How Much Are Estate Agent Fees?
- In the UK, estate agents typically charge a commission of 1%-3% based on the property's final sale price.
- Top Tip: Always find out how long you will be tied into a single-agent contract; otherwise, you could be stuck with an agent who can't sell your property.
- Disbursements are additional costs incurred during the process of selling a property.
- Estate agents often use certain tactics to secure listings and sell properties quickly. Being aware of these can help sellers navigate the process more effectively.
The world of estate agents and conveyancing can be complex and overwhelming for sellers. Understanding the fees, disbursements, and processes involved in a land and property transaction is crucial to ensuring a smooth and successful sale.
However, an estate agent's services come at a cost that sellers need to be aware of. These costs can vary widely depending on several factors, such as the location and value of the property, the level of service provided, and whether the agent is online or traditional.
Estate agents fees
How much do estate agents charge to sell a house?
Estate agent fees are significant when selling a property. In the UK, estate agents typically charge a commission based on the property's final sale price. This commission can vary, but the average fee ranges from 1% to 3% + VAT of the sale price.
For example, if a house sells for £300,000, the estate agent fee could range from £3,600 to £10,800 (including VAT).
Who pays estate agent fees?
Estate agent fees apply to the seller; home buyers don't need to pay any estate agent fees. However, if you opt to sell privately, you won't need to pay any fees to a third party.
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Factors influencing estate agent fees
Location: Fees may be higher in London and other major cities compared to rural areas.
Property value: Higher-value properties might attract a lower percentage commission fee due to the higher final commission amount.
Service level: A high street agent may offer a full service which includes extensive marketing and support, but they will usually charge more than online or hybrid agents.
If the agent charges withdrawal fees, use that as an indication to walk away because you should not be charged high fees for deciding not to sell your home. Opt for a no-sale, no-fee agreement.
Estate agent disbursements
What are disbursements when selling a house?
Disbursements are additional costs incurred during the process of selling a property. These are usually passed on to the seller and can include a variety of services, and understanding these potential hidden costs can help sellers budget accurately and avoid any nasty surprises during the sale process.
What do estate agent fees include?
- EPC (Energy Performance Certificate): Required for selling a house, costing between £60-£120. This certificate must be ordered before the property is put on the market, but bear in mind that an EPC lasts for 10 years and one will only be required if yours has expired.
- Professional photography: High-quality images to market the property, costing between £100-£300. Some estate agents include this as part of their fees, but others charge separately.
- For sale board: Placing a sale board outside the property costs around £30-£70. Although more traditional than online, it’s still an effective way to generate enquiries and increase local awareness.
- Advertising and marketing: Costs for premium listings on property portals vary widely but are generally between £100-£500. These costs can also cover social media advertising costs, brochures, and other marketing materials.
- Floor plans: Detailed floor plans providing a clear layout of the property can cost between £50-£150. This can attract serious buyers as they can visualise the space before viewing.
- Virtual tours: Since the pandemic, along with the rise of digital technology, virtual tours have become a popular tool, typically costing between £100-£400. Potential buyers are allowed to explore the property online and in detail, which can increase the number of eyes on your home.
Typical conveyancing fees
The conveyancing process involves the legal transference of property ownership from the seller to the buyer and will require legal documentation, property searches, and financial transactions.
Clarity about fees and conveyancing disbursements will help ensure transparency and avoid surprises such as hidden costs. Always compare fees on multiple quotes and services to find the best fit for your needs, but they are typically divided into basic legal fees and conveyancing disbursements.
What is a sliding scale?
A sliding scale is a tiered fee structure that can potentially save you money on estate agent fees. Rather than charging a flat percentage fee on the sale price of your home, a sliding scale adjusts the percentage based on the final sale price. This can motivate the estate agent to secure a higher sale price for your property.
If your home is valued at £250,000, here’s how a sliding scale might work: For the first £200,000, the estate agent charges 1.5%. For the next £50,000, the rate drops to 1%.
If your home sells for exactly £250,000, the fee on the first £200,000 would be £3,000 (1.5% of £200,000) and the fee on the remaining £50,000 would be £500 (1% of £50,000). So, the total fee would be £3,500.
A flat fee of 1.5% on the entire sale price would be £3,750. As you can see, the sliding scale can result in lower fees, especially beneficial if your home sells for a higher price.
It's wise to discuss a sliding scale when:
- Your property is in a desirable location and likely to attract competitive offers.
- The market is hot, and properties are selling quickly.
- You believe your home might fetch a price higher than the initial valuation.
- Asking for a sliding scale can align the estate agent's interests with yours, motivating them to work harder for a higher sale price.
Sole agency vs multi-agency fees
Sole agency
With a sole agency agreement, you appoint one estate agent to sell your property. This type of contract typically comes with lower fees, often ranging from 1% to 1.5% of the sale price. The downside is that if you find a buyer yourself or switch to another agent, you might still owe the original agent their fee.
Multi agency
A multi-agency agreement allows you to instruct multiple agents to sell your property. This can increase competition among agents, potentially leading to a quicker sale. However, the fees are generally higher, usually around 2% to 3% of the sale price. Each agent is motivated to be the one to sell your property, but you’ll pay more for this privilege.
Which to choose?
Opt for sole agency if you’re confident in the agent’s ability to sell your property quickly and at a good price. If your property has been on the market for a while or you want to maximise exposure, multi-agency might be worth the higher fee. Assess your needs and market conditions before deciding which route to take.
Estate agent hidden costs
When budgeting for estate agent fees, it's crucial to be aware of potential hidden costs that can catch you off guard.
VAT
Estate agent fees are usually quoted without VAT, which is an additional 20%. If your agent's fee is 1.5%, with VAT, it’s 1.8%. Always check if VAT is included in the quoted fee to avoid surprises.
No withdrawal fees
Check for withdrawal fees in your contract. Some agents charge if you decide to take your property off the market. Look for agents who advertise "no sale, no fee" to ensure you won't be hit with unexpected costs if your plans change.
The estate agent's legal obligations
Estate agents are legally required to disclose all fees upfront. They should provide a comprehensive breakdown in writing, including any potential additional costs. If they fail to do so, they are breaching regulations, and you have grounds for complaint.
Choosing an estate agent
Selecting the right estate agent is crucial for a smooth and profitable sale. Here are some tips:
Online agent vs. high street agent
- Online estate agents: Often charge a fixed flat fee paid upfront, which can be lower than traditional agents. Fees typically range from £300 to £1,500.
- High street estate agents: Charge a commission based on the sale price but offer more personalised services and local market knowledge. Some high street agents might offer a sliding scale on a house sale depending on the valuation of your property.
- Hybrid estate agents: Won't have a physical office but will provide the same services as a high street agent with the convenience of an online-only agent.
Estate agent tricks of the trade
Estate agents often use certain tactics to secure listings and sell properties quickly. Being aware of these can help sellers navigate the process more effectively.
Negotiating estate agent fees
Booking multiple valuation visits
Start by booking valuation visits with at least three different estate agents. During these visits, ask for detailed explanations of their fee structures.
Ask for fee structures upfront
Request a clear breakdown of their fees, including any potential hidden costs like VAT. Make sure everything is laid out transparently in writing.
Use the lowest offer as leverage
Once you have all the quotes, use the lowest fee offer as leverage with the other agents. Let them know you’re considering other offers and ask if they can match or beat the lowest fee. This can create a competitive environment and push fees down.
Aim for the savings for your own best interests
Remember, estate agents are competing for your business. Be confident and firm in your negotiations. Every bit saved on fees is more money in your pocket after the sale. So, don’t be afraid to haggle and aim for the best possible deal.
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