Is it a red flag if an estate agent is willing to reduce their fees?
Are you thinking about putting your property on the market, moving somewhere new, a fresh start? You might be thinking that the best way to do this is to opt for the cheapest or see if you can negotiate the fees down. This article explores whether this is an excellent idea for you or catastrophic for your moving experience. Read more to find out.
When you contact estate agents to arrange valuation appointments, you probably won't ask everyone in your area to visit. The average homeowner will have three or four valuation appointments, and most towns have between seven and ten estate agencies. So your first decision will be, which agents do you invite?
You may narrow this down by selecting the cheapest and the biggest, or at least the agent that seems to have the most properties for sale in the area. Maybe you will ask the one you like the look of; perhaps you like their branding or the way they use photography. Then you will have your property valuation appointments.
Sitting through three or four valuation presentations from estate agents can feel laborious, and really, if you're being honest, you're not all that interested in how and where the property will be marketed; you just want to know the valuation price. Most sellers sit on the edge of their seats, feigning interest in the presentation from the agent, waiting patiently for that all-important valuation figure.
If you're happy with the estimates quoted, your next decision is which agent to choose. Now, because there is a chance that your attention waned slightly during the presentation, you might not be able to remember everything you were told, but you will know the fees that the agents will each charge. So, do you opt for the cheapest? If you do, more money is left in your pocket at the end, and all of the agents seemed to say similar things, right?
Or do you go to the agent you like the most and ask them to reduce their fees? You could get a more expensive agent for the same price as the cheaper one if they say yes - bargain!
This is a terrible idea, and here's why.
If the agent you select reduces their fees, they'll have to try to sell your home with a lower profit margin. This could mean that they'll not be able to devote as many man-hours and marketing strategies to achieving the sale of your property.
If you decide to go for the cheapest agent, you may find that they can't fully market the property because they don't have the budget.
Consider also for a moment that if the agent agrees to a reduction of their fees, without any negotiation, how do you think they will perform for you when negotiating the offers on your property? Will they try to maximise the price from the buyers, or will they simply accept the first offer?
Remember, selling a property takes months, so you are engaging the agent to work for you for at least 3-9 months, as they will be there throughout the process, right up to legal completion. You have to consider that an estate agent is a business, and they are not there as a charity but to make a profit. Staff wages need to be paid, and office overheads will need to be covered too.
But also, the negotiation element of a property sale is a skill. It can make the difference between a mediocre offer that will get your house sold and a great price that will leave you more than able to cover a slightly higher fee percentage.
A good agent will be able to justify their fees and negotiate hard for you when you receive your offers. If you consider knocking down the prices or haggling to get a deal, you might regret this further down the line.
If you are considering selling your home, get in touch to find out how we ensure the best prices for our sellers.