Irish property vendors are dramatically overpaying auctioneers to sell their properties, according to the founder of Auctioneera, a fixed price estate agency. Mr O’Driscoll decided to set up Auctioneera when he was planning to sell his own apartment and invited a number of estate agents to get quotations. “I was very naïve to be honest; I had expected maybe a few hundred Euro, perhaps as high as a thousand Euro.”
However, the current pricing model in the Irish estate agency industry is typically that the vendor pays the auctioneer a percentage of the final selling price of the property. As house prices have soared since bottoming out around 2012, so have the fees being charged by estate agents.
O Driscoll explains, “When you think about it, we have a property shortage in Ireland now and prices are high. Properties are being snapped up after just a few viewings in most cases. This contrasts with the dark days of the recession when properties would languish on the market for months on end. So it’s a lot easier, and no more expensive, to sell a property in 2018 than it was in 2012, yet because auctioneers are charging a percentage of the final selling price, their fees for selling a property are up well over 50% and they weren’t exactly starting from a low base!”
O Driscoll contends that the costs involved in selling a property are largely fixed and consist of onsite valuation, professional photography, 2D floor plans, Daft & MyHome listings, hosting viewings, accepting offers and perhaps some negotiation at the end. According to O’Driscoll the cost of doing all of these jobs amounts to hundreds, not thousands, of Euro and hence his firm charges vendors a fixed fee of €1299+VAT to sell their property, regardless of the ultimate sales price achieved. To put this in context, a typical fee of 1.5%+VAT and outlays on a property that ultimately sells for €300,000 would command a fee for a traditional agent of €5900 including VAT. There do appear to be substantial savings of offer by considering a fixed price agency.
O’Driscoll points to the UK market as having embraced the fixed fee model and contends it is a matter of time before Ireland goes the same way. Of course, the traditional agents that have done very well under the current regime won’t take this lying down so expect fireworks in the prop-tech sector over the coming years as both sides fight for market share.