‘Greedy’ real estate agencies are target of Malta start-up that promises to slash fees

No agent fees? Sounds good enough, and ‘Not Greedy’ – yes, that is the name – is making a point of telling people they can bring change to the real estate industry by removing agent fees from transactions. 

John Zammit, director of the Not Greedy start-up, told MaltaToday that he was amazed at how many people think that agency fees on property transactions are paid for by the seller rather than the buyer. 

Transactions conducted through a real estate agency incur an agency fee, which is payable by the seller but usually passed on to the buyer through an increase in the cost of the property. Fees are usually in the range of 3.5% and 5% of the value of the property.  

With real estate agent fees calculated as a percentage of the value of a property, fees will continue to rise as the property market continues to grow.

Someone buying a property valued at €150,000 in 2010 would have had to pay up to €7,500 in agency fees, assuming a 5% fee. Over the past five to six years, house prices have risen on average by roughly 50%, meaning an average €150,000 property is now worth €225,000, driving agency fees up to €11,250 for essentially the same service rendered. 

Not Greedy has set up an online portal which allows sellers to advertise their property by signing up and uploading photos to the website. Once online, buyers can arrange to view the property and even make an offer through the website itself. Sellers using the website’s service will be required to pay a standard fee which will never exceed a value equivalent to 1% of the value of the property.

However not everyone believes that the industry can do without agents. Ian Casolani, managing director of Belair Property, said that the job of a real estate agent that takes his work seriously goes far beyond simply showing properties and that they offer a more tailored service that a website cannot offer. 

“Many people underestimate what goes into the day to day job of an agent, dealing with the authorities, permit issues, legal paperwork and a lot of other small jobs that go unnoticed,” said Casolani.

Zammit agrees that the industry contains many hard working agents, however he is adamant that the industry itself is flawed due to issues such as a lack of transparency, unjustifiable fees, and often poor service. He added that while the price of property has shot up by 67% in the last 15 years, real estate agency operational costs have not.

“It is a time when the average buyer is being hit harder than ever financially, yet at the same time the agencies are making more money than ever, instead of passing on savings to their clients,” said Zammit

While the idea of saving buyers money is a positive one, one can also envisage sellers inflating their price to take advantage of the fact that there are no agency fees. Mr Zammit acknowledged that this was a possibility but added that in most cases the seller has one asking price in mind, which he communicates to the agency.

“Sellers are usually happy to get that amount irrespective of what the property is advertised at. The agency then increases the price by 5% and sometimes a little bit more to round off the price, I’m not too sure sellers would increase their asking price if the commission is removed, and this can be seen by those owners who try and advertise on other websites they use their asking price and not the inflated price.” added Zammit.