Brightsale

We are confused - and we don’t mean a super-annoying car insurance advert. We are confused because for about a year now we have been assured that high street estate agency fees have been rising. The story has been that it is much harder to sell properties at the moment (which can hardly be doubted) and that estate agents are now having to work much harder (bless them) and therefore the general public are only too happy to pay higher fees for the service. It is the last point that has always struck us as a little odd. We know that in the early 1990s house price recession agents’ fees did go up. In some well-heeled areas we know that some agents even got away with charging a ‘registration fee’ of up to £500 just to list a property, and then up to 3% commission on top of that. But times have changed a great deal since then. Competition from lower cost modern agencies such as BrightSale have changed the competitive landscape – and have surely made it much harder for high street agents to simply raise prices in the face of falling demand (which is all they are doing).

So it was almost with a sense of relief that we read yesterday of the major London agent Lauristons offering customers a chance to opt out of the traditional 2-3% (this is London remember) fee in return for a non-refundable up-front payment of £999. To us this looks like a desperate attempt to get some, ANY, cash flow into their business before the year end. If you cannot make money actually selling properties, try to make it by listing them instead.

But isn’t this just another sign of a business model that simply doesn’t work anymore? Most vendors in these hard pressed times are not going to be happy forking over £1,000 in cash with no guarantee whatsoever that a sale will be achieved. So although Lauristons’ move certainly worked as a PR stunt, it will do nothing to address the fundamental problems of traditional agency: bloated costs, ineffective technology, poor client service, excessive fees etc. But as the Director of the company concerned said: “the market is changing and the current economic climate means it probably won’t be the same in the future.” Amen to that!

Tags: economy, housing-market, predictions

This entry was posted on Thursday, October 23rd, 2008 at 9:35 am and is filed under Chatter, General Estate Agency. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.