Big rise in fall-throughs and fee-loss for agents

Posted on Tuesday, February 1, 2022

Agents are losing tens of thousands of pounds each - in some cases even more - because of the volume of fall-throughs.

The first assessment of the 2021 calendar year’s fall throughs estimates that some 326,091 transactions collapsed, a 9.2 per cent annual increase on 2020 and 19.5 per cent up on the pre-pandemic level reached in 2019. 

The average estate agent fee reduced last year to 1.18 per cent but with house prices climbing considerably the average fee per transaction also climbed to £3,059. 

As a result, the nation’s estate agents lost out to the tune of £998m in fees as a result of transactions falling through before completion.

These figures come from an analysis by property purchasing specialist HNN Solutions which has also looked at the previous two years. 

Its approach is to analyse the annual number of fall through prior to and during the pandemic, as well as the average estate agent fee lost per sale, before looking at what this loss equates to across the entire sector. 

So in 2019 - before Covid 129 was known about - the research shows that some 272,768 property transactions fell through before reaching completion. 

In total some £805.2m income to agents was lost as a result. 

Then in 2020 during the initial year of the pandemic, the estimated number of transactions to fall through increased by 9.5 per cent to 298,680, with the average house price also climbing to £237,227. 

At the same time, the average estate agent fee reduced to 1.26 per cent but despite this lower fee, the estimated industry loss due to fall throughs totalled £891m - a 10.7 per cent increase on the previous year. 

Then came 2021, so making it an estimated £2.7 billion lost in income to agents in three years.HBB Solutions managing director Chris Hodgkinson says: “Unfortunately in the UK, a transaction falling through before completion is a commonplace occurrence and one in five sales alone will be lost due to the chain collapsing. 

“When you also add the other pandemic complications that many have faced during what has been a tough few years, as well as the increased volume of transactions spurred by the current property market boom, then it’s hardly surprising that the number of sales collapsing has climbed considerably since 2019. 

“It can be as gut-wrenching for those facilitating the sale as it is for those buying or selling the property. Having spent months on end working tirelessly to reach the finish line, they have no choice but to watch their hard work go to waste and their potential income evaporate.”

Via @EstateAgentToday