Selling your house can be a stressful time and can leave you with questions surrounding the house selling process. And whilst the work that estate agents do is incredibly helpful, when it comes to the fees you can be in for a bit of a shock.
You end up asking yourself ‘how much are estate agents fees?’
In this blog post, we will be looking at how much estate agents charge in commission, how much the average estate agent fee is, what estate agent jargon is, and how much you should pay your estate agent.
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To understand estate agent fees, we must first understand what an estate agent’s commission is. The estate agency charges a commission in return for undertaking the sale of your property. This commission is taken away from the profit of when you sell your property.
Estate agents will typically charge a percentage anywhere from 0.9%-3.6%. This figure depends on which estate agent you choose to sell with, how many you use as well as how well you negotiate.
Estate agent fees in 2022, were on average around 1.42% including VAT. If a property is £275,000 then the estate agent’s fees will be around £3,900.
You should be ready to negotiate the fees down as you can expect your estate agent to aim high.
Every estate agent is different, so what is included within their fees will vary from estate agent to estate agent. However, as a rule of thumb, these are what should generally be included within the fees:
Whilst what is included in estate agents’ fees varies depending on which estate agent you go with, if you decide to sell with an online estate agent you should be wary. An online agent may offer cheaper packages, but they are often not as robust. Make sure you check online reviews thoroughly and shop around before committing to an agent.
It is also worth making sure that the contract you choose includes all of the services that you would expect an estate agent to provide. You should also make sure that there are no hidden fees that you are not happy paying. After you have signed the contract, no additional charges can be added without your written permission.
When you are making any big house purchasing/selling decision, it is always a good idea to shop around and compare before committing to one option.
Whilst it may seem like a tempting offer, it is not always the wise idea to pick the cheapest option based on fees alone. It is always a good idea to compare estate agents based not only on price but also on performance. You can do this by comparing the price that estate agents charge against their performance rate. If an estate agent is able to achieve the asking price, then they are usually worth paying the higher fees for.
An example of this would be a property listed for sale at £300,000 and the agent you choose sells at this asking price at an agreed commission of 1.42%. You would end up paying estate agents fees of £4,250. However, if a second agent charges a lower fee than this or no fee at all and then achieves 98% of the asking price, then it will cost you £6000 in a lower achieved sale price.
But just because you should be wary of cheaper estate agents does not mean that you should go with the most expensive.
You may come across estate agents’ fees that are quoted excluding the VAT, which is currently quoted at 20%. This means that if you are quoted 1% plus 20% in VAT you will pay £3,600 in estate agent fees if you sell your property for £300,000.
The Property Ombudsman’s Code Of Practice For Residential Estate Agents states that “fees advertised by estate agents must be shown to be inclusive of VAT”– alongside a statement confirming that VAT is included.
Agents are also obligated to express their fee as an actual amount including VAT based on the asking price in their contract. The Property Ombudsman says ‘The example amount should be based on the asking price. However, you must make it clear that, should the selling price be higher or lower than the asking price, your commission fee will be correspondingly higher or lower.’
Whilst there is a lot to consider when looking through estate agents’ bills, there are plenty of red flags that you need to be wary of. Below are some warning signs to look out for:
If this is your first time selling a house through an estate agent, then the different range of contract types available can be confusing and intimidating. Each of these contracts has pros and cons, so it is important to do your homework on each of these types before you commit to one:
Whether or not you have to pay an estate agent if you sell privately is down to your individual circumstances. If you sell your property without listing it with an estate agent then you will not need to pay any fees for the sale. However, you should be aware that if you go down this route you run the risk of not getting the best price for your house as you will be unable to list it on the big property portals.
If a buyer approaches you directly and you are signed up with an estate agency, you should still check your contract because you may still have to pay fees even if you sell privately.
If you decide to part ways with your estate agent, it is critical to make sure that the contract is completely terminated before you try to sell your home again. It is also a good idea to ask your estate agent for a list of potential buyers that they have contacted about your property as well. This is because estate agents can claim commission for the sale of their homes if they believe that they played a role in introducing them to you.
Below are some of the most common estate agent jargons explained:
The estate agent fees are usually due once the contracts have been exchanged but you do not have to pay them until the sale is complete. The only time you would have to pay any fees before the house sale is complete is if you have signed a ‘ready, willing, and able’ buyer contract.
If you have had a shop around high street agents and can’t find a price that you like, online estate agents are always an option. Online estate agents often offer lower fees than high street estate agents. Some online agents even have packages that start at £100.
As previously mentioned, it is not a wise idea to choose your estate agent based on price alone. Before committing to an estate agent, you should always shop around and compare.
Estate agents will usually charge two types of fees. They will either charge you a flat fee that will be required to be paid upfront, or they will charge a ‘no sale, no fee’ commission that will only need to be paid if the agent sells your property.
Selling through a ‘no sale, no fee’ agency is a great way to sell your property as it provides great motivation for the estate agent to sell your property so that they may get their commission. And if they are not able to sell your property then you do not have to pay them anything. However, it is worth bearing mind that if you have a property that is worth a lot, then selling through a multi-agency agreement could prove costly. This is because the amount that you would be paying, even if the commission was only 1%, could end up being thousands of pounds.
If you decide to sell through an online estate agent, they will more than likely have an alternative way of selling. Instead of a ‘no sale, no fee’ approach, they may take a different route and charge a fixed upfront fee. One such online estate agency that does this is PurpleBricks. Whilst this can work out cheaper than being charged a percentage fee, you will still have to pay this fee regardless of if your home sells or not.
When you use a multi-agency agreement, you are instructing two or more estate agents to compete with one another in order to sell your property. The good news is that whilst a multi-agency agreement is more expensive you will only have to pay the estate agent who successfully sells your home.
As the estate agents will know they are in competition, it means that they will work harder to sell your house for a higher price. However, the average fees for a multi-agency agreement are 3%-3.6% compared to the 0.9%-3% that a sole traditional agent brings.
The seller of the property is the one who has to pay the estate agent’s fees. This is because the estate agent works on behalf of the seller. If you are selling a house, be sure to remember to add this to your moving costs.
This covers everything you need to know about Estate Agents Commission. If you have any questions, queries, or insight into the subject, please feel free to get in touch!
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Alexandra is junior content producer who enjoys writing articles and finding out more about the property market. Read more about Alexandra here.
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