How much should I pay the estate agent to sell my home?

Estate agent fees differ significantly: in highbrow locations it could cost more, and agencies don’t have the same fees. The one constant, however, is that the fees will increase the cost of selling your home by thousands of pounds. If you understand these costs, you could negotiate properly to make huge savings in the process.

What kind of questions should I ask the estate agent before looking at the contract?

  • What will it cost me?

Estate agents charge a percentage of the selling price of the home, which ranges from 0.75-3.5%. Your aim is to get the fee to as low as 1%, including VAT cost, for sole agency contract.

  • Are there hidden or additional cost down the line?

Some estate agents, in a bid to get you to sign the dotted line, won’t disclose other costs to you until you’ve committed yourself, so ensure you get all the fees upfront. Will it include floorplans, photos and ‘for sale’ board? These should be part of the percentage fee. A legal requirement in the United Kingdom after putting your house on the market is to have an EPC performed. They are valid for 10 years. If you’ve had one done recently, it might still be usable. Otherwise, your agent will mention it and tell you how much it costs.

What’s the plan to market my listing?

High street agents have an edge over their online counterparts because they possess a database of local information, experience, and knowledge which they use to attract buyers to your property. A great tool for comparing estate agents in your vicinity is the “estate agent for me tool,” which allows you to compare the length of time it takes them to sell properties, their success rate, and their ability to achieve your asking price. Traditional estate agents who are OnTheMarket members can’t advertise on both Zoopla and Rightmove, so it might be better to consider an agent who is a member of OTM and uses Zoopla and Rightmove such as Connells, Foxtons and Countrywide. Alternatively, you could register with an online agent who advertises on several award-winning property portals for maximum exposure.

Now that you’ve gotten the questions out of the way, let’s look at basics like contract terms and fees.

What services can I expect for the charges?

Property valuation

Professional photographs, measurement, and floorplans

Enticing description to bait potential buyers

Viewing management and cost of viewing

Online marketing of the property

Negotiation fees

Installation of ‘for sale’ sign

Newspaper Ads

What are my contract options?

Fixed fee

There is no set figure for estate agency fees: some will provide service for fixed amounts instead of charging a percentage of the selling value. This might appear cheaper, but they only do this if they want you to pay upfront. Therefore, whether the home sells slowly, quickly, below the asking price, or doesn’t sell at all, the estate agent gets paid. This practice is popular with online estate agents. For high-value properties over £500,000, agents are more likely to collect fees lower than 1% + VAT

Multiple agency agreement

This refers to a situation where you actively engage the services of multiple estate agents, but only the estate agent who sells the property receives a commission. You will pay a higher fee as agencies always charge a premium for their services, and it might cost between 2-3%. If you’re desperate to sell your property, this is right way to go, as it will ensure that you receive more interest in a shorter period of time.

Open-ended agreements

Here, the agent claims a commission when the person who buys your property is someone they introduced you to, irrespective of the length of time that has passed.

Sole agency agreement

As the name implies, only one agent can legally sell your home and collect a commission. It is the cheaper option with a lower commission and VAT (usually around 1.5%). Even with multiple agencies, your ads will most likely end up on online portals like Zoopla and Rightmove. However, it might take longer to sell your property, depending on the market and the ability of your agent to get a buyer willing to pay your asking price in a decent amount of time. Some agents might be willing to agree to a joint sole agreement, depending on their working relationship with the other agency.

Joint Sole Agreement

This is an agreement between two agents who split the commission after sale of the property. It is an ideal solution when combining the services of a local and national agent to maximize the selling potential of your property. The agreement lasts around the same length of time as a sole agreement, with the variation being that the commission plus VAT is higher, at 2%.

The contract must be clear to reveal financial interests from prospective buyers for your property. Keep detailed records of your transactions with estate agents, and join the Ombudsman Services or the Property Ombudsman to protect your rights during the sale.

How do I avoid traps set by estate agents?

Unusually high valuations

Valuing a property is an art form that takes in consideration variables like demand, supply, and other economic conditions. In a bid to secure business, some estate agents overvalue properties and advise property vendors to reduce the price when the property doesn’t garner interest after awhile. This is common when the price of the property is slightly above the stamp duty threshold. To maximize their profit, agencies sign you to contracts ranging in length from 12-26 weeks, leaving you with the overhead expenses. Read the contract carefully, several times over, and compare different valuations of your property before signing any contract.

Deceptive online listings

98% of buyers start their property search online, and estate agents take advantage of this by using illusive photography with flattering measurements to lure you into a contract. Ensure that the camera they are going to use to take pictures have a wide-angle lens, which will enhance the best features of your home.

Skipping out on the best offers

It might seem like a strange reason, especially when you consider that agents make a commission on the sale, so why would they not take the best price?

Estate agents fees vary, and the national average currently sits at 1.8%. Therefore, while you might make an additional £20,000 selling at £380,000 instead of £360,000, at 1.8% your agent receives £360 only. The HomeOwners Alliance advises asking your agent for a sliding scale of commission to encourage them to sell your property at a higher price. For example, if your home is worth £600,000 you could negotiate a 1% fee, and if your home sells between £575,000 and £575,000, they get 1.25%, and 1.75% if it sells over £625,000. This motivates the agent to work harder in getting the asking price or more.

Bullying tactics

In order to make a sale and pocket their commission, especially in a slow market, the estate agent might tactically bully you into accepting a figure vastly lower than the property value. To avoid this, ensure there is mutual respect between both parties from the start.

Keep an eye out for additional fees

Generally, the fees are exclusive of VAT (currently at 20%). Estate agents are legally obligated to inform the client if the fees are inclusive of VAT, but if they don’t mention it, ask them upfront.

If you appoint a sole agent, read the contract slowly to ensure you don’t miss any important detail, and ensure the contract is fully terminated before signing with another agent, or you will have to pay both a commission upon sale.

A no withdrawal fee should be included if at any point you decide to change your mind and delist your property.

You are not obliged to use their in-house services, no matter what they say. It’s often cheaper if you source EPC, conveyancing, solicitors, and mortgages on your own.

Don’t sign a contract where changes were handwritten, as this is a ploy some agents use to apply withdrawal fees and extra marketing charges.

The tie-in period should be for a length of time that you’re comfortable with, and make sure you confirm there is no drawn-out introducer commitment period where the agent receives a commission even when a sale is made years after they’ve stopped advertising your building.

Finally, compare rates, read service reviews, and get several agents to compete on cost so you reduce the fee to within a range of 1%.

Tips for negotiating with an estate agent

It’s always a good idea to invite at least three renowned estate agents for your property listing and get a quote from each. They should provide full details on what their services entail and furnish you with success rate they’ve had with your type of building.

Competitive estate agents are always willing to negotiate on either the fee or other aspects, such as tie-in period or additional services. If the preferred estate agent refuses to lower his fee, try to entice him with a sliding scale where he makes commission based on the final price the property is sold. Online estate agents offer cost-effective fixed fees, payable upfront even when the property doesn’t sell.

Whichever estate agent type you go with, either online or high street estate agent, the services are similar and our main recommendation is for you to conduct extensive research before choosing an estate agent to sell your property.

Published on 31st October 2017

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