Estate agent commission sat at roughly five to seven percent of a sale price for decades while the actual cost of bringing a property to market fell sharply. Photography, listing, reach and paperwork all became cheaper and largely digital. That gap between what the work costs and what it is charged at is what every low-commission competitor is built on.
The same structure exists in many industries, which is why the property example is worth understanding beyond property itself.
A static price with a falling cost base invites competition
When the cost of delivering a service drops and the price does not, the margin becomes visible to anyone prepared to look. The incumbent explains the price by reference to tradition and service quality. A new entrant charges what the work costs plus a reasonable margin and takes share. Any owner should ask honestly whether their own pricing sits on that kind of gap.
Percentage pricing detaches fee from work
Charging a percentage of a transaction means the fee on an expensive property is many times the fee on a cheap one for broadly the same work. Customers at the upper end eventually notice, which is why disruption in commission-based industries starts there. Owners pricing on percentage should understand where their model is most exposed.
Lower price only works with genuinely lower cost
A business charging substantially less has to actually cost less to run, through central handling, standardised process, and the customer doing part of the work. Cutting price without redesigning delivery is not a competing model, it is a slow failure. This is the distinction between the entrants that survive and those that do not.
Infrastructure changes what customers value
Connectivity has become something buyers actively look for in a property because of what it enables, remote work, connected devices, streaming, and areas with it command a premium. That is a reminder that what customers value shifts with infrastructure, and businesses that keep selling the old attributes get left behind.
Regulation applies regardless of the model
Estate agency remains a regulated activity, and a low-commission or online operator carries the same qualification, trust account and disclosure obligations as a traditional one. The requirements are published on the government’s services portal, and a cheaper model that skips them is not a cheaper model, it is an unlicensed one.
Frequently asked questions
Why did low-commission property models emerge?
Because the cost of marketing and selling a property fell substantially while commission rates stayed where they had been for decades.
What makes percentage-based pricing vulnerable?
The fee scales with the transaction value while the work does not, so customers at the upper end pay many times more for broadly the same service.
Can a business simply charge less to compete?
Not sustainably. A lower price requires a genuinely lower cost of delivery through standardisation, centralisation or shifting some work to the customer.
Why does connectivity affect property value?
Because it enables remote work and connected home technology, which buyers now actively look for, showing how infrastructure changes what customers value.
Do online agencies face the same regulation?
Yes. Qualification, trust account and disclosure obligations apply regardless of the commission model.
Further reading
Originally published in January 2017. Updated September 2026 to explain why commission-based pricing attracts competition, in place of a one-year forecast.
