Estate Agents to charge even more now house prices are dropping!
The Telegraph recently remarked on a trend toward higher Estate Agent charges to maintain their profitability in a time of lowering house prices. In an article dated 28 July, the Telegraph Personal Finance Correspondent, Myra Butterworth reported that some Agents are increasing their fees to as much as 2.5% from the typical previous charge of 1%-1.5%.
The Telegraph reported the Senior Negotiator at the Estate Agents, Bonnets Estate, as saying that they had introduced a new flat fee of 2% and had gone as high as 2.5% recently for multi-agency instructions. Bonnets’ David Beakon said: “A lot of people are getting desperate to sell and so they put their property on with a load of agents. The chances of us selling it when we are competing with five other agents are slim and in a difficult market, you don’t want to spend the time on these sorts of properties if you are not going to get a good fee.
“If people walk away because the fee is too big then that is fine with us if it is something that we do not want to deal with.”
Jonathan Hewlett, head of Savills London region, agreed with this sentiment, saying: “With the market being much tougher and sales taking a lot longer to sell, our clients are aware that their property will require more marketing exposure and many more viewings to achieve their goal of a sale. So they are less inclined to negotiate with us on our fees.”
According to Hometrack, the average home has dropped in value by £7,800 since last summer and is now worth £168,500. This means that the new Agents fees would cost a whopping £4212 (just short of £5000 including VAT) in addition to the drop in the home-price for the ‘average’ householder.
Time for a private sale to recoup your losses anyone?