The National Consumer Agency (NCA) yesterday criticised the decision by leading estate agent Sherry FitzGerald to increase the fees it charges for selling houses by 50 per cent. Paul Cullen, Consumer Affairs Correspondent, reports.
Ann Fitzgerald, acting chief executive of the NCA, said it was incredible and unacceptable for estate agents to increase fees in response to a downturn in the property market.
Sherry FitzGerald confirmed yesterday an increase in fees charged by its outlets in Dublin and Cork. The average increase from 1 per cent to 1.5 per cent of sale price will add €2,000 to the cost of selling a €400,000 house.
Sherry FitzGerald is the State's largest estate agent, with 100 branches or franchises nationwide. "The property market has changed so much over the past year that it is only possible to continue a high-quality service with increased fees," said Mark FitzGerald, chief executive.
"Sherry FitzGerald provides levels of expertise and personal attention that are unparalleled. The company will not compromise those standards in difficult market conditions."
However, Ms Fitzgerald described the move as unbelievable. "Estate agents have had 10 years of a gravy train, during which they didn't need to sell houses because they walked out the door at ever-increasing prices."
"Now, just six or seven months into a downturn to have estate agents increasing fees by 50 per cent is unbelievable."
While anecdotal evidence indicates an increase in commission levels across the board, few estate agents were willing yesterday to admit they had increased prices.
Douglas Newman Good (DNG) said its fees of 1-1.25 per cent were "marginally up" on last year but managing director Keith Lowe said that overall they were down 50 per cent in the past three years.
Lisney said its commission rates would not change and Colliers Jackson-Stops said Sherry FitzGerald's increase was disproportionate. "At a time when the country is calling for a reduction in the penal levels of stamp duty to help home buyers, as an industry we should be taking steps to strengthen the current market, not penalising buyers with increases in commission rates," said Marcus Magnier, director of Colliers Jackson-Stops.
Alan Cooke, chief executive of the Irish Auctioneers' and Valuers' Institute, said he had no knowledge of or involvement in the fee levels charged by his members. "The market has slowed. It's taking longer to sell property and more effort is involved. That effort has to be rewarded and staff have to be paid. Mere economics demands, therefore, that fees should be higher."
Some estate agents have responded to the property downturn by cutting costs.
Both DNG and Gunnes have each let go small numbers of staff and one industry source said redundancies were occurring "across the board".
Sherry FitzGerald's next set of figures are expected to show a decline in profits.
The fees charged by estate agents are low internationally but in many countries this expense is shared between the buyer and the seller.
Ms Fitzgerald advised consumers to shop around before deciding to go with a particular estate agent and to obtain precise information on what work the agent will carry out in return for the fee.
With most of the main parties promising to cut stamp duty if elected, Mr Lowe predicted an improvement in the property market after the election.