Two thirds of agencies prepare to raise sales fees this year
New report reveals that industry is getting fed up with 'race to the bottom' as higher NI and other costs eat into their profits.
Estate agency bosses are fed up with the ‘race to the bottom’ with sales fees and nearly two thirds – at 64% – plan to increase their commission rates this year, a new report has claimed.
A further 31% of agents say they are looking at new business models including performance-based fees and retainer fees, while some are looking to withdraw entirely from ‘no-sale, no-fee’ and adopt a more auctions-style approach.
The revelations, which come from canvassing a wide range of estate agency leaders to create a report by iamproperty, highlight how many agents feel they are at a commercial crossroads and must now find either new income streams or raise their existing property sales fees.
Key issues driving this include overall raised running costs – such as NI and other PAYE items hitting the bottom line – , while many agents have begun charging clients for money laundering compliance after previously ‘sucking it up’ to win business.
One agent told the poll that the NI increases have cost their firm an additional £350,000 a year, or 10% of its turnover.
Another big issue facing the industry, iamproperty says, is that many vendors don’t have a clear understanding of what an estate agency and its staff do to justify the fee, something Purplebricks has always used as a stick to beat its traditional competitors with its ‘commisery’ marketing campaigns.
Tech trouble
It is also claimed that tech, rather than helping agents be more efficient, is creating a narrative that it is technology that sells homes, not core estate agent skills.
“We are so proud to be launching this report, because it shows the market as Estate Agents see it and experience it, street by street, sale by sale, not as politicians describe it, headlines frame it or trends predict it,” says Ben Ridgway, Co-founder at Iamproperty.
“We were able to explore big topics like AI, regulation, data security and fee models, but through the eyes of agents, to really understand the future they want and understand how they are balancing people, tech and tools to stay resilient day to day.
