Selling a House > Estate Agent Fees

Ask anyone who has dealt with estate agents about them, and they will most likely let out a loud and prolonged sigh. Rightly or wrongly, estate agents get a bad wrap. But are they as bad as we all believe they are or are they a necessary evil, much like council tax and energy suppliers?

It’s not just buyers and tenants who find estate agents exasperating. It may be hard to feel sorry for people selling a property – I mean, they’re making a lot of money – but they also have to contend with estate agents.

Selling a property is arguably more stressful than buying one. For most people, they’re selling their property to fund a purchase. Unsurprisingly, then, most sellers want their sale to go through quickly and without any bumps in the road. That’s where the estate agents come in.

Like them or loathe them, estate agents make the home buying/selling process a lot easier. They take a chunk of the stress away from you and take care of the viewings and negotiation. It might feel like dealing with an agent is more hassle then it’s worth, but the amount of time and stress you save yourself is invaluable.

If you are looking to sell your property through an estate agent,  you most likely want to know what’s involved. Also, how much is it going to cost you? Don’t worry, reader, we’ve got you covered.

 

What fees might I have to pay?

Even though you’re selling and not buying, selling your home can be expensive. The cost of the estate agent and legal fees soon adds up, so you need to be aware of what you’re getting into and the price of the work.

Commission Fees

The first thing to be aware of is estate agent fees. Most high street estate agents will charge a commission on the sale of your property. The average estate agent fee in the UK is 1.42% of the selling price, according to the house-selling website, TheAdvisory. For example, if you sold your property for £250,000, the average high street estate agent would take £3,550 in commission. It’s important to remember this sum is the average percentage, so check with your agency to see what their fees are.

VAT

While estate agents used to quote their fees ‘plus VAT’, meaning that you’d have to pay an extra 20%, they now have to include VAT in their prices. This rule was put into place by The Property Ombudsman and came into effect on October 2016. If you’re ever unsure about an element of your quote, don’t be afraid to raise your concerns with the agency.

How to choose the right Estate Agent?

There’s a lot of estate agents out there, so picking the right one can be difficult. It may be tempting to go with the agency that charges the lowest commission, but you should consider your options before rushing into an agreement.

The best estate agents will charge more for their services. While the commission figure may be less appealing than their rivals, they’re likely to get you the best possible price for your property, therefore making you more money in the long run.

It’s also worth remembering that you’re going to be in contact with the agent a lot, so they need to be somebody that you trust and feel comfortable doing business with. The person who conducts house viewings and negotiates on your behalf will be different than the agent who does the evaluation, so pop into the branch and get a feel for the company as a whole.

 

What do Estate Agent fees cover?

Estate agent charges may seem like an unwanted expense, but they do cover a lot of services. In general, fees cover the following:

  • Property valuation – The agent will research the local market, looking at trends and past sales to come up with a realistic valuation of your property.
  • They will create floorplans, measure the dimensions of the property and take professional photographs.
  • The agency will do the write up of your property, making it as enticing as possible to potential buyers.
  • They will list your property online and in the newspaper
  • They will install the ‘for sale’ sign outside of the house.
  • They will organise and carry out viewings of the property.
  • The agent will negotiate the price on your behalf to potential buyers.
  • There are also other costs included in the fees, such as estate agency office rental, fleet cars and general advertisement.

 

Online Estate Agents: what to know

If keeping the costs to a minimum is the priority when selling your property, it may be worth considering an online agency to help with the sale of your home.

Online estate agents are growing in popularity, and it’s easy to see why. The biggest advantage of an online agency is the savings you can make on estate agent fees. Unlike a high-street agent, online agencies do not charge a percentage and instead ask for an upfront cost of between £200 to £1000.

Not only are online agencies cheaper, but they also offer a level of control and personalisation that you cannot get from a high street agent. If you’re someone who likes to be in control and constantly kept in the loop, using an online agent allows you access all the information you need at the click of a button and at any time of the day. This differs from a regular high street agency, which requires you to call your agent and hope that they pick up the phone.

Although you have an element of control and can save a lot of money through an online agency, you should also be aware of the downside of these businesses.

Disadvantages of Online Estate Agents

An online estate agent will ask you to pay your fee upfront and, although the figure will be lower than what you may end up paying a high street agent, the fee will be non-refundable. This means that if for whatever reason, your property does not sell during the term of your agreement, you will end up out of pocket as you will have to pay your fee regardless. Some online estate agents do offer packages that allow you to pay your fee on completion, but they are usually more expensive than their rivals.

One of the perks of using a high street agent is that they will know the area and will be able to give you an accurate valuation of your property. Despite the fact that many online-only estate agents have now evolved into ‘hybrid agencies’ and employ local ‘experts’ to handle the sale, they may not be as knowledgeable as a high street agent.

These area experts tend to cover a large ground area and are unlikely to have the in-depth knowledge of a local estate agent. You may not think that this matters, but having someone who knows the area; knows the schools and local businesses; knows what the commute to town is like, and has previous experience in selling similar houses can be invaluable.

As mentioned, online agents will save you money. But, on the flip side, they won’t save you time. Unless you opt-in for the company to conduct viewings (which costs more money), you will have to show people around your property and deal with all the stresses that come with managing the property for sale. You might think that this is fine, in fact, you may think that you can do a better job at selling your house than an estate agent ever could, but you will also have to contend with late drop-outs and no shows who waste your time and energy.

What to know when comparing Estate Agents

If you decide to go with a high street agency, make sure you do some comparisons before you commit to a certain business.  Like most purchases, estate agent fees can be haggled and you can play the agencies against each other in order to receive the best price.

The majority of high street agents will offer a property valuation for free, so invite several companies to come to your home and provide you with a valuation and quote you a fee.

Estate agents are well-versed in sales speak, so don’t be afraid to grill them on what they’re offering and their recent performance. They will not want to lose your business, so mention that you’re talking to other agencies or provide them with a rival quote if it’s lower than their price.

Even if your preferred agent refuses to lower their fee, they may be happy to negotiate on other aspects of the agreement, such as the rate of commission they receive based on how much they sell your property for. For example, if the agent fails to sell the property for the asking price, they may be willing to take a lower commission due to their poor performance. By negotiating on the commission, you give the agent an incentive to provide the best possible service and negotiate the best price for the property.

The world of property can be a confusing place, so you should try and educate yourself on the language used by agents before you begin shopping around.

 

Quick Glossary: top terms to be aware of

The Property Ombudsman has an online glossary of property terminology that is a useful tool for buyers and sellers with little-to-no experience or understanding of the property market. In order to save some time, here a few key terms to be aware of as a seller.

Sole agency agreement

This means that the agent will be entitled to a fee if the home is purchased by someone who your agent has found.

Sole-selling agreement

Like the sole-agency agreement, sole-selling also means that the estate agent is the only agent that can sell your property during the contract terms. However, there is a key difference. If you find a buyer, the estate agent is entitled to charge estate agent fees, typically between 1-2%. If this is in the contract clause, it is not recommended to sign.

Multi-agency agreement

This agreement means that you’ve instructed multiple agencies to advertise the property and whoever finds a buyer will get the fee. This type of agreement usually involves a higher agency fee. Also, as the majority of agents will list your property on the same websites, it may not be worth the extra cash.

Fixed Fee

A set charge rather than a percentage of the final costs.

While you do have to pay this upfront, it’s usually cheaper and ensures you pay the same amount regardless of how quickly or slowly the property sells or for how much. Fixed fees are more common with online estate agents.

Tie-in period

This is the period of time that you are tied into the contract with the agency. The tie-in period runs from the date that you signed the agreement until the agreed termination date. Try to avoid anything over eight weeks as, if an agent hasn’t managed to sell your property in that time, they may not be the best option for you.

Ready, willing and able purchaser

You need to look out for this in the contract as you do not want to be signing with an agency that includes this as a clause. This means that you will still have to pay the agent for finding a buyer even if you withdraw from the sale for whatever reason.

Notice Period

This is the period of time – usually 2 weeks – between when you tell your estate agent you want to terminate the contract and when it actually terminates. Bear in mind that you may also have to factor in the tie-in period, if this applies (at the bottom of our list).

Open-ended agreements

As part of an open-ended agreement, an agent can claim commission if you sell to someone who the agent originally introduced to your property – even if this is months or years afterwards.

 

Estate Agent Fees in Scotland

In Scotland, things work a little differently. The laws in Scotland allow for many solicitors to also act as estate agents. This way, the act of marketing your property goes together with the all legal work.

This said, there shouldn’t be any major differences in estate agent fees. The same work gets done, you just have to deal with one person instead of two.

In England and Wales, the laws differ. The roles of estate agents on the one hand and of solicitors and conveyancers on the other are clearly separate.

 

When selling your home, you should be certain that the agency is the right one for you and that the relationship between yourself and the agent looking after your property remains positive and open. Red flags should appear if you’re having to call five times a day before getting through to anyone, or your emails are regularly ignored. At the end of the day, selling a property involves and an enormous amount of money and upheaval, so the deal should be treated with the respect and attention it deserves.

Make sure that you read through the contract and that you understand the terms of the agreement before you sign anything. If there’s any clauses or terminology that you are not happy with or unsure of, talk to the agent and never be afraid to as questions.

All prices in the agreement should include VAT, the term of the agreement should be clearly set out, and there should an official process in place if you are unhappy with the service you are receiving. Whether your relationship with the agent is positive or negative, keep a track of all correspondence as you may need them as proof.

Other than that, good luck!