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The Theory of Relativity (of estate agency fees...)

Estate Agency Fees are a surprisingly controversial with many in the industry. I caught up with an old friend in estate agency recently, who all but dismissed achieving 2%+ fees as an illusion, which did surprise me. But in fairness, his focus is in the 'volume' market, which suffers much more pressure on fees than the premium market.
I see By Design agents regularly not only achieving, but exceeding, these fee levels through delivering a service commensurate with that price point through marketing investment, property presentation, and customer service leagues above their competition. So although it wasn't my place to argue with my friend, I do believe mindset around fees is incredibly important. 

For instance, products and services are never 'cheap' or 'expensive', it is all relative to what customers are comparing your service to. In the premium market, we often talk about not comparing ourselves to other agents, especially those in the volume market, but to services our customers are used to and the standards those businesses set: business class flights, premium car dealerships, high-end hotels and so on. All deliver premium service, but for a premium fee. 

A particularly extreme example of 'fee relativity' came to light recently, where an agent I know achieved a (wait for it...) 5% commission on an instruction (again in the premium market). I appreciate that is, largely, an exception, but the context around it proves an interesting point. 

This fee included an introduction charge to a brokerage who sell businesses, not property who had first contact with the vendor. The brokerage charges are between 5% and 10%, so charging 5% was comparatively good value to achieve the vendor's desired end result. And needless to say, the agent in question 'pulled out all the stops' in the marketing of the property...

Equally, products and services are only expensive relative to WHO is buying them - not just their affordability, but their motives for buying as well. 

A regular reference point of mine is Daniel Priestly, he recently described a Ferrari as NOT being expensive, depending on who is buying it. Of course, Ferraris cost a lot (the price of a house in some cases!), but not if you have just sold your company for £100m and always wanted one, or if you run a luxury car rental company then a Ferrari is just capital expenditure, or if you are (and I quote) 'an influencer in Dubai then a Ferrari is a way of capturing the hearts and minds of your customers'...

Im not such a big fan of the last one I must admit, but his point remains: to avoid thinking of your pricing, i.e. your fee, as expensive relative to you, but whether it is expensive relative to your customer, what they are comparing you to, and the outcome they are looking to achieve. 

So thats my 'theory of relativity' regarding estate agency fees... Einstein is probably turning in his grave as we speak! 

P.s., here is the link to Daniel Priestly talking about the relative pricing of a Ferrari: https://www.instagram.com/reel/C8RtoUzsNcw/?igsh=enEwa2ZrenlhN3d5