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When Do You Pay Estate Agent Fees?

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Estate agent fees can be hard to swallow, especially on top of stamp duty, legal fees and removal costs. But for most people, they’re an inevitable part of buying and selling a property.

So when do you pay estate agent fees and how much are they? What affects how much you pay and can you negotiate lower fees?

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Shop around and compare estate agency services

Choose to sell your home through an estate agent and they will charge you a commission – usually, a percentage of your home’s sale price. There are no fixed rules on estate agent fees or what you get in return, so shop around and compare services.

High street local agents usually offer more comprehensive packages than online or hybrid agents, but they often charge more. Online counterparts can save you a lot of money, but can leave a lot of work for the seller to do, you will have to decide which is more important – saving time or money. 

How much are estate agent fees?

So, the first step in this guide to sell your house is to work out whether to use local estate agents or an alternative option. The option you choose is likely to depend on the estate agency fees you’ll be charged. 

High Street Estate Agent Fees

High street estate agents can charge anything from 0.75% to 3% of the house price, but only when the property is sold. Research by industry publication Property Industry Eye, suggest UK fees average around 1% plus VAT.

This is for a sole agency – just one estate agent marketing your property. Joint sole agencies and multiple agency agreements see fees jumping to as much as 2-3% +VAT.

Online Estate Agent Fees

Online estate agents charge lower fees, but usually upfront, or tie you in via a credit agreement. They also often offer fixed fees.

In an attempt to capture market share, some online agents have introduced ‘no sale, no fee’ options. But these can be double their upfront fees, bringing them into line with high street agents’ charges. 

Is the most expensive or cheapest estate agent the best?

How you sell your property is up to you. 

If you’re pushed for time or just uncomfortable showing potential buyers around your home yourself? You might find it worth using an estate agent and paying their higher fees.

If you are pro-active or want to save some cash, consider an online agent who will generally be cheaper. This can help keep the cost of selling a house down. Prepare to handle viewings and more paperwork yourself, though! 

When choosing an estate agent, make sure you understand what you get for the agency fee you are paying. If you choose high street, the average estate agent fee tends to include the full package, such as online portal listings, floor plans and photographs etc. Be careful, agents charging lower fees may class these as add-ons that you need to pay extra for.

How to get a good deal when selling your home

Choose an online or hybrid agent, and there’s little room to haggle. But go for a high street agent, and there’s scope for negotiation.

Ask several estate agents to value how much your home is worth and to quote a fee. It’s also worth finding out how many listings they had over the last few months, and how many converted into sales. This will give you a measure of their success. Also, ask what’s included in their service.

If one estate agent has lowers cheaper fees but you would prefer another company, mention the cheaper deal and ask if they will match it. If your preferred agent refuses to lower their charges, make sure you get as many services included in the money and get the most out of your estate agents fees.

If you need a quick sale, consider incentivising the agent. Agree to a basic fee, but offer a bonus for anything achieved over the agreed sale price for a deal within a set period.

Don’t be afraid to negotiate – the worst that can happen is they say no!

The small print

High street and online agents are legally obliged to act in your best interest and must do everything they can to get you the best result. Remember, as the seller, you are their client.

The Estate Agents Act 1979 also states an agent must tell you what is included in their fee – the property details, advertising costs, placing it on property portals, and ‘For Sale’ boards.

They are also required to quote their agents fees including VAT, so check carefully. With VAT currently at 20%, a 1% fee means you would actually pay 1.2%, so based on a £250,000 home you pay £3,000 instead of £2,500 – a notable difference.

All estate agent charges must be clearly explained & confirmed in writing before you are committed or have any liability towards an online or local agent. Don’t get bullied or feel obliged to use an agent if they haven’t taken the correct steps.

Look around if you are quoted extras like up-front registration fees, fees for photos or floor plans, and advertising or marketing costs. There are enough agents to choose from without upfront costs.

The only additional upfront cost may be for an Energy Performance Certificate (EPC). Most agents can arrange this for you, but there is no obligation to go with their recommendation. The agent is almost certainly receiving a commission payment for their recommendation.

Estate agent contracts: what to look out for

Legally, your estate agent contract must use clear terms and pass on all offers promptly in writing. They must also reveal any personal or financial interest in the offers made on your property. Finally, they must be a member of The Property Ombudsman, The Property Redress Scheme or Centre for Effective Dispute Resolution.

Make sure they are clear and explain what happens if you find a buyer yourself. If it is a Sole Agency Agreement, then you shouldn’t have to pay the fee. But if you sign a Sole Selling Rights Agreement, then you will have to pay them regardless of who finds the buyer.

Typically, you will be tied into an agency contract for 4 – 12 weeks. Check how quickly you can terminate the contract if you are not happy with their service. Ideally, go for a tie-in period of no more than six weeks.

If you are unhappy with an estate agent’s explanation on any query you have or an unwillingness to negotiate any of these points, politely decline their services and go elsewhere.

Other clauses in an estate agent contract to look for are ‘ready, willing and able purchaser.’ This means you will pay your agent’s charges in part or full even if you don’t sell your property.

You should also clarify if it is a ‘sole agency contract’ or not. Some high street estate agents put an agreement in the contract stating they have sole selling rights to stop you from listing your property with multiple agencies. Even if you find a buyer yourself, or via another agency, you might still end up having to fork out for their agency fees!

When do you have to pay an estate agent’s fee?

Go with an online estate agent and part or all of their fees are due upfront. With high street agents, payment is due when contracts exchange. The estate agent submits their invoice to your solicitor, make sure you check if the fee is correct. But you don’t actually pay until the sale completes.

Typically, your solicitor pays the estate agent from the completion monies. This way, you don’t need to write a cheque or transfer funds to the estate agent at all.

There are three conditions an agent must satisfy to claim their commission:

  1. They must have introduced the person who enters into a valid, binding contract;
  2. The buyer must be financially willing and able to complete; and
  3. The agent must be able to show that their introduction led to the contract of sale between the seller and buyer

The agent’s fee is based upon their success – do not agree to any (part) payments until your solicitor confirms the deal has completed!

Ask lots of questions and get good advice!

Selling your home can be complicated and emotional. Don’t be shy to ask the estate agent lots of questions – good agents will be happy to take the time and answer them for you.

Knowing the estate agents are valuing your home fairly is vital. You can double-check their opinion using Phil Spencer’s Property Report

Get a Property Report

It also pays to have the right solicitor on your side who can guide you through the sale.

Find a Solicitor

Good luck with your sale and be sure you are getting the service you are paying for!

Last Updated: January 25th, 2024