Reply To: Estate Agents Fees


Did anyone else receive a copy of this very interesting email below, written by Alasdair Kennedy?


Over the years, VE have been quick to criticise their competitors with various ‘exposés’ published in their Hot Properties magazine. Victims of their often vitriolic attacks have included winners of various prestigious real estate awards, anyone selling property in Bulgaria and more recently fellow agents on the Costa del Sol have been damningly described as ‘prostitutes’ for charging over the top commissions.
So, as VE launch their new campaign to sell property on the Costa del Sol at ‘only 2% commission’, does this campaign prove that VE really are the noble philanthropists they claim to be, or is there something far more sinister lurking behind the marketing promise? Does their offer stand up to scrutiny and more interestingly, how will they react to being the subject of an exposé rather than the indignant and horrified whistle blowers in their ‘Hot under the Collar’ articles? VE sure like to ‘dish it out’ but the big question is can they take it?

Very recently, VE launched with a massive fanfare their latest marketing initiative, claiming a revolution for buyers and sellers alike by offering to sell properties at only 2% commission, whilst the other ‘greedy’ agents were selling at anything between 5 and 7.5%. So far so good, but then dig a little deeper and you’ll find the first big catch.

Property vendors can list their home at a 2% commission in the event of a sale but they have to agree to let VE do the legal conveyancing. This is obligatory so it’s a case of ‘no conveyancing, no listing.’ The legal conveyancing fee is set at 1% of the property purchase price and 20% of that amount has to be paid up front by the vendor. The minimum up front payment is set by VE at 600 euros and the maximum at 1,000 euros.

So, VE will very kindly list your property at a fee which undercuts every other agent, but they want cash in advance to do so! Now you may start to get a whiff an ulterior motive. VE have recently mobilized their entire sales team of around 80 reps to go out and list properties. So if the sales teams are all out listing, who’s doing the selling? Are VE really interested in selling the property or do they just want the up front fee?

As VE like to say in their own advertising, ‘Do the math’! With a portfolio of over 3,000 listings built up over 8 years in operation, could it be that they just want to turn their listings into quick cash – potentially 2 – 3 million euros worth just from their existing portfolio! And if they are so busy doing that, then what chance is there of any individual vendor seeing their property sold? There’s always going to be a far greater number of properties being listed than sold, therefore the vast majority of vendors are going to be paying money up front with a high numerical risk of being sorely disappointed.

Also, surely there’s something unethical about tying the vendor into an agreement to let VE do the legal conveyancing. Doesn’t that smack of ‘conflict of interest’? Not the type of enforced contract one would expect from a consumer champion who espouses the importance of impartial and independent legal advice in much of their publicity.

At first glance yes, but here’s a very sobering fact. VE started their 2% listings campaign only a few weeks ago. They are estimated to have converted less than 200 of their 3000 strong listings portfolio onto the new rate. (They won’t convert a listing unless the vendor pays the up front conveyancing fee). That means that well over 90% of the properties they are marketing are still at their old commission rate of 7.5%.
Could it be that the 2% promise is merely bait to lure unwitting customers into buying the higher commission properties? Whilst they will be enticing customers in on the premise that they can buy cheaper with VE than anywhere else, the reality is that buyers will most likely end up buying a property at a much higher commission rate.

Alternatively, if VE do really stick to their guns and only sell the lower commission properties, it means the customer suddenly has an extremely limited choice of properties to view. So whilst VE claim in their current advertising to have a larger portfolio than everyone else, there’s a massive contradiction here. Either they’ve got a big portfolio of 3,000 properties (but on two completely different commission rates) or a tiny portfolio in the low hundreds if they are only prepared to sell at the lowest rate. So how can they claim to have both at the same time in their advertising? It simply doesn’t stack up.

Any agent worth their salt will tell you that the key to listing at the right price is accurate and professional valuation. Valuing a property correctly so that it can be sold at the right market price is a highly specialised job. It’s not as simple as asking the vendor what they want for it. That normally leads to over valuation as everyone thinks their own property is worth a lot more than it really is. A good valuer will calculate the right price according to their experience and intimate market knowledge and not be swayed by the unrealistic expectations of a vendor.

That leads to the question of why VE have now mobilized their sales team to do the listings rather than using professional valuers. Will the sales team just be interested in picking up a commission on the up front listing fee or will they be genuinely interested in listing the property at an attractive market price? Are buyers getting a better deal buying a 300,000 € property at 2% commission, or are they better off buying it at 290,000 € with a 5% commission to the agent? It’s the end price that’s important, not the commission level to the agent.

VE have never made any secret of their ambitions to dominate the property market, put their competitors out of business and be the biggest most successful agent on the coast. Yet at the same time their entire marketing and publicity drive to the consumer is devoted to portraying them as approachable and friendly to the point of being naïve. The happy puppets on their cars and billboards are patently childish and playschool-like. How could such disarmingly friendly people as VE possibly have any financial motives or want to relieve customers of their hard earned cash through any form of sophisticated sales technique?

VE have worked very hard and spent a lot of money to come up with a brand image that tries to distance themselves as much as possible from the popular belief that real estate agents are sharks. Yet behind the scenes is a well-oiled and aggressive sales and marketing machine that is highly target driven and profit orientated. Isn’t that approach just a little disingenuous? A business can be very successful and offer great service, honesty and professionalism at the same time, but to pretend you’re not even the slightest bit wolf-like is surely just trying to pull the wool over everyone’s eyes.”