Dealing with one estate agent seems frightful enough, but dealing with multiple… who would self-willingly endure the pain?
Apparently the people that want to effectively sell their home quickly.
But how effective is using a multiple agency strategy, and why is it that professionals, which includes developers, investment funds, probate managers, all tend to use it, while 94% of individuals use one sole agency?
Should you use multiple estate agents to sell your property for a quick sale, and if so, what’s the best way to do it? Walk with me…
Estate agent contracts explained!
First and foremost, let’s quickly go over the most common contractual agreements vendors have with their local agent. It will help create a clear picture of the overall scenario.
When instructing an agent to sell your property, you’ll most likely be presented with one of the following options:
- Sole agency agreements – this is the most common agreement used by estate agents.
This agreement means that you agree to use only one agent for a set period of time, in which time you cannot use another agent (typically between 8 – 16 weeks). It’s normally best to negotiate for the least amount of time possible, so you have the flexibility to use another agent sooner rather than later if you’re dissatisfied with the service.
You only pay the agent if they find you a buyer. If you find a buyer yourself during the fixed period, you won’t have to pay anything to the estate agent.
The typical estate agent fee for sole agency is 1-2%.
- Sole selling rights – this should not be confused with ‘sole agency’, and you may want to consider before agreeing to the terms of this particular agreement.
Sole selling rights is the same as sole agency except that you have to pay the estate agent even if you find your own purchaser e.g. family member or friend. This kind of agreement is more common for commercial properties.
- Multiple agency agreements as you’d expect, this type of contract allows you to use more than one agent to market and sell your property at the same time.
Because this scenario naturally creates extra competition between agents, they typically charge a higher commission fee of the sale price, usually between 2.5% – 3.5%+VAT (instead of the usual 1% – 1.5% you would expect to pay under a sole agency agreement).
You don’t need to pay every agent you instruct, only the agent that gets the sale.
May the best chump win, right?
- Ready, willing and able purchaser – avoid, avoid, avoid! Any agreement that comes with this clause is garbage.
If this clause is in your contract it means you’ll be liable to pay the estate agent fee even if you decide not to sell (for whatever reason).
Toss it in the bin.
It’s worth noting that agreements can be updated (i.e. you can switch from ‘sole agency’ to ‘multiple’ earlier than contractually agreed upon) or prematurely terminated as long as there is a mutual agreement between both parties. Otherwise, both agent and seller are obligated to adhere to the terms of the agreement.
Needless to say, it’s critical to carefully check the terms and conditions of any agreement before you sign it.
Why home-sellers use multiple estate agents!
Access to more buyers
Many people assume that there’s generally no difference between using one or two local agents, because inevitably, the property is going to get launched onto Rightmove and Zoopla, and it’s going to attract all the same eyeballs anyways.
That’s actually a common misconception.
The most successful and resourceful estate agents accumulate leads from several sources, not just the portals, and many of those sources are unique to them. If you opt for using a couple of reputable and established agents, you potentially get access to more protective buyers.
Quicker sale and higher offers!
Obviously the more agents you have scrambling around trying to shift your property, the more potential buyers you will reach, and potentially the higher the offers you will receive. Multi agency agreements usually make traditional estate agents work harder because of the competition and the higher cash prize.
On average an estate agent will only sell 50% of the houses they market, so that means using more than one agent will significantly improve the chances of your property being whisked away.
Why do the “experts” (the property moguls) use multiple estate agents?
I’ve already mentioned that ‘the professionals’ with in the industry tend to favour the multi-agency strategy when they’re selling, but why if they have to splash out more on commission?
The reality is, the property boffins aren’t paying the same rates as individual sellers that agree to a multi-agent agreement.
Unfortunately, while us mere mortals are lumbered with the ‘sucker rates’, the pros are groomed with significantly lower rates because they’re regular customers that sell in volume. Meanwhile, the average UK homeowner sells their house every 9 years, so agents aren’t incentivised to offer us those reserved glamorous low fees.
So while most us have to dig deep and splash out on a 3% commission bill if we want to use multiple agents, the big-wigs are probably paying half that, because the local agents want their lucrative recurring business.
It really boils down to economies of scale (i.e. commodities and services get cheaper as you scale up).
So should you become a professional property mogul and start dealing in volume?
You could, if you really want to.
But it’s an unlikely solution.
How to use multiple agents while paying the low sole agency fees!
This solution recently jumped onto my radar unexpectedly. It looks kinda’ promising, so I thought I’d update this crusty old blog post (which was originally written all the way back in 2013. Blimey!) and share.
I think I may have stumbled upon a solution for those craving to benefit from the perks of using multiple agents, but reluctant to cough up the extra cash for the privilege!
A company called Movewise claims to provide a cure for our ailments.
So, presumably, the folk behind Movewise surrendered to the realisation that the only way to get a “sole agency” price while using “multiple agencies” is to deal in volume to benefit from favouritism (i.e. low fees).
With that in mind, Movewise have built up a service which signs up a butt-load of home-sellers around the country, presumably like yourself, and then they subcontract strongly-performing local estate agents to sell your property.
So what does that achieve?
It means Movewise are able to negotiate better rates with our local agents than we, as individual sellers, could ever dream of, because Movewise can use the large volume of properties they have in their books as
Open sesame! Hello, glamorous low fees!
The results? Movewise manage and deploy a multi agency sales strategy for a sole agency fee, and by doing so, they claim to achieve an 88% sales rate (compared to the standard 50% achieved by a single agent), 2 months faster sale rate, and a higher average selling price of 3%.
The logistics? You don’t deal with the agent(s), you deal directly with your Movewise account manager, who will keep you updated on viewings, offers, and handle the entire management your property is sold.
Movewise negotiates the commission directly with your local agents and puts 0.25% on top for their own fee. They will initially assign one agent, and if the sale does not progress rapidly, Movewise drags in the next best agent. My woefully clumsy explanation is probably butchering their service – thankfully there’s a diagram on their ‘how it works’ webpage which explains the process much clearer.
The cost? Like a regular traditional high-street agent, no sale, no fee applies and you are not tied in to an exclusive contract or minimum period. If your property sells, you pay one fee to Movewise, which is 1.25% of the sale price on average.
It’s quite a simple and effective strategy, to be fair. At least, it sounds like it is. To find out more, movewise.co.uk.
Just to clarify, I’ve never used Movewise’s service, therefore I cannot recommend them. But there’s enough buzz around the web to conduct your own due diligence to determine if their approach to a multi-agency strategy is a viable option for you.
All I’m saying right now is that you wouldn’t be totally *ahem* unwise (oh come on, I had to!) to find out more about their cost-effective approach to a multi-agency service – if that’s what you’re after.
I’ve been told their service is
also being recommended by theadvisory.co.uk (apparently that’s a big deal *shrugs shoulders*). So if they do actually suck, blame them.
Disclaimer: I'm just a landlord blogger; I'm 100% not qualified to give legal or financial advice. I'm a doofus. Any information I share is my unqualified opinion, and should never be construed as professional legal or financial advice. You should definitely get advice from a qualified professional for any legal or financial matters. For more information, please read my full disclaimer.