What do estate agents want from a sale?
On the move:Getting the highest possible price for a seller isn’t always a priority for the agent
Have you heard the one about the estate agent? How many estate agents does it take to change a light bulb? Two: one to screw the bulb in and the other to screw the buyer.
Criticising estate agents might be a cheap shot better consigned to darker days gone by, but it has sustained many a house buyer frustrated by the process. Ask anyone who has bought a house – or indeed sold a house – what the main difficulties were and invariably dealing with an estate agent will make the top three of their complaints.
They called too often; they didn’t call at all; they were rude and/or aggressive; they didn’t give the vendor my offer; they made me accept a low-ball offer when I sold my house; they spun me a story about when the vendor could close and I had to wait six months to move in.
I’m not going to add to that chorus here as, to be fair, so far we have dealt with a largely professional bunch. Perhaps it’s true what they say about the bursting of the property bubble separating the wheat from the chaff. Or maybe regulation is improving standards.
Whatever it is, I know from our experience that if you make a bid these days you will be asked to put it in writing; if you ring an agent you will be called back; and when youre told four other people are bidding on the property you . . . well, Im not too sure about that one.
Higher may not be better
Many people are convinced that estate agents are all about driving up the sale price of houses. Depending on what side of the buyer/seller fence you are sitting on, this might be an objectionable or welcome assertion. But is it true?
Well, it might not be the case that an estate agent’s sole interest is in achieving the highest price for their client. It may not necessarily be in the agent’s own interest to do so, especially if it requires considerable leg-work and effort.
Take the following example. Let’s say you put your home on the market at €500,000 and, lo and behold, it sells for €450,000, netting the agent you hired to sell it a tidy 1.5 per cent fee, or €6,750 ex VAT. But if the agent works for one of the larger agencies, how much of this commission does he actually get to keep for himself? Ten per cent? Twenty per cent? So possibly between €675 and €1,350.
Now, what if he or she invested the time and effort required to get various interested parties to bid together and managed to get the sale price up to the asked- for €500,000? What’s in it for him or her?
Well, the agency’s fee will rise to €7,500, so it will look better when he brings the cheque back to the office and the vendors will be happy with the higher sale price. But all the extra time and effort he put in might just net him about €100 extra.
Why bother? It makes far more economic sense to sell the house as quickly as possible, and move on to the next one.
Indeed, a US survey a few years ago revealed that when an estate agent sells their own house, they hold out for the best offer; when they sell yours, they often encourage you to take the first decent offer that comes along. As a result, they keep their house on the market for an average of 10 days longer.
So, it might be a misconception to say that agents have a vested interest in higher prices; what is really in their interest is a fast-moving, buoyant market, where they can make a quick sale and move on to the next house. Investing time in getting an extra €50,000 or so for the vendor doesn’t always make economic sense.
But what can buyers and sellers alike learn from this?
Well, if you’re out there house hunting and the agent is encouraging you to make a bid, or to counter with a substantially higher offer, remember he/she is probably trying to close the deal and not necessarily trying to achieve a higher sale price. And knowing this can work in your favour.
On the other hand, if you’re thinking of selling your house and are looking to appoint an agent, look for one that will put the leg-work in, will chase up potential buyers, and won’t be in too much of a hurry to close the deal.
Just be good enough to wait until we’ve bought our house.