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?
Shop around and compare services
Opt to sell your home through an estate agent, and they will charge you a commission – usually, a percentage of the sale price. There are no fixed rules on charges or what you get in return, so shop around and compare services.
High street agents usually offer more comprehensive packages than online or hybrid agents but charge more. Online counterparts can leave a lot for a seller to do but can save you a lot of money if you are comfortable with this.
So, 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 depends on the estate agency fees you’ll be charged.
How much are 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 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 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 cheapest or most expensive best?
How you sell your property is up to you.
Time-poor or uncomfortable showing potential buyers around your home yourself? Then use an estate agent, and pay their higher charges.
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 fee you are paying. High street agents tend to offer a full package, including online portal listings, floor plans and photographs. Agents charging lower fees may class these as add-ons that you need to pay extra for.
How to get a good deal
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 quote a fee. Find out how many listings they have had in the last few months and how many converted into sales. This will give you an idea of how successful they are. Also, ask what’s included in their service.
If you have a lower quote from one agent, but prefer another company, mention the cheaper deal and ask if they will match it. If your preferred agent refuses to lower their fee, make sure you get as full a service as possible from them instead.
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 fees include VAT, so check carefully. With VAT currently at 20%, a 1% fee is actually 1.2%, so based on a £250,000 home you pay £3,000, not £2,500 – a notable difference.
All fees must be clearly explained & confirmed in writing before you are committed or have any liability towards an estate 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 payment for recommending their provider.
Know your rights
Legally, your estate agent’s 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.
Check how quickly you can get out of 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!
When do you have to pay an estate agent’s fee?
Go with an online 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 – you should check 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:
They must have introduced the person who enters into a valid, binding contract;
- The buyer must be financially willing and able to complete; and
- 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.
It also pays to have the right solicitor on your side who can guide you through the sale.
Good luck with your sale and be sure you are getting the service you are paying for!