Ian Blyth – It's Just a Thought

My thoughts and opinions

Incentives

Posted by Ian Blyth on 29 May 2008

What drives people to do what they do? A vision? Goals? Or just plain old fashioned incentives?

Take estate agents, Please! (Old joke).

They make their money from the commission they get selling your house. So you would think the more it sells for the better for them. But they also have targets to reach each month. If they charge 2% and the house sells for £300K then they make £6,000. If they sell it for £310K then they only make another £200 which is not a great deal considering the company will take a chunk so the individual agent may not seen anything like that.

So why would they hold out for another month to make less than £200 if there is an offer on the table now and they have their months target to make. For you it is better to wait a month for a buyer who will pay the higher price as you get an extra £9,800. For the estate agent though it is better to take the quick sure sale and get the money in the bank and move onto more houses next month. So it is likely that they will try and persuade you to take the offer and say that that is all the market will bear, not many buyers etc.

If it is a slow month then estate agents will do what other shops do and cut prices to attract sales. The thing about a supermarket is that they have bought those goods already and so will cut their profit. The estate agents do not own the house – you do. So it costs them nothing to reduce the price and even though they make less money per sale if they get sales then that is all money for them and it is better for them to get sales rather than not get sales. So their selling effort is focused on getting you to reduce the price rather than sell the merits of the house to the buyer.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
%d bloggers like this: