Property is an industry obsessed with numbers. We love house prices, digits, data and stats. Just a small cluster of figures can give us a snapshot of the market’s health and one recent number got the Open Property Group office talking.
The figure was -45%. What could it refer to? Estate agent comparison site, GetAgent.co.uk, recently studied data from Google Trends over a 12 month period (January 2023 to January 2024) and found interest for High Street estate agents had dropped. In fact, search intent for ‘high street estate agents’ was down -45% annually. Conversely, there had been a substantial increase in searches for ‘cheap fee agents’– up 53% between January 2023 and January 2024.
Agents’ fees have long been a bone of contention among sellers, who feel High Street branches charge an extortionate amount for just ‘sticking a home of Rightmove’. As a company that has former estate agents in its ranks, we understand the role of an agent far surpasses uploading a property to a portal. We do, however, recognise that paying 1% or 2% commission doesn’t sit well with sellers if they receive a substandard service.
The rise in searches for ‘cheap fee agents’ isn’t surprising to us. The latest Halifax House Price Index for February 2024 puts the UK’s average house price at £291,699. A vendor charged 1.5% of this sales price will fork out more than £4,375 in commission. A ‘cheap fee agent’ charging 0.5% in commission would bill just £1,458 on completion. It’s a significant saving.
Is a cheap agent the best agent? The old adage ‘buy cheap, buy twice’ alludes to a level of shoddy service that comes with scrimping but is this true in estate agency? If another statistic is to be believed, sellers run the gauntlet no matter how much they pay in commission.
According to deep data analysis by industry commentator Christopher Watkins, only 52.8% of the properties listed by UK estate agents during 2023 resulted in an exchange of contracts. Just 52.8%. That means almost half of hopeful sellers – those appointing an estate agent with an air of optimism and trust – never achieved a ‘sold’ sign outside of their property.
More recent statistics from Watkins also need taking into account. During the first week of March 2024, 19,665 properties saw a price reduction – much higher than the 8-year average at the same time of year, which is 13,945. This means 1 in 8 properties each month are being reduced in price in order to attract buyers.
The nation's fall through rate is also a stark figure. Over 5,200 sales fell through – that’s when the transaction collapses before it reaches completion – during the first week of March alone. In its simplest numerical expression, 1 in 5 sales never complete, leaving the vendor without a buyer.
Watkins’ statistics do not discriminate between a quality High Street agent or a ‘cheap fee agent.’ The analysis shows that, no matter what type of agent a seller uses or how much commission is charged, there’s a 50% chance their property won’t sell and when it does, there’s a 20% chance that deal will collapse.
There are a variety of reasons why an estate agent may fail to deliver on their promise of selling your home. We can’t shy away from the fact that some of those reasons lie with the seller (if the vendor insists on listing at an over-inflated price, the property will struggle to sell, despite the agent’s best advice).
Agents can also over-estimate a home’s worth, especially if they know the seller will appoint the agent giving the highest valuation. A transaction where the valuation is overinflated can easily collapse at the survey stage, with down-valuing a trend that’s on the rise, according to a report on estateagenttoday.co.uk.
The mortgage stage is another hurdle that trips up many transactions in the current climate. Agents who fail to prudently prequalify the financial position of potential buyers may find lending is refused quite far along in the sales process. Frequently, a mortgage agreement in principle expires and the buyer fails to secure a new rate they can afford, leaving them with no alternative than to back out of the purchase.
The fact of the matter is, sellers can’t stomach the possibility that there’s only a 50% chance their appointed estate agent will get their property sold. They’re also nervous about the certainty of a deal – there are so many variables and unknowns that can scupper a transaction when it takes place on the open market..
At Open Property Group, we do things very differently. Firstly, there is no bill on completion. No agent fees to pay. No commission. Zero. Zilch. We’re not a High Street agent. We’re not even a ‘cheap fee agent’ or an online-only agent. Open Property Group is a professional cash buyer and we deal directly with the seller – there is no agent requirement, nor middle man to charge a fee.
Open Property Group also buys with cash. We are investors with an instant-access fund to spend, so we don’t need a mortgage. Not only does this eliminate the risk that a buyer is refused a mortgage, it also simplifies the sale too. We can exchange within 7 working days and complete in approximately 6 weeks of receiving legal documents for a fast house sale.
If you would like to know more about our service, please contact the Open Property Group team. Alternatively, you can request a free valuation online.