A Worcester based company that claims to have ‘disrupted’ the traditional estate agent model is setting its sights on national expansion because it says that demand for its offer is growing.
FreeAgent247.com, launched by Daniel Lewis and Gerard Smith, provides homeowners with a ‘free’ way of selling their homes by reversing the fees so they are paid for by the buyer.
The pair state that the unique approach has proved successful in Worcestershire, suggesting that there is increasing appetite for a different sales model that has, to date, they say, achieved the asking price on 99% of properties.
Lewis commented: “There were a lot of doubters when we launched FreeAgent247.com, but I think it is safe to say that we have proved the critics wrong.
“Reversing the fees so that the buyer picks up our charges makes complete sense for the seller. It takes away a big additional cost, whether you are selling a 2-bed starter home or a luxury rural property. We are now seeing a steady stream of clients asking us to sell £1m-plus properties and why not? They could be saving between £15,000 and £30,000 by placing their trust in us.”
He continued: “Usually in our sector, when you lower the price for the client, they expect the service to suffer. This couldn’t be further from the truth, with a team of experts – covering estate agents, digital marketeers, photographers and video specialists – handpicked to deliver outstanding customer service and, importantly, to use their skills to sell your property.
“We’ve tested the model in Worcestershire, now the emphasis will be on increasing our geographic reach across other parts of the country.”
FreeAgent247.com is supported by local accountants Haines Watts, which employs 20 people at its office in Worcester City Centre.
The company claims to have a strong track record in backing ‘high-growth disruptors’ and has worked with Lewis and Smith from the very start.
Initially, this was focused on set-up support, but this has quickly evolved into expert assistance with compliance, payroll, VAT/Tax planning and advisory services around the planned expansion.
Dan Jackson, associate at Haines Watts, commented: “FreeAgent247.com is a great example of how an innovative business can take a new concept and revolutionise an established sector.
“Our team of experts have helped the company with all of the financial issues a new business has to contend with, navigating them through the journey so they can concentrate on the property market.
“The duo now has access to a team of specialists to provide strategic advisory support as they look to take the company and its disruptive model to the rest of the UK.”
This has been tried before, lots of time… buyers simply factor the purchasing fee into their offer – so the seller actually gets less, as the overall fee is higher than the UK typical.
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So true, I thought that immediately I read this article. And I’d offer even less as a penalty for thinking I would pay their fee. Cheek. It would put me off buying the porperty in fact. Not a great start for the seller to have annoyed buyers.
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So a lot like the ‘Modern Method of Auction’ then!
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A positive spin is that the risk of a down valuation is reduced.
edit… Or maybe not now I have read Andrew Stanton Proptech Real Estate Influencer reply further down.
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Another scheme that should be illegal. Its got misleading advertising written all over it. Rightmove should be policing this like they should be for Purplebricks and payanyway agents.
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Win win for them, the purchasers just going to ask for a deduction so the vendor will lose out.
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As PB embark on a new push
A certain individual tried this before, wouldn’t call it a disruptor nothing new here.
Most of the public are happy to pay whatever if able to demonstrate what’s involved to achieve maximum attention and the best price. Sorry would be disruptors, there is a small market of people that don’t want to pay for anything in life, but the old adage reigns paying peanuts gets you monkeys.
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Having glanced at their site – and looking at their offer form which takes seven minutes to fill out – good luck with buyer’s filling that out, I am a little worried by this clause –
‘In making the above offer I/we acknowledge our requirement to pay a buyer’s fee on completion of sale and through the solicitors only of £2000.00 + vat (if the purchase price is lower than £200,000) or 1.0% + vat of the eventual selling price (if purchase price is higher than £200,000), in addition to the agreed purchase price. Payment of the buyer’s fee being instructed by the seller and forming part of the property seller’s sale contract.’
First, will this distort in any way the offer made by the prospective buyer, eg they reduce their bid to compensate paying the vendor’s fee?
Second if the buyer is using a mortgage would the paying of a vendor fee by buyer, be seen as a really a mechanism to buy property at a higher value. Eg, vendor sells at £400,000 – buyer puts down £200,000 get a mortgage for £200,000, and pays the vendor gets the benefit of £4,800 via the instrument of the fee being paid to the agent. In reality the real cost to buyer of buying home is £404,800 not £400,000 should the mortgagee not be made aware of this?
Third, what is the HMRC view? As SDLT is paid on the sale price, so if the vendor gets sold at 400,000 then SDLT is calculated on the 400,000 but if the vendor receives 400,000 plus the benefit of the seller’s fee 4,000 + 800 VAT, should SDLT not be applied to 404,800? No doubt the accountant in the mix will have sorted all of these issues.
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“Initially, this was focused on set-up support, but this has quickly evolved into expert assistance with compliance, payroll, VAT/Tax planning and advisory services around the planned expansion.”
Perhaps someone should tell Haines Watts that +VAT is not permitted. Consumers must be quoted prices inclusive of VAT.
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So you are working for (being paid by) the buyer. Should you not be looking to act in the buyers best interest and helping them buy for as little as possible?
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So the purchaser is now the fee paying client and the agent has no obligation to act in the best interest of the seller other than Consumer Protection!
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So the buyer offers 2k less because they’ve got a 2k fee to pay, nothing groundbreaking here…
Still more honest than the ‘modern method of auction’ I keep seeing bandied around where I am where the buyer is paying a fee of 6k+
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Exactly the same as with buyers paying high fees in the so-called Modern Method of Auction/Tender, any material premium is bound to result in a buyer paying less for a property. It also reduces the number of people who will want to buy the property. So it’s a double whammy for the seller. The TPOS Code and Trading Standards state that anything in a contract that is likely to prejudice a seller getting full market value for his/her property should be disclosed. Of course this won’t happen in this case until a dissatisfied buyer makes a complaint.
Also, as Andrew says, will HMRC query this? With the Modern Method and indeed any sale by tender where the buyer pays a material premium, this has to be added to the purchase price for stamp duty purposes (see the TPOS Code on tenders). If this catches on then it is almost bound to be extended.
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Sale by tender then.
I purchased my house 7 years ago in this way, its not groundbreaking.
And I factored this cost into my offer so the seller didn’t really win anyway.
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