Low-cost estate agents revolutionising property market

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The question needs to be asked: Why would one choose a low-cost estate agent - where the seller shows potential buyers around instead of an agent - rather than a traditional estate agent?

A key attraction would be that low-cost estate agents have far lower fees. Steeple has a commission of 1.5% compared to the 5% to 7% + VAT charged by traditional estate agents. On a R1.5m house, for example, Steeple's commission would be R22,500 whereas a traditional agent could charge between R85,000 and R120,000 including VAT.

Secondly, low-cost estate agents prefer to offer a transparent service and work with the seller to finalise the selling price. Steeple provides the seller with a comparative market analysis that shows the recent sales in the area, so that the seller can see the actual selling prices achieved. The seller is also free to canvass the opinions of other agents or their bank.

Open mandates

Low-cost agents work with open mandates and are therefore focused on setting a price at which the property will attract buyers, rather than a price that will persuade the seller to sign a sole mandate.

In SA there are no buyer's agents, only seller's agents, so if you approach an agent about your requirements you are most likely only going to be shown houses that the particular agent has a mandate to sell. Hence, it makes more sense in SA to look on the property portals where all the properties are listed.

Online marketing

These days, the majority of buyers search online for properties and that is where a property needs maximum exposure. Unlike many traditional agents, low-cost agents will focus on online marketing and, typically, their internet marketing reach would be broader. The more people who see a property, the more potential buyers there will be, and this increases the chances of concluding a sale.

Buyers need quick responses or they will lose interest. In the traditional model, buyers and sellers have to communicate with an agent who is invariably on the road and can't respond immediately or record the request.

In essence, the low-cost estate agency model is akin to the low-cost airline model: the focus is on providing the critical service/s at the lowest possible cost. In the 21st century, people are no longer prepared to pay extra for the luxury of an outdated business model.