Daily bite-sized proptech and property news in partnership with Estate Agent Networking.
FreeAgent247 makes the buyer pay the vendors agency fee – is this good news
We’ve seen a number of interesting takes recently that have attempted to change how things are traditionally done in property. Now we’re seeing yet another topsy turvy agency model, this time where the buyer pays the agency fee.
I’m all for innovative ideas, it’s how we progress after all. But it’s true that we must go through thousands of bad ideas to find a good one. How does FreeAgent247’s proposition stack up?
FreeAgent247 has a buyer model based on the concept that the seller pays the agent on completion, as well as paying for the property. So a direct reversal of the usual model. On its website, FreeAgent247 had less than twenty properties for sale, so it did not look as though they had managed to convince many vendors of the model.
Looking deeper and exploring their offering a little more, I came across a section where a buyer has to fill out detailed information regarding their position to purchase. This makes sense, but the following wording was a little unsettling.
“In making the above offer I/we acknowledge our requirement to pay a buyer’s fee on completion of sale and through the solicitors only of £2000.00 + vat (if the purchase price is lower than £200,000) or 1.0% + vat of the eventual selling price (if the purchase price is higher than £200,000), in addition to the agreed purchase price. Payment of the buyer’s fee being instructed by the seller and forming part of the property seller’s sale contract.”
First, will this not make any buyer offer a figure that is what they would have offered, less the price of the fee payable to the agent? So the owner gets a lower sale price?
Second, if the buyer is using a mortgage, would the paying of a vendor fee by the buyer be seen as a mechanism to buy property at a higher value?
For example, if a vendor sells at £400,000, the buyer puts down £200,000 get a mortgage for £200,000 and pays. The vendor gets the benefit of £4,800 via the instrument of the fee being paid to the agent.
In reality, the actual cost to the buyer of buying a home is £404,800, not £400,000. Should the mortgagee not be made aware of this?
Also, what is the HMRC’s view of this? Because SDLT is paid on the sale price, if the vendor gets sold at £400,000 then SDLT is calculated on the full amount. However, if the vendor receives the full amount plus the benefit of the seller’s fee (£4,000 + £800 VAT), should SDLT not be applied to £404,800?
All fees must be quoted inclusive of the VAT element so there is full transparency, this is a legal requirement.
No doubt FreeAgent247’s accountant will have sorted all of these issues.
New tech from Tenancy Deposit Scheme cuts admin time for agents
Tenancy Deposit Scheme (TDS) has released the latest update of its newly launched API solution to help lettings agents streamline their deposit protection process.
The PropTech API, which has been developed by TDS’ in-house technology team, connects an agent’s lettings software/CRM tool with the TDS database to automatically transfer the tenancy deposit registration details at the click of a button. Up to now, this has always been a manual exercise and often results in duplicate efforts where agents are entering the same information into multiple platforms. The new API turns this into an automated process which removes the inputting task and saves hours of administration in the process.
“Tenancy deposits play a small but an important part in an agent’s list of responsibilities and should therefore be as easy as possible to manage,’ commented Debbie Davies, Head of Sales and Client Success at TDS. “After listening to our customers’ needs, our in-house technology team developed the API to speed up the tenancy deposit process and save agents’ time. Our aim is to continue making deposit management as fast and simple as possible.”
TDS currently protects 4.2 million deposits for thousands of letting agents throughout the UK. The user database is vast, which is why CRM providers have already started integrating with TDS using the API.
The integration streamlines the deposit protection journey and improve user satisfaction. As a feature that agents have been calling for, TDS is urging letting agents to spread the word to their CRM software suppliers and ask for the feature to be added to their platform.
“Letting agents are encouraged to bring their CRM partners onboard to integrate with the TDS API,” added Debbie. “We have a strong incentive and promotional programme for all CRM software providers who integrate, to help them access and retain users in the property sector. It’s a win-win for letting agents and CRM providers.”
TDS expects the solution to be picked up by more CRM software providers throughout 2021 and into 2022 as agents continue to look for further efficiencies and cost savings. Fraser Sutherland, Managing Director of SME Professional, is delighted to announce their partnership with TDS, “Our partnership with TDS is taking the next step with our insured-scheme API integration. As a leading provider of property management systems, we believe that software integrations are key to offering our clients simple, reliable and time-saving transfer of information between platforms.”
The TDS technology team has made the integration incredibly straightforward with a simple 4-step set-up process for CRM providers. “If something can be made easier or more efficient in tenancy deposits, we’ll find it – and develop it. This API is just one example of how our technology team continues to push tenancy deposit management and automation forward.”
The TDS API now features a new update that allows agents to search their TDS account to check if properties and/or landlords have already been added to their database. This new function prevents duplications and further streamlines the deposit registration process by ensuring agents only add new details.
CRM providers and letting agents can learn more about how the API works and integrates here: TDS CRM API