martymcfly Posted March 26, 2014 Share Posted March 26, 2014 Yeah I dont buy this, it doesnt really make sense from an incentives perspective Estate agents make around 1-2% commission on the sales price. Lets say you have a typical house priced at around £250k and a 2% commission. So the estate agent gets £5k if it sells for that. The problem is now that for every £1000 it sells for in excess of £250k, the estate agent is only getting £20. So even if the agent can push it up to £255k, they are still only making an extra £100. There was in interesting chapter on this in the book "Freakonomics" about whether Estate Agents were correctly "incentivised" for the very reasons you describe above. Basically they looked into the price houses sold for in a particular area, and looked at the price Estate Agents own houses sold for in the same area. I think they found about 3% difference in Estate agents home sale prices vs their clients. Quote Link to comment Share on other sites More sharing options...
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