Traditional estate agents have been accused of being stuck in the past as Purplebricks steps up its ‘commisery’ campaign.
Purplebricks said that Britain’s method of buying and selling homes is out of touch and out of date – and leaves “millions” out of pocket.
A new report for Purplebricks – called ‘Commission: Out of touch, out of date, out of pocket’ – claims estate agents’ commissions are seen as “unnecessarily expensive” by over a third of home owners.
The report makes the equally controversial claim that sellers may be left in the dark about offers.
It claims: “Commission is supposed to incentivise agents to work harder but the work involved in dealing with a £100,000 home is the same as with a £1m mansion.
“And because the estate agent isn’t paid until a sale is agreed, home owners, who have no visibility of offers received other than information relayed by the agent, can’t feel certain they have been made aware of all offers, or the exact position of those making the offer – so can feel left unsure of whether they’ve accepted the very best offer for them.”
It also claims that estate agents’ commissions have spiralled in the last two decades but that the public is not getting more for their money.
It says: “House prices have soared by 253% in the last 20 years, from an average of £61,830 to £218,255. As house prices have boomed so have the profits scooped up by high street agents – the commission on the above examples has gone up from £1,113 to £3,929.
“Despite rising house prices making commissions rise year on year, it is not the case that consumers are getting more for their money.”
The report, based on the average estate agent fee being 1.8% (1.5% plus VAT), argues: “Technology has freed buyers from the rigidity of working hours and now it’s time for things to improve for sellers too – those who actually pay the bill.”
According to the report, estate agents’ fees were cited as the top gripe by 35% of home movers, followed by Stamp Duty (28%) and conveyancing costs (26%).
Buyers cited the legal process (39%), the cost of buying (26%) and the process of actual moving (18%) as the worst aspects of purchasing a home.
Dealing with estate agents came in fourth, at 11%.
Nearly half of those questioned (47%) said estate agents represented average value for money; 42% felt agents represented poor value; 16% felt the agent had not done enough for the money they were paid; while 10% felt agents offered good value.
The report, based on a survey of over 1,000 people who had previously sold a home, says that 95% of people make the internet their first port of call.
When it came to estimating the amount of commission they would expect to pay to sell a £500,000 house, 96% underestimated the cost and one in seven (16%) said they had no idea what the bill would be.
The report does indicate widespread public recognition that they can pay a flat fee “and avoid a percentage commission” when selling, with 69% aware of the possibility.
When asked how they would have felt if they had appointed an estate agent to sell their property only to find they could have purchased the same service for a lot less, almost all (94%) said they would feel annoyed, with six out of ten saying they would be “very annoyed”.
Less than 5% of those questioned were concerned with an agent showcasing a property in a high street office shopfront while one in ten said that they chose an agent following recommendation from a friend or a family member.
Michael Bruce, CEO of Purplebricks, said: “Home owners are entitled to a fair, transparent and convenient way to sell their homes and it is no longer acceptable to charge ever-increasing fees just because that’s the way things have always been done.
“This report shows that commission is the charge people dislike paying the most when they sell. But it doesn’t have to be that way. There is an alternative: a fair fixed fee with the same personal service as the high street.
“We want to help as many customers as we can avoid commisery – that feeling of kicking yourself because you could have got the same service for less.”
The research was carried out by Atomik Research in January and released yesterday.
EYE has asked Purplebricks where it got its commission figure from. My Home Move, which supplies conveyancing services to the company, has been quoting 1.2%.
However, yesterday afternoon a spokesperson for Purplebricks strongly defended the 1.8% (1.5% plus VAT) figure.
She said it was based on the results of a Purplebricks survey conducted between May 19, 2015, and July 7 last year. The survey had been sent to all sellers who had completed their sales with Purplebricks between these dates, and the respondents were asked to give the level of commission quoted by a traditional high street agent: 1,805 respondents indicated the level of commission they were quoted, and the 1.5% average was taken from these responses.
She also quoted Citizens Advice which quotes a commission rate of between 1.5% and 2.5%; Your Money which said that the “average high street fee is 1.5% … but charges can be as much as 3%”; and the 2011 Which? claim that the national average commission is 1.8%.