Why screwing your agent down on the commission can be counterproductive...a perspective

When you are going to do work for a client, e.g. you’re a plumber and about to install a central heating system: you quote £6000, then your client says, can you do it for £5k? Or, you’re a consultant and quote £3000: the client says, can you do it for £2500?
You need to clarify the situation...
The explanation is pretty similar each time. You have
1. in-built costs (your tools, your vehicle, your office, your staff, your marketing, etc, etc),
2. You have the cost of the job (the preparation, the quote time, the kit, the travel, the time to do the job, etc, etc) and
3. You have a profit to make (isn’t that why you get up in the morning?)
If you are reading this and are salaried each month, it may not be as clear as it is to people paid on performance/results as it is their world too.
Consider the relative importance between fees charged and what you finally get in your pocket.
Which is more critical?
The difference in fee if the commission percentage is reduced:
You’re selling your property for £400,000. Agent A says 1% + VAT, Agent B says 2% + VAT. (I am using two whole number percentages as easy to calculate).
Obviously, you will be paying £4000 + VAT more to Agent B if you give them your property to sell.
What can you surmise about the relative merits of the agents?
Agent A will probably have more properties on their books (good thing/bad thing?):
• Can they focus attention on your property as much as agent B?
• Will they care about you as much as agent B?
• Have they the time and staff to give you the service you expect?
• As they have more to sell, will they be keen to get you the price you want, or a lower price, to get a deal done? (They need to sell twice as much property to earn the same income as Agent B.)

Agent B will have less property on their books:
• Will have more time to attend to your property
• Will have more time to ‘qualify’ buyers more carefully so less chance of an abortive sale
• Going to earn more so will be more attentive to your needs including negotiating the best price for you
• Less likely to try to tempt you into accepting a low offer
• Will have more experienced staff so you get a better service
When you sell, what makes the biggest difference to what you get in your pocket?
Sell for £400k at 1.5% you pay £6000 + VAT (£7,200) – you are left with £392,800
Sell for £390k at 1%, you pay £3,900 + VAT (£4,680) – you are left with £385,320
Cheapest fee is not always best fee. The figures speak for themselves.
Get an agent who acts for YOU and remember, you don’t pay the agent till the deal is completed and if you don’t like the price, don’t accept it!

Comments, thoughts?


Picture is of office during Kemp Town Carnival...