Find out what "No Sale, No Fee" really means, who pays for the marketing and sales process, and why estate agents only earn a fee if the sale completes.
If you don't pay unless your property sells, who is taking the risk?
No Sale, No Fee is a term that most people have heard of, but relatively few stop to really think about what it means. No Sale, No Fee doesn't mean the work is free. It means the estate agent accepts the financial risk of carrying out that work before receiving any payment.
From the day an estate agent accepts your instructions, if they are working on a no-sale-no-fee basis, they begin investing their own time and money without any guarantee of ever being paid. Professional photography, marketing, property portal advertising, fielding enquiries, carrying out viewings, negotiating with buyers and keeping a sale moving forward all involve time and expense before the sale completes and the fee is earned.
Unlike a solicitor, surveyor or photographer, who is normally paid for the work they carry out, an agency's fee is usually dependent on the sale actually going to completion. If the property never sells or if you decide to take it off the market, the agent will normally receive nothing for the work they have done. In effect, the estate agent is funding the marketing and sales process on your behalf, recovering those costs only if the transaction completes.
Another way of looking at it is to say that the vendor has control over whether or not they sell and the terms of the sale. The estate agent accepts the financial risk of trying to make the sale happen, and this business model explains many of the decisions experienced estate agents have to make.
- It explains why they spend time discussing a realistic asking price before the property goes on the market.
- It explains why they may sometimes decline to market a property they believe has little realistic prospect of selling.
- It explains why they ask detailed questions about the property.
- It explains why they try to qualify buyers before arranging viewings.
- It also explains why some agents recommend sole or exclusive agency agreements rather than competing with several other agents for the same sale.
These actions improve the chances of a successful sale and help to ensure that the time and money being invested have a realistic prospect of producing a successful result for both seller and agent.
It is worth restating the fact that you, the vendor, remain in control throughout the process. You decide the selling price. You decide whether to accept an offer. You can also change your mind and withdraw the property from the market altogether. If that happens, the estate agent will normally have invested considerable time and money without receiving any payment.
This, of course, doesn't mean that every estate agent is equally committed. Some will invest far more time and effort than others and, as with any profession, there are excellent agents, average agents and poor agents. The important point is understanding how the business model works before deciding whether an estate agent is offering you value.
No Sale, No Fee doesn't mean that the agent is working for nothing. It means that they accept the financial risk of carrying out that work on your behalf before receiving payment. For many sellers, that arrangement provides reassurance.
For others, selling privately may still be the preferred option. Neither approach is automatically right or wrong. Like most decisions when selling property, it comes down to understanding your options and deciding which approach best suits your circumstances.
We have always believed in the No Sale, No Fee concept, and it has always formed part of our working relationship with our vendor clients. If you would like to discuss this or any other matter relating to selling your property, call us on (0034) 952 90 52 00, WhatsApp us, or email info@michael-moon.com.
