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Fees: how to escape the race to the bottom

Estate agency fees seem to be on a downward spiral, but according to Kevin Ellis from the Land & New Homes Network it doesn’t have to be that way.

Kevin Ellis

New building development image“£99 to sell your home.” That’s the cheapest claim I’ve seen from an online-only agent.

While not casting any aspersions over their ability to deliver on that statement, you’d have to sell a whole lot of properties at that price to just about break even, it would seem.

Fixed fees are becoming more and more common. No, let me rephrase that: eye-wateringly cheap fixed fees are on the rise while the ‘traditional’ percentage of sale fees seem to be on the decline.

The race to the bottom is on, but my fear is that it’s a contest where no one wins.

Agencies will need pockets as deep as a Russian oligarch to sustain this cheap fee strategy.

Ultimately vendors will lose out in terms of service, the quality of marketing their homes receive and everything else that happens when you pay peanuts.

The good news is it’s not all doom and gloom.


There is a way to step out of the race to nowhere and stride onto the path leading to good commissions, sustainable income and a brighter future for your agency.

I’ll be as bold to say the future’s bright and the future my friends, is Land and New Homes.

Kevin Ellis image

Kevin Ellis

By growing your agency’s land and new homes offering, you enter a market place where costs are measured but the slashing of fees and subsequently service is seen as a huge negative.

There are three main reasons to develop a land and new homes strategy for your agency.

Land deals – land deals. So good we said it twice. But it’s true. If you develop a culture within your agency of all your staff being trained and aware of how to spot a land opportunity it’ll pay big dividends.

That’s because developers and house builders need land, and if you find them suitable sites you’ll often win the future business to sell the homes built on the land you sourced for them. There’s potential here for several deals and good commissions.

You are also perfectly placed for additional business related to this including part exchange, financial services, conveyancing and second hand home sales and lettings.

The race to the bottom is on, my fear is that it is a contest where nobody wins. You’ll need pockets as deep as an oligarch to sustain the cheap fees.

Developers are different. Unlike some domestic vendors fees are not the be all and end all to developers. Of course, they are cost conscious, but they also tend to realise that if the selling commission is too low something gives – whether that be the agent’s motivation, the quality of marketing materials or the calibre of agency staff dealing with enquiries and transactions. Developers and house builders realise there’s value in using experienced, knowledgeable agents.

I’ve seen on several occasions the positive effect that working with demanding developers with high standards has had on agencies who raise their game across all parts of their business.


Reflected glory. This is something we’ve noticed happening to several of our members. When you start working with respected developers and house builder brands it shows domestic vendors that your agency is obviously doing something right. When pitching to Mr and Mrs Smith at a valuation it helps to point out that you work with prestigious local (and national in a lot of cases) developers. This creates the ‘well if it’s good enough for them’ thinking in the homeowners’ selection process and helps to win the instruction without relying solely on a cheap fee.

Our members’ focus is on showing that strong local independent agents who are the experts in their locality provide the very best of service to a house builder and / or developer.

The time and effort agents put into building relationships and working with developers and house builders is not dissimilar to that spent struggling to win ‘cheap and cheerful’ instructions with cut price fees.

The big difference is that the land and new homes sector offers estate agents a chance to showcase their expertise, local knowledge and marketing and get paid for it accordingly.

Developers and house builders want value obviously, but they also want all the above skills and are willing, as proven by our members, to pay the going rate for it.

And that’s a long-term approach worth looking at if you want your agency to escape the rat race to the bottom.

Kevin Ellis is the founder of the Land & New Homes Network which helps non-competing agents across the UK win more business in this rapidly growing sector. 

January 26, 2018

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