How many Estate Agents to Instruct?

For many sellers out there, the world of estate agency immediately conjures up scenes from a Clint Eastwood western movie. Agents eyeing each other up under their Stetsons in the midday sun, then taking each other outside to have a good old fashioned quick-draw pistol shoot out. The winner takes all the loot/commission, plus the admiration of the local town.

You can therefore completely understand the logic of a recent client saying to me that they had instructed three estate agents to act for them on their behalf. Whoever finds the buyer, takes all of the fee. In their own mind, they envisaged an estate agency bar room brawl, with each agent clambering over each other to get their commission, whilst the saloon piano played along in the background. Whilst the client’s logic was sound, it got me thinking – why would they know better and what are the different types of agency instruction?

Multi-Agency

In this example, the client had instructed the agents on a multi-agency basis. This applies to two or more estate agents acting on a winner takes all footing. As an agent, you stand to take all the fee. However if you don’t bring anything to the table, then you walk away with nothing. It sounds great in theory and yes estate agents are highly focussed sales people. However what the client didn’t realise, is that they had inadvertently shot themselves in the foot. You see, estate agents are always happy to take out their competitors, however if the risks are seen to be too high, then they won’t bother getting involved. What actually happens under a multi-agency basis, is that the agents will take a property on, however it is usually to be used as marketing collateral. They’re not interested nor incentivised to sell your home, as at any point the other side could pull a buyer (or second pistol from their holster) and take them out without warning. Multi-agency dilutes estate agents efforts and also shouts of desperation to sell. The only winners are the agents and it is therefore very rare I suggest this route.

Joint agency

One can then look towards a joint agency. This is where two estate agents are directly instructed, to act on your behalf (the owner) and the percentage weighting of the commission towards the winning agent can altered if required. However this is a fine line to tread, as if you inadvertently don’t read the situation well enough by giving too much fee to the winning agent, then your well choreographed line-dance will turn into everyone stepping on each other’s toes and they all fall over. Most of the time, I would suggest that you want the agents to collaborate and act together for you the client. Therefore a 50/50 split (or sometimes a 60/40) is applicable. Going beyond these numbers will only land you in hot water with the local sheriff. Under joint agency, both agents should be contrasting (e.g. large corporate and a smaller local firm) and it can be a more subtle way to change the energy of your sale, by drafting in an additional agent. Whilst there is usually a higher fee to pay as two agents are involved, it is certainly useful to have in your armoury depending on the type of property you are selling.

Sole agency

Your final option is sole agency. One agent, acting for you on the right basis. You therefore keep their entire focus, plus if rewarded correctly, they will kick down the doors of every saloon bar in town, to secure you that buyer.

So overall, instructing one estate agent is great. Two can be a power team. But putting agents on a winner takes all basis with each other, will just lead to a Mexican standoff.