Inspiration

Our Commission Cutting Weakness

Raising fees Instantly - It CAN be done!

Estate Agency fees percentages have spiralled downwards over recent years, and we only have ourselves to blame; but now is the time to reverse the trend – and it’s easier than you might think!

Increasing agency fee percentages is my passion. Anyone who has attended any of my courses will tell you that avoiding commission cutting is an aspect of estate agency training that really excites me.

An agent came to value my house the other day. I asked him what his firm charges. He said usually 2% but he would do it for 1.25%. I was just about to ask him why he so readily wanted to throw away 33% of his revenue when I realised I should actually keep quiet and take advantage of his generous offer.

But his attitude and his weakness over the fee issue are absolutely rife throughout the UK. We charge the lowest agency fees in the world and we don’t seem to care. It’s all part of what I call the “Do you want to go on our mailing list” syndrome (“No I don’t want to go on your stupid mailing list. I want to buy a house! – Please help me, somebody”)

The trap that many agents fall into is to let our service become a commodity. It doesn’t matter which agent you choose, the red one, the green one, the blue one – they all apparently do about the same thing and would probably sell your house within a few days or weeks. And with so little differentiation between agents, the only question a client can think to ask is, “How low can you go?” There are no other distinguishing factors from which prospects can discern value. We have made it too easy for people to judge us on price!

With competitor pressure, bullying by clients and our inability and unwillingness to protect ourselves, we have allowed fees to spiral down to virtually nothing in some cases. For the untrained agent, fee cutting is the line of least resistance - and the easiest way to get an unprofitable instruction and a mediocre business.

Remember, we don’t get paid to market a property, to generate offers, or to offer advice. All this is FREE. Most of what we do is free. We even stump up hundreds of pounds in adspend running the risk that we might not see a return on our investment. Some agents tell me that they fail to sell up to 50% of their listings for one reason or another. Yet they keep plugging away using the same old methods – working harder rather than smarter!

We have allowed our public to walk all over us, and now is precisely the right time to get our fee rate up again.

“But if we don’t drop our fees, the agent over the road will get the instruction” Rubbish! Steven Shipperley, MD of Connells, kindly contributed to the Revolutionary Estate Agency Seminars I co-presented. He said, “Undercutting fees is not good for your business. I have had no experience in my business where, if we halved our fees overnight, we’d take the market place. It just doesn’t work like that. Conversely, our best branches, the branches with the biggest market share and doing the most house sales, are the ones who also charge the highest fees. So if there was any correlation between dropping your fees and winning market share, I have not seen it yet.”

Much of it is in the mind. A recent survey sought to establish what motivates a vendor to choose one agent over another. Of 1200 vendors questioned, only 4% of them said that the level of agency commission was the most significant determining factor in whom they appointed to sell their home.

Yet I’ll bet many of the remaining 96% asked for a fee negotiation anyway. Because you do, don’t you? So is it really a refusal? Or simply a request! Most people are usually “just asking” and the well-trained agent can almost always turn this into a profitable result.

Of course the public have cheaper alternatives – that’s democracy. But the best agents position themselves so that people will regard them as their agent of choice - and be happy to pay for their service, style, ethos, attitude, enthusiasm and corporate personality. Vendors are actually becoming much more discerning about which agent they choose and how we manage our reputation locally is critical.

When it comes to securing high quality, saleable listings, at the highest fee level, ideally nudging up towards the 4% mark, you should seek to become the unquestioned agency of choice, by having earned the right to the business – just like the reassuringly expensive Stella Artois. If Starbucks can charge £3.50 for a coffee in Leeds, when you can still buy a cup of coffee across the road for 50p then there’s hope for us all!

Last year I presented a number of open “Raising Fees Instantly” seminars, which included over 100 actual client dialogues. The results have been staggering with some agencies having doubled (yes doubled) their turnover as a result. One £6m fee turnover agency added 37% to its bottom line and another now charges 2.3% in a 1% area - and they have a 43% market share! Even smaller one-man bands have reported a substantial rise in their market share which tends to accompany a fee increase. These 3-hour seminars are now only offered to agencies on an in-house basis and I guarantee the results. If you would like to book one for your own estate agency, then please contact me. And don’t forget to invite your competitors!

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© Richard Rawlings 2010
Richard Rawlings is the founding director of Estate Agency Insight, which specialises in helping estate agencies harness opportunity through innovative method, marketing, publicity, and training. He can be contacted at or on 0845 838 1354.

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