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redwing

How Much Less Are Estate Agents Making

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Hi

I posted this on the local forum but figured it might be worth a more general airing.

The game is to figure out from home.co.uk prices how much less money agents in your area made this year compared to last. I figure this could be a good game to play over a chilly Easter weekend when there's not much new news.

The figures for my local patch go like this:

Dec 2006 vs Dec 2007

Detached 29 13 -55%

Semi 57 36 -37%

Terraced 77 52 -32%

Flat 78 40 -49%

Total Dec 06 241

Total Dec 07 141

That's a nice round 100 fewer sales in the month.

The average price in Dec 07 was £280,000.

Let's say agents are charging 2% fees. That means Cambridge agents collectively made over half a million quid less than the previous year.

That's a hell of a downturn for any business.

Even if I've got the agents' fee percentage wrong, it's still a 42% drop in turnover.

Eyewatering for any business sector.

Can you do worse (by which I mean bigger volume downturn) in your neck of the woods? The rule is yoy %age drop in total volume. And using sales volumes and average for all properties if you want to calculate the £value of the downturn to agents in your town.

Edited by redwing

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remember home data/land registry data takes 3 months to be fully completed, dont compare data in 2008 as it wont be complete.. having said that its an interesting idea to graph income ;p

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probably a lot easier to look at new mortgage numbers, probably somewhere on the BOE website

so this month if there where 20bil in mortgages compaired to 30bil this month last year it means they are making 10bil times their commision less than a year ago.

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ok looking on cml statistics

for Q4 2007 there where £34.3Billion in mortgages for NEW homes (ie not for remortgages)

for Q4 2006 it was £43.7Billion

that is a drop of about £9Billion

Assuming that the majority of homes are sold via estate agents.

that means they sold £9Billion Less or at a commision of 1.5% they took in £135million less in Q4 2007 compaired to Q4 2006

lets times that by 4 to get a year

and you have estate agents taking home £540Million less in fees

now, assuming each one gets paid 50K PA. Expect 10k Less estate agents in the not to distant future

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December income for worcester assuming 2% fees, i would do it for the 11 other months but that seems like ALOT of work

DecIncome.JPG

post-552-1206145246_thumb.jpg

Edited by moosetea

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December income for worcester assuming 2% fees, i would do it for the 11 other months but that seems like ALOT of work

Nice graph - it looks like Worcester is a fairly typical town; reflecting the downturn at the end of 2004 which we all thought was going to be the 'big one' and a then an upkick after the August 2005 drop in base rates.

Looks like around 40% drop in your town too.

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ok looking on cml statistics

for Q4 2007 there where £34.for Q4 2006 it was £43Billion in mortgages for NEW homes (ie not for remortgages)

3.7Billion

that is a drop of about £9Billion

Assuming that the majority of homes are sold via estate agents.

that means they sold £9Billion Less or at a commision of 1.5% they took in £135million less in Q4 2007 compaired to Q4 2006

lets times that by 4 to get a year

and you have estate agents taking home £540Million less in fees

now, assuming each one gets paid 50K PA. Expect 10k Less estate agents in the not to distant future

What if the average LTV is less than 100%?

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The poster 'Father Fred' (ex-EA) informed me that to advertise in a local rag costs, £300 for half a page. £600 for a full page. :huh:

That's actually quite cheap considering the distribution of a local rag. To advertise in a 25k circulation magazine you're looking at around £300 for a quarter page and £1500 for a full A4 colour.

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Today's Guardian confirms that turnover is down.

Please, spare a thought

It must be bad if estate agents are starting to feel the pinch. Miles Brignall reports

Jim Clarke, finance director at the UK's largest chain of estate agents, Countrywide, agrees the industry is now waiting with bated breath to see what happens in the credit markets.

"We've no current plans to lay off staff, but across the industry, business volumes are down 30%-40% from what they were last year, and clearly that will not be sustainable for any length of time.

So my calcuation for December of down 41% and Moosetea's c. 40% down in Worcester look to be bang on.

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What if the average LTV is less than 100%?

your quite right.

9bil in mortgage debt, if most people put a 10% deposit down. that means 10bil in home sales

1.5% fee of 10bil is £150billion less in fees for Q4 2007 compaired to Q4 2006.

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Today's Guardian confirms that turnover is down.

So my calcuation for December of down 41% and Moosetea's c. 40% down in Worcester look to be bang on.

More confirmation in this HPC thread today.

NAEA says:

"Each agent made an average of eight sales during the month, the same as the previous month, but down from 13 a year ago."

I make that a 38% drop in turnover.

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Wait until Tesco's join the party, then you will really see the EA's fry.

If I were Mr Leahy, I'd be waiting until the market is really bad, until a few national chains have gone under. And until the bottom of the market has been reached and turnover starts to increase

I'm assuming that Tesco's model for estate agency would be very low fees for minimal service. That's the sort of thing that would work better in a rising market.

I think the estate agents that survive this correction are going to be the ones who can actually sell something, who know where to find buyers, who know what things are really worth and can properly advise their sellers.

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  • 297 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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