Property Natter: are estate agents paid enough?

Agent wages have been in the news this week, with boastful claims from a number of self-employed businesses about the sums of money they are making. But, in the vast majority of cases, the average agency salary is a lot lower and topped up by commission.

While predictions on the average salary vary depending on where you look, the average UK agent is currently anticipated to earn an annual gross income of around £24,000 before commission. 

With an average fee of 1.5%, this adds up to around £3,800 in commission when a home is successfully sold – although the individual agent individually receives only approximately 10% of this as commission (around £380 per sale).

If, as Nested recently predicted, the average agent sells 30 homes per year, they are making an extra £11,499 in commission and pushing their gross income to £35,595. In London, where higher house prices and higher fees (around 1.74%) are on offer, it’s predicted that the combined average earnings from salary and commission is around £64,000.

According to the website Prospects, starting salaries for estate agents can be in the region of £14,000 to £20,000 on-target earnings (OTE) for trainee posts, rising to between £25,000 and £60,000, plus commission.

It adds: “At the higher end of the scale, in certain management positions, and particularly if you’re in a high-end London agency, you could be earning up to £100,000.”

Location, qualifications, the size of the firm and the economic climate are also likely to have a bearing on an agent’s pay, while some agencies will provide perks like company cars, a car allowance and other incentives.

You’d be hard pushed to find much sympathy for agents, who are often accused of not doing enough for the fees they charge, when it comes to pay, but in many cases they will be relying heavily on commission – far from guaranteed, of course, even in a buoyant market – to top up a fairly low basic salary.

Obviously, some agents – including business owners, high-fliers and those on the board of corporates – will earn considerably more than the average, but most won’t.

As I’ve written about in previous Natters, the average salary in other parts of the world for agents is much higher, because it has seen as a far more valued and respected profession. Fees in the UK are also, when compared with the rest of the world, at the lower end of the scale.

If the industry wants to be more professional and boost its reputation among the public, does it need to offer better pay? Does it need to attract more graduates? Does it need to give employees a real sense of pride and longevity?

For all the talk this week of agents earning silly money, it is not the case for most agents, who may feel they are underpaid for the work they do.

Agency has had a problem with recruitment in recent years, and maybe better incentives and renumeration will make the prospect of becoming an agent a more attractive and desirable path.

There’s never going to be a time when kids will be dreaming of becoming an agent rather than a footballer, Olympian, pop star, actor or pilot, but despite its generally negative perception, many people are still attracted to the role, despite the long hours and complex work involved.

Many people have enjoyed long and happy careers in agency, and maybe this needs to be shouted about more to bring the next generation of agency leaders through.

The current government initiative offering bonuses of £3,000 for every apprentice a business hires – which Chancellor Rishi Sunak announced the extension of by four months to January 31 2022 at the Conservative Party Conference this week – is certainly helping, with Propertymark CEO Nathan Emerson saying the extension to the apprenticeship incentive will help boost the number of young property entering the property sector, including agency work.

He said: “During the time that the apprenticeship incentive was increased to £3,000 for employers, Propertymark Qualifications saw the number of estate agent apprentices registering for their qualifications quadruple compared to the previous year.”

He added: “Now that the chancellor, Rishi Sunak, has announced an extension to the funding which will remain available until January 2022, we’re excited to see more young blood entering the property sector which in turn will help it continue to flourish and provide youngsters with the stepping stones to enter the exciting world of estate and letting agency.”

It may also be the case, if agency is serious about professionalising and become respected in a way that real estate professionals are in other parts of the world, that it will need to follow the model set in the likes of the US, Canada, the Middle East and Australia, where agents are typically far better paid and placed in a similar bracket to teachers, lawyers, businesspeople and doctors.

A forum asking for truth and honesty

Regular readers of the Natter will know I’m always keen to shout out about new initiatives in the property world, and the other week James Graham from ODOS Properties – which describes itself as a new breed of estate agent – got in contact to let us know about a new function it had launched.

The nationwide estate agent has just launched a forum to help home buyers, sellers, investors, landlords and developers talk to each other and ask for assistance from one another in similar situations.

“Our aim is to make the property process transparent and hassle-free and this is one of the ways we thought we could do it by letting people share experiences, non-biased recommendations and discussing the industry in general – it’s all free for people and we aim to create a large network where anyone having an issue can contact one another or one of our team,” James told me.

“We wanted to start a forum to give people a free platform in which they can ask anything about estate agency and have it answered in an unbiased, honest manner by other members of the public who have been through similar situations. We explored other forums out there - they were either small or based on Facebook and many fell victim to pop-up adverts, spam and crude comments/ links.”

He went on: “ODOS Properties was created after first-hand bad experiences with an estate sgent so we integrate technology and software into everything we do, along with an ethical and transparent approach. We have grown from selling investment properties and people’s homes across the West Midlands since we began three years ago and we’ve gone from strength to strength simply by looking and being ‘different’. 

“We feel that people should be able to speak to us and have their questions answered honestly. We want to provide a free community where people can speak without retribution about good and bad experiences that they have received from estate agents and hopefully we can dispel some of the myths about how bad we all are and re-establish people's faith in estate agents as a whole.”

He added: “We want to make the house selling and buying process as stress-free and as simple as possible and want to get that message out there to as many people as possible and we feel that an open forum is the best way to spread that message. The forum will be free forever and no pop-up ads will be on our site.”

A very innovative initiative that could certainly help in improving the reputation of agents in the eyes of the public – it’ll be interesting to see if it catches on elsewhere.  

Explaining MovePal

MovePal, the next evolution product from The ValPal Network, is now just over a year old and going great guns, if I do say so myself!

Business is booming and to help explain away the product in a nifty, interactive way, the clever media people we work with at Angels have produced this fantastic little video, which you can see in full below.

Until next time…

Source