Published: 17/08/2017At the end of 2016 we temporarily put aside our commission based charging structure to experiment with an upfront marketing fee. The experiment was limited to just three clients and here is how we got on:
The Terms. We charged the clients £1500.00 (inc. VAT) upfront to provide the exact same service and marketing that all our clients normally experience. This means the homeowners had to either accompany their own viewings or pay extra for us to attend instead. Had those clients removed their homes from the market they would not have had their money returned but if they sold they would have saved 70% compared to our normal commission. (You will find a link to the terms and conditions we created for the exercise below).
Did the Houses Sell? Two of the properties went under offer inside a week of marketing. The third took around two months to go under offer. All three houses have now completed.
What Prices Did We Achieve? One house sold at its asking price, the second sold within 1% of its asking price and the third dropped by 3%.
That-being-said, at the outset there was no disagreement between us and any of the clients about where to set their asking prices. So, as it turned out we had three sensibly priced houses which were much easier to find buyers for than if they had been boldly priced – this is not always the case of course.
Were the Clients Happy? All three clients were pleased with the results and the money they saved. Importantly they all said they would choose to do the same if they had another house to sell and one of them has already appointed us to do just that.
Will We Formally Offer This Service in the Future? The simple answer is that we are not sure yet. Whilst we expect up-front payments will become more accepted in the UK housing market over time, it remains to been seen whether the fees that homeowners are prepared to risk paying upfront are high enough to allow the agents to provide a good enough service.
By “good enough service” we mean can an agent provide an experience that a sufficient number of their clients would want to pay for again? Also would they go on to recommend it to their friends and family?
Central to these questions will be how the homeowner reacts when a sale is NOT achieved plus to what extent the agent concerned may have over-pitched to win the instruction in the first place.
While the market adapts to upfront payments we will continue to experiment with our own versions. We have however, already increased our fee to £2000.00 (inc VAT) for our most recent upfront client – which is more than double Purple Bricks’ normal charge but less than half our average commission fee.
If you would like talk to us about our upfront service please call us on 01206 911 366.