CCOVICH said:
We have been quoted 0.5% (by Property Partners), 0.7% by Sherry Fitzgerald (who said if we got a better quote we could bargain) and 1% by Remax. VAT @ 21% in all cases. Signage and Myhome.ie included in the price.
Be careful not to be pennywise and pound poor CCovich – the cheapest EA could cost you very dearly. I say this because of my recent experience with an EA (should I name the firm here?) who I went with because they were the cheapest of all the EA’s I tried (0.75% plus VAT, incl of adv etc). After 2 weeks of sloppyiness, laziness, inaccesability, arrogance, not a solitary viewing or even an adv board in place I decided to rid myself of the stress by going with another EA who was recommended to me. The new EA (1% plus VAT, incl of Adv costs etc) was extremely professional, hard-working and ultimately successful. While one never knows for sure I reckon that switching before it was too late “saved” me circa €30K on what was a relatively modest transaction. The extra 0.25% plus VAT that I had to pay is nothing compared to what I gained.
In contradiction to what someone else said I certainly
don’t believe that “the market” will always settle the purchase price because the incentive for EA’s is to sell quickly, thus not giving “the market” sufficient time to find the true value. (This is not to mention the fact that EA’s can also be particularly sloppy in the selling process, doing further harm, let alone mention of any unethical behaviour). Just look at the incentives for EA’s given the present structure of EA’s commission. In reality, with very little effort, they can achieve about 90% of the potential purchase price (i.e. what the market will bear). To achieve the extra 10% requires hard work, some skill (in my view) and a number of extra weeks before concluding on sale. On a 0.5% commission they have very little incentive to go this extra mile and, my guess is, would much prefer to see the vast bulk of the cash early in their accounts! (I mean 0.5% on, say, an extra 40,000 is a paltry 200 – the first 2,000 commission is very easy and the next 200 is bloody hard work – this can’t be right!).
Ok, one maybe able to go through the stress and hassle of “pushing” the EA to work harder but I’d much prefer to have an EA who was recommended to me (i.e. who I was confident would work hard from the beginning) or, saving this, a better commission structure along the lines suggested by several people here already (i.e. sliding scale fees). Fair play to all those out there who go looking for this with EA’s – the more people who do the more likely it will become adapted by hungrier newcomers and, eventually, the more established EA’s. For what it’s worth, here is my suggestion (discounting the fact that a recommended EA is worth quite a lot in my book!):
- For the purposes of the example lets say you are selling a house which, judging by recent sales in the area, you think should fetch somewhere between 400K and 450K – lets assume the laziest most useless EA can achieve 400K whilst the best EA could possible achieve 450K – I think this type of assumption is not unreasonable, though others may disagree. Clearly in this instance you want the best EA, even if he is way way more expensive than the most useless EA.
- Set a dual commission structure of say 0.25% (plus VAT) and 5% (plus VAT) and shop around with EA’s on this basis, i.e., you, the vendor, ask the EA to choose the cut-off point. The EA who is most confident in their ability to fetch the market potential should, in a competitive market where he knows you’re going to play hardball, pitch the cut-off point at a much higher level than the useless lazy EA. You are then left with the option of which EA to pick based on the cut-off points selected by the EA’s plus, of course, any other knowledge you may have re the EA’s relative expertise, local knowledge etc.
- Of course the main point of this type of dual structure is that there is a very real incentive to get the highest price for the vendor (i.e. an extra 500 in the EA’s pocket for every additional 10,000 he can extract – versus an extra, lousy, 50 for every additional 10,000 extracted on a flat 0.5% commission structure).
Perhaps this is flawed, but I am convinced that a dual commission structure (or something nuanced like it) is far superior to the present situation whereby the incentives for EA’s work against the interests of vendors.