No Sale, No Fee - A Good Idea?
Hot on the heels of the legal profession's adoption of the 'no win-no fee' business model, there are now many estate agencies offering their services on a 'no sale-no fee' basis. At first glance, it makes a certain amount of sense to pay an estate agency's fees only once you've exchanged contracts, as opposed to paying a fee for just putting a house on the market.
And it's a good way of testing the market to see what kind of price a property would fetch, as well as being a way of starting the selling process when you're not really sure you want to move in the first place. This way, if you take your home off the market you won't get charged a penny - even if the agent has found you a buyer. Isn't that great? In fact, with no sale-no fee you can really wind up estate agents, even to the point of withdrawing from a sale seconds before contracts are exchanged and there's nothing they can do about it. How wonderful is that?
And therein lies the reason that no sale-no fee is deeply unfair as a means of levying a cost to property sellers. How so? If you are a tyre kicker, a messer or a fair weather property seller, an 'unmotivated seller' as the industry terms them then no sale-no fee is indeed perfect. But if you actually intend to move regardless of obstacles and therefore will end up paying a fee, then the principle of only paying on success is fundamentally flawed. And expensive.
And here's why: those vendors who actually go through the process all the way to the exchange of contracts are actually subsidising those unmotivated sellers who don't go all the way. Those properties that don't sell cost the estate agency listing them. It could be that they're valued but don't come onto the market. Or go onto the market but are priced too highly. Or the sale falls through because the buyer or seller backs out. Whatever the reason properties like these can add up to a huge expense for the agency.
And how do agencies claw back those outgoings? As well as other outgoings like rent and rates for their high street branch offices? By passing on the costs to their customers, in the shape of a typical 3,200 fee, for not a great deal of physical or mental effort.
It is no wonder that online estate agents such as eMoov are becoming more and more popular with their one off, flat fee business model.Using an online estate agent at last ensures that you actually get what you pay for....
And it's a good way of testing the market to see what kind of price a property would fetch, as well as being a way of starting the selling process when you're not really sure you want to move in the first place. This way, if you take your home off the market you won't get charged a penny - even if the agent has found you a buyer. Isn't that great? In fact, with no sale-no fee you can really wind up estate agents, even to the point of withdrawing from a sale seconds before contracts are exchanged and there's nothing they can do about it. How wonderful is that?
And therein lies the reason that no sale-no fee is deeply unfair as a means of levying a cost to property sellers. How so? If you are a tyre kicker, a messer or a fair weather property seller, an 'unmotivated seller' as the industry terms them then no sale-no fee is indeed perfect. But if you actually intend to move regardless of obstacles and therefore will end up paying a fee, then the principle of only paying on success is fundamentally flawed. And expensive.
And here's why: those vendors who actually go through the process all the way to the exchange of contracts are actually subsidising those unmotivated sellers who don't go all the way. Those properties that don't sell cost the estate agency listing them. It could be that they're valued but don't come onto the market. Or go onto the market but are priced too highly. Or the sale falls through because the buyer or seller backs out. Whatever the reason properties like these can add up to a huge expense for the agency.
And how do agencies claw back those outgoings? As well as other outgoings like rent and rates for their high street branch offices? By passing on the costs to their customers, in the shape of a typical 3,200 fee, for not a great deal of physical or mental effort.
It is no wonder that online estate agents such as eMoov are becoming more and more popular with their one off, flat fee business model.Using an online estate agent at last ensures that you actually get what you pay for....
About the Author:
Using a high street estate agents means paying high estate agents fees. Using eMoov, the UK's leading online estate agents instead will get your house sold by displaying it to 170 million internet visitors each month. No extortionate commissions, no percentage fees, no sole agency tie ins. Just a range of fixed, low cost estate agents fees which might even make you start to like estate agents again.