Here is an example of an average High Street Estate Agent’s complete income revenue stream from one sale, with all additional products they provide. This example Estate Agent is Licenced by The FSA to advise on Mortgages and Financial Services including General Insurance Products.
Estate Agents Income Potential
Example Scenario.
Mr. and Mrs. A.N. Other, are selling their £100,000 home and moving to a larger home on sale through Floggem & Filchem Estate Agents for £150,000.
Floggem & Filchem offer to conduct the sale of their present property and facilitate the purchase of their new property.
Floggem & Filchem charge 1.5% for selling their property, with additional costs if Mr. & Mrs. Other requests their property details advertised in the Property Pages of the local Newspaper. Floggem & Filchem charge £45.00 per insertion, minimum 3 insertions in this Newspaper.
Floggem & Filchem benefit as much as Mr. & Mrs. Other, in that they receive free publicity and newspaper exposure for their agency.
| Sale of Property | Item Charge | VAT | Total |
| £100,000 @ 1.5% | £1,500.00 | £262.50 | £1,762.50 |
| 3 Adverts in local paper | £135.00 | £23.62 | £158.62 |
| Total invoice to client | 1,921.12 | ||
| Godfrey & Godfrey's charges would be | £393.00 | ||
| Saving | £1,528.12 |
For arranging a £70,000 mortgage on the new property, a procuration fee from the lender of 0.45%, is paid on completion;
Floggem & Filchem benefit some
£315.00
Floggem & Filchem also arrange buildings and contents insurance for the client at £35.00 per month; they receive commission at 20% per annum.
Giving a financial benefit to Floggem & Filchem of
£84.00
Floggem & Filchem arrange accident, sickness and redundancy insurance cover, to protect their monthly payments; this is now almost mandatory as a condition of a mortgage advance, charged at £5.75 per £100 worth of cover to protect £400.00 risk, for this Floggem & Filchem receive a commission of 25% of the annual premium,.
A financial benefit to Floggem & Filchem of
£69.00
Floggem & Filchem will further arrange a top up life policy to cover the further borrowing that the clients have taken, we will assume a £50,000 additional policy under critical life 18 term @ £45.00 per month. Floggem & Filchem will benefit by 175% of the first years annual premium
A financial benefit to Floggem & Filchem of
£945.00
Floggem & Filchem have benefited on this one sale some
£3,334.12
Let us not forget, Floggem & Filchem have been instrumental in the sale of Mr. & Mrs. Other’s new property as well. £2,250 for the sale alone.
An average branch of a High Street Estate Agency is instrumental in selling around 200 properties per year.
Perhaps it becomes clearer why Estate Agents almost demand that you use their in house financial/mortgage advisor. Or at least give the impression that you must.
Unfortunately, this is not the only income stream that Estate Agents benefit from. By recommending a specific Solicitor, a Timber and Damp Specialist, an Electrician, A local Builder or a Local Furniture removal company, they could benefit by a financial considerations for making these referrals. The Estate Agents act demands that the Estate Agent reveals any financial inducements they may receive from your custom; I wonder how many actually do.
As we previously stated, we have no problem with anyone making a profit, it is the vast amount of profit they make for such little effort that bothers us. We are, however amazed that people will pay these amounts when there is a vastly cheaper effective alternative available.