Estate Agents Prices - Increase of 33%
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KalEl
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I would have thought with less available commissions in a slowing market and many EA's logically competition among EA's will heat up resulting in lower fees?
Obviously if it becomes apparent certain EA's get better results in a tougher market they will indeed be able to command higher fees.
I find it interesting that the only thing that people haven't taken Murray up on is the assertion that EA fees have dropped by 33-50% in recent years, and it's the only thing where I think he's flat out wrong! EA's percentages have dropped in that proportion; however, the real terms fees have, as a result of house-price increases outstripping other inflationary factors significantly for the best part of a decade, risen. What's being portrayed as some sort of re-normalising as the market slows in fact seeks to maintain the fees at the "new" and higher levels.
Sorry Murray! I do think your posts on this subject, quibble aside, are quite balanced and reasonable. And I agree that many of the cowboys will, happily, find things more difficult. I've encountered a couple of the spoofers who've been selling in spite of themselves, rather than because of any salesmanship or professionalism, and by contrast have also dealt with some extremely professional, clued-in and hard-working agents. In a more difficult market, I know who my money's on...
Sorry Murray! I do think your posts on this subject, quibble aside, are quite balanced and reasonable. And I agree that many of the cowboys will, happily, find things more difficult. I've encountered a couple of the spoofers who've been selling in spite of themselves, rather than because of any salesmanship or professionalism, and by contrast have also dealt with some extremely professional, clued-in and hard-working agents. In a more difficult market, I know who my money's on...
Less houses for sale (rising market, low inventory) means greater competition for houses to sell and consequently lower fees. More houses for sales (falling/stagnating market, high inventory) means less competition for houses to sell and consequently higher fees.
You have to see it from the EAs POV. If they already have five or six houses to sell in an area and only three serious buyers, why would they want to take on another house unless the seller is willing to pay more than the existing inventory on the books?
As a seller, if you think the price for the EA's service is too high, then simply avoid buying their service.
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KalEl
Guest
I think you've got this the wrong way round.
A slowing market means less transactions. Lots of EA's, few sales means EA's fighting over the little business there is.
EA's do not control this market...buyers and sellers do.
I agree with Room305 , and disagree with KalEl - it is not the wrong way around at all - its basic economics as room305 says - you seem to be taking the obvious 'anti-EA' opinion .... but I cant be a*sed arguing the toss !- so I guess we'll just see , I have worked through all this type of market before and that is what happened.................................
You have gone too far KalEl !
A profession ? like engineers , accountants , lawyers , having spent years studying a recognised body of knowledge ? I'm not beeing snooty , I have respect for any person who learns a trade , plumber , electrician , doctor ,footballer ......
You cant call Estate Agent a Profession.
pjq
A profession ? like engineers , accountants , lawyers , having spent years studying a recognised body of knowledge ? I'm not beeing snooty , I have respect for any person who learns a trade , plumber , electrician , doctor ,footballer ......
You cant call Estate Agent a Profession.
pjq
Rocket Science:
Selling property is NOT rocket science.
During the boom queues of people out the door of show apartments and people sleeping out over night will show that for the last 5 years any one could have walked around a show apartment taking deposits.
In my experience many of these could barely read the plans.
When competition was at its "fiercest" between EAs in the above time (good) property still was not diffficult to sell.
Now thaty there are more properties and less buyers property is harder to sell because it takes more time but spending more time at sometyhoing makes it less efficeient but no more "complicated".
" Only returning to " the pre boom commision levels still equates to huge average commissions in todays times as previously pointed out, as the price of property has risen exponentially in recent years.
I would also liike to see how many of the actual negotiators are seeing a 33% increase in their personal commission payments?
The increase in fees agreed by all the big EAs is in effect cartelling is it not?
If a smaller co. tries to remain more competitive by keeping commissions low, in the slowing sellers market, they run the risk of going bust. Therefore this cartelling by the big guys can be seen as very uncompetitive.
It certainly does not help competition and I also fail to see the advantage to the consumer in paying more far a service that the scope of remnains the same.
This situation removes some of the incentive for EAs to become more efficient in the downturn like the rest of us have to become.
Selling property is NOT rocket science.
During the boom queues of people out the door of show apartments and people sleeping out over night will show that for the last 5 years any one could have walked around a show apartment taking deposits.
In my experience many of these could barely read the plans.
When competition was at its "fiercest" between EAs in the above time (good) property still was not diffficult to sell.
Now thaty there are more properties and less buyers property is harder to sell because it takes more time but spending more time at sometyhoing makes it less efficeient but no more "complicated".
" Only returning to " the pre boom commision levels still equates to huge average commissions in todays times as previously pointed out, as the price of property has risen exponentially in recent years.
I would also liike to see how many of the actual negotiators are seeing a 33% increase in their personal commission payments?
The increase in fees agreed by all the big EAs is in effect cartelling is it not?
If a smaller co. tries to remain more competitive by keeping commissions low, in the slowing sellers market, they run the risk of going bust. Therefore this cartelling by the big guys can be seen as very uncompetitive.
It certainly does not help competition and I also fail to see the advantage to the consumer in paying more far a service that the scope of remnains the same.
This situation removes some of the incentive for EAs to become more efficient in the downturn like the rest of us have to become.
In a boom market an EA can afford to keep more properties on his books, they shift quicker thus costing less to market and service the clients. However if a property stays on the market for a long time, it becomes less cost effective to market this property. The EA has to cover their cost base, overheads such as rent, fuel, wages etc all add up.
For a property in a boom market, you can sometimes expect to show it to prospective purchasers at most 7 times before you get an offer in. For a property in a falling market, you can expect to show it twice, if not even three times. Each viewing alone costs money.
I do not understand how you feel that the rising of commission rates represents cartelling. The cost of maintaining a property on the market for longer is simply being passed on.
As I have pointed out already, if you are unhappy with a high commission rate you can simply go elsewhere. Nobody is bound to choose a particular EA and therefore not bound to choose to pay high commission rates where they feel that it does not represent value for money.
For a property in a boom market, you can sometimes expect to show it to prospective purchasers at most 7 times before you get an offer in. For a property in a falling market, you can expect to show it twice, if not even three times. Each viewing alone costs money.
I do not understand how you feel that the rising of commission rates represents cartelling. The cost of maintaining a property on the market for longer is simply being passed on.
As I have pointed out already, if you are unhappy with a high commission rate you can simply go elsewhere. Nobody is bound to choose a particular EA and therefore not bound to choose to pay high commission rates where they feel that it does not represent value for money.
Im not debating the consumers free will to go any where they choose as of course that option is there.
My issue is that of cartelling, if all the EAs get together and agree to raise rates and to stick to that what is it then?
A competitive market is where these parties alll take their own actions, some raising prices, some even lowering, some closing offices...whatever.
It is uncompetitive to give the public ( who in general know little better) the option that: if you want to use a big name reputable co. you have to pay an increase, otherwise as you say, try your chances elsewhere.
My issue is that of cartelling, if all the EAs get together and agree to raise rates and to stick to that what is it then?
A competitive market is where these parties alll take their own actions, some raising prices, some even lowering, some closing offices...whatever.
It is uncompetitive to give the public ( who in general know little better) the option that: if you want to use a big name reputable co. you have to pay an increase, otherwise as you say, try your chances elsewhere.
ButtermilkJa
Registered User
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Honestly, I think you're getting mixed up here. This is indeed what happended when the likes of H&McD sent their young ones around to new launches to just look pretty and take deposits, yes anyone could have done it. But strictly speaking, they weren't estate agents. They were simply employees. They wouldn't know how to value a property in a changing market, or have the sklills necessary to persuade a prospective client, or plan a merketing campaign to sell a property. And you weren't directly paying these people for the service when you bought a new build.
The EA's referred to here (in particular by murray I'd assume) are the experienced EA's who can value properties and know what to do and when in order to sell it. There is a difference between 'showhouse EA's' and those more experienced ones who deal in the second hand market.
I understand that...........
..........but regardless of who was collecting the deposits the revenue was coming in to the EA practice shall we say, with very little effort required. The properties of all sorts really sold themeslves even individual residential units in the 2nd hand market, you suggest, just walked off the shelf. They often even sold units off plans and immediatley were given the same unit for resale with an existign list of purchasers not succesful 1st time round...fish in a barrel.
Thats not really the main point however, it possibly seems (is?) anti competitive for any group of large well known compaines, in any sector, to group (cartel?) topgether and agree a unilatteral fee increase?
..........but regardless of who was collecting the deposits the revenue was coming in to the EA practice shall we say, with very little effort required. The properties of all sorts really sold themeslves even individual residential units in the 2nd hand market, you suggest, just walked off the shelf. They often even sold units off plans and immediatley were given the same unit for resale with an existign list of purchasers not succesful 1st time round...fish in a barrel.
Thats not really the main point however, it possibly seems (is?) anti competitive for any group of large well known compaines, in any sector, to group (cartel?) topgether and agree a unilatteral fee increase?
Believe me when I say I have no love for EAs. The few I've dealt with have been generally incompetent or crooked. I'm sure there are a few like Murray who are decent and hard working but until the industry is properly regulated I'm not going to try and find them. The industry has probably lost my business for life.
As a profession (what else would you call it if they do it for a living?) they are universally disliked. So people are using this increase in fees as justification for having a rant against them. The hike is a response to changing market conditions, no different than airlines adding a surcharge for higher fuel costs.
As for people arguing that fewer property sales should mean prices go down. This is completely illogical. When are you likely to get a better price for trading in a used car - when the dealer's lot is empty and he cannot get enough used cars to meet demand or when his lot is full of used cars he cannot sell?
If you think the rate hike is unjustified don't pay it, you have a choice. You'll be in the minority though. If I didn't hold so many of them in such contempt I'd almost feel sorry for the EAs. As they spend the next few years dealing with illogical buyers who refuse to believe market conditions have changed, are staggered that there is not a queue of buyers lining up to view their overpriced hovel and insist on blaming the EA for their house failing to sell.
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KalEl
Guest
Right...so if the car market collapses and nobody is buying cars the dealers will increase the price of cars and give less generous trade ins?!
That makes no sense at all.
Fewer sales, lots of EA's...how anyone thinks this automatically leads to an increase in fees is beyond me. There seems to be this belief that a public who have little or no belief or respect for this "profession" are going to stomach these ridiculous increases. In quieter times the EA's will be crawling over each other for the little bit of business there will be. They'll undercut each other.
I think EA's need to realise they're not surgeons.
The houses would sell with our without them...no EA is ever going to "sell" me a house.
Well Ford dealers might and look where they are
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KalEl
Guest
LOL...true!
I dont dislike them my other half, IS one...any way.
Ryanair are the most profitable airline out there, they have no fuel surcharge. Instead of hiking prices they work more efficiently...my point.
I know I dont have to use an EA that does not defend the price hike in any way or provide a good argument for it.
Its like saying most people dont know enough about the industry, to NOT use an EA, so they will use an EA regardless and anyone else can do what they want...... Cos this group of EAs, making this decision, is big enough and bold enough to do what they want and the punter will know no better.
As I've already pointed out the cost of maintaining a property on the market for a longer period of time will most likely be passed onto the customer. Otherwise it will not be financially viable for the EA to market the property.
I don't understand how this represents a cartel?
In order to come up with the fee amount or % that will be charged to the client, the EA has to look at their cost base etc and consider how much it will cost them to market the property, keep staff in employment and run the office.
Fair play to any EA who will be able to keep their fees at the current rate in a falling/stagnant market and still pay all the bills and keep their staff in employment. I don't think that many will be able to sustain it in the long term.
I'm getting the impression though that I'm talking to a brick wall and no matter what I say you will continue to be convinced that the EAs in Ireland are operating a cartel.
I don't understand how this represents a cartel?
In order to come up with the fee amount or % that will be charged to the client, the EA has to look at their cost base etc and consider how much it will cost them to market the property, keep staff in employment and run the office.
Fair play to any EA who will be able to keep their fees at the current rate in a falling/stagnant market and still pay all the bills and keep their staff in employment. I don't think that many will be able to sustain it in the long term.
I'm getting the impression though that I'm talking to a brick wall and no matter what I say you will continue to be convinced that the EAs in Ireland are operating a cartel.
I never said they would increase the price of cars. I said they would decrease the price they offer to you as a trade-in (i.e. increase the percentage mark-up when they resell). If you don't like it they don't care, at that stage they don't need your business.
Remember, the EA doesn't need to sell *your* house just any house. If there are lots of sellers and few buyers, whose house is he going to sell? That's right, the one who pays the highest commission. If you are a seller who believes they need an EA to sell their house (i.e. the vast majority of sellers) you will be more desperate to sell your house than the EA is to put it on their books. Hence prices for the EAs service will rise.
With a massive inventory of unsold property to shift, why the hell would they be fighting with each other over new clients? The only thing they will be fighting over is buyers. Watch as the service on offer for the buyer increases. Forget about the days of EAs not turning up for viewings, soon they will probably collect potential buyers and drive them round to look at houses.