The myth of overly high agency fees

Real estate professionals agree on many points in 2017. Beginning with the importance of technology to remain competitive, particularly mobile internet and smartphones. These enable properties to be promoted with quality, to keep in contact with buyers and sellers and to take very good photographs. The other unanimous innovation this year is the importance of continuing training according to the ALUR law guidelines. This American-style professionalisation will give new impetus to the role of property adviser. This should in the medium term make it possible to increase exclusive mandates. For reference, these represent the majority of transactions in the United States and the United Kingdom. Otherwise, fees vary considerably and their calculation is precisely a point of disagreement within the profession. Let us examine all the cases together.

The percentage in relation to the sale price

This is one of the most commonly used calculation methods. The average percentage for agency fees would vary between 6 and 7%. For agents who have lower operational costs, this varies between 3 and 5%. This variation is largely due to the economic climate and household solvency, and these fees are often negotiated downwards. Either agencies align with agents, or they play the service card. Agents are also very well equipped in terms of software and hardware tools; they can use this card to align their percentage with agencies as well. In short, the negotiated percentage often hovers around 3%.

The capped percentage in relation to the sale price

Some regions are significantly more advantaged than others because the average sale price of a property has increased much faster than elsewhere. In Paris, to use our favourite example, property prices increased by 155% in 10 years. In the Ile-de-France region, there are also quite disparate variations from one year to another. Cities such as Montrouge, Elancourt, Noisy-le-Grand and Nogent-sur-Marne saw their prices rise by around 10% in one year according to the Parisien (November 2016). These significant fluctuations could be seen as an opportunity, but they are not really justified because from one year to the next, the work of the property adviser remains the same. This is why some professionals use capping; they wish to reassure the client regarding their remuneration.

The exclusive mandate

This remains the most effective remuneration tool because all work deserves pay. In the case of simple mandates, property advisers take the significant risk of not necessarily being paid when they enter a mandate, not to mention the budget spent on a sale that does not go ahead. We have already covered this subject in detail in this article: The inherent risk of simple mandates. Logically, this salary would also make it possible to see the commission amount reduced, and in a transparent manner.