As you will discover as you ‘shop around’, agency fees can vary quite considerably from one to another for what appears at first glance, to be the same job.
Traditional ‘High Street’ agencies generally charge between 1 – 3% of the actual selling price.
Some agencies agree a ‘fixed’ price to sell your home but ‘traditionally’ they have always charged a percentage of the selling price as this was deemed the fairest way for home owners to pay an equivalent value to that of the property being sold and the fee varies according to how successful the agent is. (i.e. the higher the agreed selling price, the more the estate agent earned).
When times get tough in the estate agency world and there are fewer listings or a new agency opens its doors, you may get a deal of less than 1%. This is a way for agents to get a ‘foot in the door’ but you should consider the reasons why you are getting offered their services so cheaply. Good service levels cost money and don’t come cheap.
The old saying ‘buy cheap – get cheap’ resonates. However, you don’t want to pay more than necessary either.
You should look to achieve a fee of 1-1.5% of your selling fee. This is considered a fair fee in today’s market.
2% and over, should be for services provided above what is usually required to sell the average home. You may also find those extra services available at a fixed cost.
Some estate agencies have a minimum fee. This is because if you are selling a property at the lower end of the market, the 1% fee will not cover the minimum amount of spend the agent will incur.
You may also find you will have to pay a higher percentage if you are selling a ‘Leasehold’, ‘Shared Ownership’ property or have a ‘Help to Buy’ Scheme in the background. If not a higher fee, they might charge an additional fixed fee or an administration fee for dealing with third parties and extra paperwork.
You should also seek a ‘no sale – no fee’ agreement. This way if you later change your mind about selling or your sale falls through, you aren’t hit with a fee. It is the estate agent that is out of pocket for their time, effort and costs incurred. This also encourages the agent to agree the sale of your property and hold it together through to completion.
Also check whether there is a ‘withdrawal fee’.
Make sure you find out exactly what is included in the fee. For instance – there may be additional costs for ‘for sale’ Boards, professional photography, floorplans, videos, virtual tours and viewings.
The one thing you will have to pay for, if there isn’t one already in place is an Energy Performance Certificate. This is a legal requirement and costs vary between £50 - £100. An agent may obtain one for you or you can arrange one yourself. Your agent may be willing to defer payment until completion of the sale or include it in their package.
Online only agents’ fees vary depending upon how they receive payment to cover their costs.
For instance, you may find an agent that offers a ‘fee free’ service for you. All services have to be paid for somewhere, even if they are limited and, if you aren’t the one paying for the service – then someone else will be. A lot of estate agents charge ‘referral’ fees for other services. This is where the supplier pays the agent for their referral of your business to their service. These can include, but is not limited to, Mortgage and Financial Services, Solicitors and Conveyancing services, Removals, Energy Performance Assessors and Utilities. So you may find your estate agency service is free but you may find you end up paying more than you should for other services. Another interesting question is therefore ‘If you are not the paying client – then who is?’ and, how do you know they are working in your best interests and how hard.
Other on-line agencies offer a ‘Pay Up Front’ package. This is also a package where, generally speaking, you are paying whether the property eventually sells or not.
Do not be tempted by the ‘pay up front’ fees. You need your agent to be motivated to sell your home quickly and for the best price possible.
Some online agencies are making the cost of their basic packages widely known, however, some of the packages that are more in line with ‘traditional fees’ are not made available until you make an appointment.
Even ‘traditional’ agents are sometimes reluctant to reveal their fees.
From a perspective point of view, this isn’t particularly helpful. Especially if you were brought up being told ‘if you have to ask the price – you can’t afford it’.
You need a basic starting point so that you can decide whether you can afford the agency – no matter how good they are.
If an agent isn’t willing to divulge their average fee before the visit, it promotes a feeling of what are they hiding? Or, are they going to badger me into signing a Contract once they’re in the house.
An agent may well be able to provide some sort of discount on their fees once they have seen your home. You may have a highly desirable home in a sought after area or you may have some rather unique or quirky feature that the agent knows one of their registered buyers is looking for. Some houses sell easier than others and if the agent knows they can achieve a quicker or easier sale, they may tweak their fee for you.
It may be of some comfort to know that estate agency fees in the UK are amongst the lowest in the world.
In France, Russia and Spain sellers can expect to pay 4% of their selling fee. Canada, USA and Australia pay 5% and South Africa and New Zealand 7.5%
It was the creation of the on-line agencies from 2010 that have helped bring about the reduction in traditional agents fees.
It cannot be denied that since 2011 High Street Agents fees have been falling.
Competition has benefitted today’s home sellers.
Most of the online only estate agents advertise their lowest fee with extra fees for additional benefits. Most also want their fee upfront and you pay a higher fee if you pay later. There are also those that offer a ‘no sale – no fee’ agreement, again at a higher rate.
One of the reasons they can offer you a lower ‘pay now’ fee is because you are paying whether or not you sell your home.
You will be thinking to yourself ‘of course I am going to sell’ but according to the BBC News in 2018 it was reported that just over 50% of one online agencies properties achieved a ‘completed’ sale.
This is of course old news and times have moved on but this suggests that nearly half of properties listed with online agents don’t actually sell.
Perhaps sellers had a change of heart or circumstance. A lot can happen in 10 months and those figures pre-date Covid. Perhaps those figures indicate that 50% of those that listed their properties weren’t serious sellers and didn’t mind risking a lower fee. But what if you were a buyer that was interested in their property? How would you feel?
Whatever way you look at it, the agent was paid for not selling nearly half of their listings.
An agent can afford to offer a lower fee if they are being paid twice for the amount of properties they actually sold.
Whichever agent you choose to sell your home, should quote their fees including the VAT in legislation laid down by the Property Ombudsman.
They should provide the fee in writing, demonstrating what you would expect to pay including the VAT if you sell at your full asking price and this should be provided to you before you sign a Contract.
If you feel what the agent is offering is good for you but you want to negotiate on their fees, this is acceptable. However, bear in mind that this will give you a good idea of how willing or good they are at demonstrating their negotiation skills and speed at which they will drop their price and yours if necessary when the time comes.
I hope I have answered all of your questions regarding what to expect to pay in estate agents fees. However, if you would like to ask us anything else, please give me a call at JP Harll on 01757 709955.