Does Commission Matter?

I have watched for some time as the debate on fixed vs. variable estate agents fees has, over time gained traction. There has been much debate around the validity of fixed fees, and recently an interesting development which should end all these arguments.

The majority of the agencies across the country are on a variable fee structure, this is known as the traditional model. Whilst there are variations within this model, the concept of charging a percentage of the sales price is and has been the norm for many years. As with any industry, some disruptors come along from time to time, challenging the status quo. In this instance I have seen two predominant fee structures being presented: a) A lower percentage fee-based model and b) A fixed fee model.

It would seem both models are, however, short-lived. Whilst there is a benefit to a seller selling through one of these channels, there remains an abundance of risk pre and post the sales process that most sellers seem to ignore. The fixation on the agent's commission seems to govern the decision and generally becomes the central point of the transaction.  Which points to "you get what you pay for." You cannot pay a VW Polo's installment and drive a Porsche; this is not how it works.

I never could understand why one would put their most prize possession at risk and in the hands of someone offering a cheap deal. Through time, we have all been exposed to something that sounds too good to be true.

 As with most other necessities, medical aids, pension funds, car instalments etc. one tends to do a little homework before committing to the agreement. Many of us get quotes and do comparisons ourselves and sometimes settle on a marginally higher premium for a better-quality product through a reputable established brand. Yet when it comes to managing the biggest asset we have, we tend to look at price only. I have had clients insist on wanting to pay the fixed fee quoted by other agents for our "Rolls Royce" services and they cannot understand why we say no? I have never walked into a Porsche dealership and offered a Polo's instalment with much success.... why would this be any different? 

The result of this debate around the fixed-fee model...the agency that was charging a fixed fee with their strategy, that was built on slandering the generic model, breaking down traditional agencies and advertising falsities', has converted to a variable fee agency, shame on you!

If you are willing to forego the comfort of security and open your home to strangers yourself, get limited exposure and limited marketing for the first price on offer.... so be it. If you, however, want to get the best possible price in the shortest possible time, with the security of knowing your prize possession is protected....then perhaps a more sensible traditional tried and tested model is the way to go.

Why change something that isn't broken?

For more information please click here and read our Seeff Blouberg August Magazine