Sliding Scale Fee - The Holistic Remedy

If they achieve the suggested asking price, good for them – if they don't, their fee reduces accordingly.
Sliding scale fee structure is nothing new but it addresses ONE very important issue – agencies won't get paid for easy promises.

If you valued a home at £450,000 and the vendor instructs the agency that promised £500,000, that competitor is well-rewarded when they eventually sell the home for £450,000. At a commission of 1.5%, they earn £6750 instead of £7500. The vendor has theoretically dropped £50,000 and the agency has theoretically dropped £750. Hardly seems fair to the vendor, or to your agency which ethically aligned itself with that eventual sale price.

What if the other agency's fee was reduced – such that, for them, selling the home at £450,00 earned zero commission? Immediately, their incentive to deliberately overvalue dissolves.

Sliding scale can do that!

• Sliding Scale demonstrates to a potential client how motivated your agency is to achieving the highest price – without making false promises.
• Compensation becomes more equitable. Agreed offers below and above the asking price are rewarded accordingly.
• Transparency becomes paramount. Both parties understand the consequences of the offer.
• Sliding Scale strengthens the reputation of the industry as a whole and – strengthens the relationship between agency and client.
• Agencies that are unwilling to offer a Sliding Scale fee structure will be perceived as failing to have the courage of their convictions.
• When there is little discernible difference between agencies, other than fee and valuation, Sliding Scale offers the vendor assurance that one agency, at least, acts in their best interest.

"Fee is the last refuge of the marketer who has run out of good ideas." – Seth Godin.
And when your competition has run out of ideas, they will turn to the issue of Fee. Appealing to the greed of the potential client.
"The other agency has offered to sell my home for 1% - will you match their offer?"
A simple Yes, or No won't suffice. This plays straight into the hands of the potential client – playing one agency off against another.
Sliding Scale can offer an escape route for your agency.
Reducing a fee from 1.25% to 1% no longer becomes the issue. The potential to increase, not reduce, fees becomes linked to reducing the base asking price.
When agents are encouraged to set the asking price lower, whilst maintaining their earning potential, the emphasis becomes one of negotiation, rather than manipulation. They are motivated to negotiate higher because they have set a lower base fee and asking price.
Sliding Scale moves an archaic practice of fixed percentage commission to a more fluid model. The agency has the flexibility to set both the asking price and the commission – and allow both sides to view the consequences in real time.
What incentive is there for any agency in offering 0% Fees and for them to then negotiate the highest price?

Zero.

Or one that offers a Fixed Fee of £999?

Nil.

You can download and use the free Sliding Scale Commission spreadsheet below. This is based on a similar model to Australia where the agent receives 50% of the amount acheived over the asking price.