the end of that working day to hop into their heavily-tattooed Smart car and pop out for a bottle of Bolly or two with any other given James, Justin and Julian. But at some point the media that giveth will become the media that taketh away: questions sill be raised in both broadsheet and tabloid alike as to how a job requiring such minimal effort can net such maximum commission. And the public will want answers.
Until the property market starts its upward trend for real, there’s not much point trying to play off one estate agent against another when it comes to commissions, but as soon as that trend starts there’ll be even less point because the best place to go when it comes to those selling fees is … online. Online estate agencies can spread their marketing message much further afield than traditional offline agencies. They’re also as knowledgeable, professional and effective as their high street cousins. Perhaps even more so. And they can actually justify their fee scale – not that they’d really need to, because for the most part those fees are about one-tenth of the commissions charged by those high street cousins.
As the property market blossoms once more, it may well be a case of the demise of the estate agency industry as we know it. Victims of their very own success. As prices rise towards the peak that the Centre for Economic and Business Research predict, typical selling fees could drop by a far greater amount at the same time. Estate agency is dead. Long live estate agency?
Home buyers don’t bother to traipse into estate agency offices these days. 90% of them search for houses on the internet. eMoov cover the whole of the UK but save money by not having hundreds of properties which you otherwise end up paying for in high estate agents fees. eMoov are online estate agents. They are a step up from private house sales and ten times cheaper than the High Street. Why pay more?
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