Estate Agents Raise Prices to Cover their Loss in Earnings

With the decline in house sales, some of Britian’s biggest estate agents are suffering losses in wages and are now trying to compensate the fall in their income by raising prices.

With a report out by the property market analyst Hometrack it has stated that for the 10th month running house prices have again fallen with a loss of 4.4 per cent

Less Homes on the Market For Sale

Concerned homeowners who are worried about the falling value of their homes and the ever increasing rises in new mortgage ‘deals’ are opting to stay put and extend homes rather than move, which in turn is diminishing even more the further losses to houses that come up for sale on the market.

Transactions around the country have fallen by 3 per cent alone in July and the East Midlands is experiencing an even slower turn around rate with 8 per cent fewer than June’s transactions.

With estate agent’s raising their prices, this will of course be added on to the homeowners who are selling. Not only are they having to lower the selling price of their homes but they are now being hit with this extra raise in estate fees.

With an estimated increase of between 1.5 to 2 per cent added on to the sale of a £228.000 house the seller will now end up paying out costs of £4,560 compared to an average of £2,280 in the past.

Comments from some of the countries leading estate agents are:

Parviz Khan, a branch manager at Birmingham-based estate agent Abbey Estates, said: "Our sales have just completely dried up and did so pretty rapidly once the crunch set in toward the end of last year. We've been forced to raise client fees in some areas to remain competitive."
Colin Nagle, a sales manager, at Roberts Newby, a Buckinghamshire agent, said: "What is happening is that the flexibility in fees that was there when the market was strong has now disappeared. We are all spending more on marketing when income is much less than it would have been this time last year."
A spokesperson for one London based esate agents said “The depressed state of the market had left it with no choice but to raise its average fee to 2 per cent of the sale price. "Our fees have gone up because of the nature of the property market as it is – we are having to do more to find buyers for our customers," she said. "In that situation, it is inevitable that fees will have to go up – we have 50 branches across London and have had to raise our fee across the board."

Consumer groups have quickly jumped on the defence for homeowners by stating that property sellers should not be made to suffer twice because of the state of the collapsing housing market.

"Consumers should not be forced to pay more to sell their home just because transaction numbers have fallen," said Mark McLaren, principal public affairs officer at Which? "We have long been worried about unfair terms in estate agent contracts. In the property downturn, consumers need to be on their guard, read the draft contract carefully, and make sure they fully understand its implications, especially regarding what fees may become due, and when."

One tiny glimmer of hope was given this week by The Royal Institute of Chartered Surveyors who stated this week that ‘the cost of rural land has soared by 47 per cent over the past 12 months in line with souring global food prices.