Estate agent and performance fee

[SarahJane321]

I just had my property valued and the estate agent said he will put it up for £320,000. We said we would be really happy if we got sold it for £330,000 (as a previous estate agent said £350,000 but we felt this was a lot for our property). He then said to pay a performance fee for £100 + Vat if he sells it for £330,000 (as it gives an incentive for the sales team).
Does this sound right or dodgy to you?

What? The incentive is their bloody standard fee. Not a good start!

Performance fee for doing their job? By the sounds of it he already knows the house will sell for £330k , you already had another quote for £350k...

We have just sold ours, no performance fee involved. I'd tell him to get rid of that for sure.

Their incentive should be to sell at the highest price possible anyway (because that's their job) - tell him to get stuffed.

If you want £330k for it then you really need to put it on the market at that, not £320k: even in a very strong market, buyers always look at negotiating downwards.

As to the bonus £100, it’s a tiny amount in the grand scheme of selling property and you’ll hardly miss it, but I’m not entirely sure it would make much difference. People will offer what they want to offer or can afford: the agent achieving £330k is surely simply about you declining any offers below that until somebody eventually offers it, and not a great deal to do with the agent working any harder - unless they mean that they’ll be making up non-existent “higher offers” whenever somebody offers under £330k in a bid to force them higher, which is questionable both morally and in terms of success as often people don’t offer higher and just walk away.

Thank you all!! I won't be going with that estate agent then! I have another valuation today so that will be interesting to see what he says.

Sounds odd to me too. Most EA work on percentage so it’s in their favour to achieve a higher price anyway. How the EA split the commission with their employee is their business, why should the vendor fund it.

It should be quite the reverse. I've sold a couple of houses in the past and negotiated that they only got their full fee if it sold for what I believed to be a good price. Of course I only negotiated that after they had valued them so they couldn't underprice.

Never in my life have I ever heard of a "performance fee".

Isnt it in their own interests to sell at a higher price for commission?

Isn’t the £2k of fees their performance fee?!

Is it a flat fee? Because if they’re working on a % basis at the usual around 1% they’d get that extra £100 anyway, on the basis of getting £10k extra on the sale price.

They charge 1% for the sale price (including Vat), and then on top of that it's the £100+vat.
He said that a 1% fee is well below average.

I am based in East Midlands so not sure how honest he was.

1% is about average. Weird to ask for the performance bonus as he’d get exactly the same amount due to the increased sale price. But if they’re a v good estate agent otherwise then I wouldn’t let it put you off completely.