Estate agents wanting to avoid being drawn into secret cartels should be very careful in talking to each other about fees and business strategies which are not in the public domain.
Juliette Enser, project director at the Competition and Markets Authority, told EYE: “Staff should not be discussing competitively sensitive information – and a test of that is whether it is public knowledge.
“A real danger area is fees, including future fees and promotions.”
Enser, who led the price-fixing cartel investigation into six agents in Burnham-on-Sea, Somerset, would not be drawn on whether more estate agent cartels are being probed, saying: “We cannot comment on individual cases, but we have reason to believe that there is less awareness in the sector than we would like there to be.
“This was after all the second time in less than two years that an estate agency cartel has been investigated.”
In both the Somerset and the earlier north-east Hampshire cases, the cartels revolved around fees.
The cartels were by definition secret, and in both cases, large fines were dished out – albeit reduced when the agents co-operated with the investigations.
Enser said: “When the CMA publicises a case in a sector, it may receive intelligence about other cartels – as was the case here.”
An awareness campaign is aimed at “avoiding a repeat”, she said – but she also said that the campaign itself could uncover more estate agents’ cartels.
Wouldn’t it be easier for the CMA simply to insist that all estate agents should state and show their fees? It is, after all, what letting agents have to do by law, so why not sales agents?
However, Enser said it was not for the CMA to mandate how agents should publicise their fees but added that agents have to make their own independent decision as to what they charge.
The CMA offers up to £100,000 for anyone not involved in a cartel to report one. It also offers a leniency programme to whistle-blowers involved in cartels who report what is going on.
This was the case in Burnham-on-Sea where one of the six agents, C J Hole, reported the cartel and then co-operated in the investigation. The business escaped a fine altogether.
Are all reported suspicions of cartels investigated by the CMA?
Yesterday on EYE, a reader (Naysayer) posted up: “This happens in Mid Herts area. The local independents agree fee levels. They even set up their own property newspaper (in rival to the local rag) to try and drive anyone not in agreement out of business and yet the CMA did nothing when it was reported.”
Again Enser said she could not be drawn on individual cases, but said that where formal investigations were launched, these followed enquiries. The investigations themselves were very thorough, as has been shown in both the Hampshire and Somerset cartel cases, with information painstakingly gathered, including emails and evidence of meetings.
I don’t know why legislation isn’t passed so that all Agents have to publish a non-negotiable base fee and detail how this might vary.
Trading Standards would probably be able to use current legislation to make this happen for any Estate Agent who has a website. After all it’s something a potential customer should know before making the transactional decision of requesting a valuation.
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Because what you receive and the service you get differs from agent to agent.
If i was to list everything my clients get as standard you will be looking at two full pages, the one man band next to me offers access to portals, that’s it.
The public may think they are getting or the bells and whistles for 1.25% when in fact they are just getting a listing. Is that fair?
We need to be able to speak to the seller to educate them so they can make an informed choice.
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Today’s quack:
“I don’t know why legislation isn’t passed so that all Agents have to publish a non-negotiable base fee and detail how this might vary.”
Monday’s quack:
“What about a campaign for doing away with commissary and have the same rate for all customers rather than charge more to the ones who don’t know you can or don’t like to barter?”
Taking the above into consideration I think it would be rude of me not to quack right back atcha, ducky.
You have previously stated you are now retired.
But you were in business, were you not?
Please share with us, then the following information – for which we will trust you to give in total honestly.
In your most recent line of business, did you:
1. Clearly publish a non-negotiable base fee and detail how this may vary?
2. Have the same rate for all customers?
3. Never vary from the above rate regardless of circumstance?
Thanks in advance for your responses to the above.
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1. I earned commission which varied but was set by the other party in all cases.
2. See above
3. See above.
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All ‘proper estate agents’ must equally market in all advertising that they charge an additional viewing fee of say £300 or charge a deferred payment fee of say £360 on top of any failure to complete fees of say £849?
That equates £1509 for a very large % of users who may then go on to pay another estate agent fee on a no sale, no fee basis?
‘Failure fees’ are easily quantifiable and therefore should be promoted equally?
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“A real danger area is fees, including future fees and promotions.”
Hmmmm, what about perma-sales? Am I rightttttt?
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Expect the next thrilling instalment of the long-running NSPR Agency #permasale fiasco tomorrow to be announced tomorrow on Tw@tter, peeps…
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I generally don’t quote a Sales Fee without actually seeing the property which I am being asked to value/quote on (ie phone call, how much to sell my house?). I can usually quote the “Fixed Costs” in advance.
In short, my Sales Fee may vary dependent principally on how much work is involved. Noting that I won’t proceed until my client fully understands and accepts/agrees the costs involved
To address cyberduck66…. “I’m not selling 99p Cheeseburgers” hence a one menu fits all scenario doesn’t actually work. What is crystal clear is that I have nothing to hide because my clients must agree to my costs in writing.
If Purplebricks for instance simply stated “£5 to list your property with us” I could understand that as they are simply placing an Advert…. sorry, when I say Purplebricks I mean PB and other like service non-estate agents …..Property Listers who charge upfront whether they actually Sell a clients home, or NOT!
Lets consider 10 Joiners have an Online Hourly Charge listed cyberduck66… that’ll explain in advance whether they are as technically skilled as each other, will all do the same standard quality of job, will take longer or shorter to do the same job, will deal with any additional problems etc etc etc… and taking the Purplebricks Joinery Company in particular ….unlike the Traditional Joinery Company they will charge whether they actually fit the shelving or not? Hmmmmnnn?
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publish and be dammed !
1%
2%
3%
or £500
whatever you publish is your fee, keep it simple. What’s more if a vendor doesn’t value your service then it doesn’t really matter what you charge.
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Most agents are now adopting a fixed fee dependent on the realism of the sale price.
How do you publish that?
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We live and work in a country where a large number of vendors want the cheapest. In fact they want the cheapest on everything – food, cars, bathrooms, holidays ……., you name it they want cheap. They do not look at what they are getting for their ‘cheap’ In the FMG market Lidl/Aldi have actually got the quality/price issue right and also their sizing makes many things appear cheap but quality/service is top notch and they are growing market share. Margins and profits are there.
It is so easy to quote standards fees, as was the other day here on Eye, ‘our fees start at x% but for you ……..’ It is the younger less experienced people working in agency who still believe that low price %age is the be all and end all for clients. If you explain how you work and explain the features advantages and benefits of your firm over and above a ‘listing firm’ or another traditional hight street agent you may get a welcome surprise. Yes you will loose some but would they have made money for you – that is your decision.Sometimes it is better to say thank you , leave the door open, but decline the business at that stage. They will often come back particularly after six months and the property has still not sold.
Explain that to be cheap you have to pile it high – what happened to Woolworths? Take time to explain that in dealing with a persons most expensive asset they need to pay to have it dealt with properly.
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I effectively tell potential vendors one simple principle;
‘The harder I work on selling your property, from assessing the correct marketing price, working out the best strategy to use, maximising the presentation (photography, floor plans, description etc.), generating the most interest, carrying out the most accompanied viewings, dealing with multiple offers and negotiating the best one to follow through to completion …….the greater sale price you will achieve and with the minimal amount of stress.’
Is there any part of doing all that you want me to skimp on to save you money?
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