Vince Baldacchino, the managing director of Owners Best and Developers Best, has two controversial proposals: either legislate for all involved in the property market to charge a five per cent commission – more than the 3.5 per cent he currently charges – to the vendor and then let all the providers compete on the level of service, or split the commission between the buyer and the seller.
“To earn that commission they need to introduce the buyer and seller to each other, take an active and intelligent role in negotiating the deal and follow it to the end,” he said, adding that he realised this would probably never happen.
“In the US, the commission is shared between vendor and buyer. I believe that it is very fair as the estate agent is then looking after the interests of both seller and buyer – who could often both be his clients in a small market like Malta. It would certainly reassure all those involved that property valuations are market-based, and not meant to increase the commission, as many people assume!”
Mr Baldacchino believes that sellers will always try to sell a property without incurring any fees, and will only then try out other methods in order of cost.
“It is only natural that people will go for what they perceive to be the cheapest option. This is why so many people will start off by putting a ‘for sale’ notice in the window, posting a notice on their Facebook profile or listing the property on Maltapark.
“If this does not work after a certain time – usually a few months – they advertise in the media and social media, specifying ‘no agents’ and are quite happy to set up viewings with potential buyers. But if this does not work, then they go to intermediaries, us and eventually to real estate agents – in order of increasing commission,” he explained.
It is only natural that people will go for the cheapest option
“If they think they can sell it without incurring any cost, then they baulk at the idea of paying a few thousand. But this means that they have usually wasted six to 12 months, during which time they have to have the property always ready and available for viewing, which is very demanding.”
Owners Best offers a hybrid of advertising agency and real estate agency – with a commission for successful sales.
“It’s a completely different business model, which has become tremendously popular because the magazine, complemented by the website and TV, appeals to the age bracket we are targeting,” he admitted.
He believes that buyers are put off by the different prices quoted for the same property.
“Sellers list their property online, with us and with real estate agents – sometimes dropping the price without updating all those involved. And sometimes raising it, which is even worse! And developers often advertise directly for one price, giving another higher one to agents.”
He was also sceptical about real estate agents, pointing out that they are interested in selling a property – but not necessarily yours.
“It is quite common for the negotiator to bring a lot of people to see your house even though it is not what they are looking for, as this makes you feel that they are working hard. And they sometimes allow you to leave your property on the market even though it is overpriced, as it makes other properties they represent seem like a bargain,” he said cynically.
“The market has become a jungle. The White Paper will tackle one part of it but if it really had the interests of the consumer at heart, then it would regulate the whole market, from owners selling direct to developers and so on.”