Agents who discount their fees show they are weak negotiators, a real estate trainer from the UK has claimed.
Richard Rawlings, who was named The UK’s Estate Agency Trainer of the Year 2012 by the UK real estate publication, Propertydrum Magazine, said agents must be able to justify their worth to prospective vendors.
“I once asked an agent to do a market appraisal on my house and asked him what his firm charges to sell it," he said.
“He immediately said he’d slash his fee by 33 per cent to get the business!”
According to Mr Rawlings, too many agents have succumbed to competitive pressure because they have not been able to effectively defend their position and fees.
“We have allowed our public to walk all over us, and now is precisely the right time to get our fee rate up again for two reasons,” he said.
“The first reason is a tougher market means the seller needs a good estate agent more than ever before and they are prepared to pay for it.
“And the second reason is you can no longer rely on volume sales, so you have to generate more profit from each of the relatively few sales that you do generate.”
Similarly, when industry veteran Malcom Riley spoke with Real Estate Business earlier this year, he encouraged property managers to start charging more for their services.
“A lot of principals believe they will lose business if they start charging more for their services, but from my own experience – and from the experience of others whom I train – that is not what happens,” Mr Riley said.
“Agents need to look at how to sell the fees, commissions and charges to a client. Explain to them what they receive for their money – it is all about communicating with your clients.”
Yet Mr Rawling's opinion is at odds with top performing agent Jason Boon, of Richardson & Wrench Elizabeth Bay/Potts Point, in inner Sydney, who recently told Real Estate Business that he doesn't have time for people who say they don't negotiate on their commissions.
Mr Boon, who finished 10th on this year's Real Estate Business Top 100 Agents list, said his commission varied from 1.75 per cent to 2.25 per cent. "I'll negotiate," he told Real Estate Business in late May. "If I have a good relationship [with the vendor], and if I didn't have to work very hard, [I'll negotiate]."
Mr Rawlings will be in Australia in August for his “Raising Fees Instantly” series of seminars.
“Although I have not worked as an agent in Australia I am regarded as an authority on agency technique which shares many similarities the world over,” he said.
“Having received great feedback from numerous Australian agents following my March tour ... it is clear that the UK system is much more in keeping with the Australian one than any other.”