A homeowner who chooses to sell their house on the open market will incur several costs. Estate agent fees are one of the biggest expenses when selling a house and they can detract significantly from the final proceeds made from a sale.
In this guide, we’ll take a look at what estate agents charge and explore the most cost-effective and convenient options for selling a property.
What Is the Estate Agent’s Fee For?
Estate agent fees can be so high that you might be wondering what you’re paying for. In these cases, you can rest easy knowing that estate agents are legally obligated to explain what their fees cover. Make sure you read the contract carefully before signing to ensure that your expectations match the services being offered.
Standard services include:
- Property valuation
- Marketing your property — including making accurate floor plans and taking professional photographs
- Arranging and hosting viewings (buyers can also elect to hold viewings themselves, without the help of an estate agent)
- Checking the legitimacy of buyers — under the Property Ombudsman Code of Practice, estate agents must take reasonable steps to check that a buyer is serious and has the funds to purchase the property
- Managing paperwork associated with the house sale
- Monitoring the property chain and addressing any problems that arise
- Negotiating with buyers and sellers
- Liaising with your solicitor
Estate agents contracts and fees vary considerably, so it’s important to check which services are included or may be deemed an additional service (attracting an extra fee).
What Types of Estate Agents Are There?
Long gone are the days when homeowners had just one or two local high street estate agents to choose from. Sellers can now pick from high street agents, online agents and agencies offering a hybrid service that combines the two.
High street estate agents offer a personal service and can provide peace of mind because you can see who you’re working with face to face. They usually offer to conduct viewings on your behalf as standard, saving you time and hassle. Brick-and-mortar agencies also tend to have a thorough knowledge of the local area, which puts them in a decent position to attract the right buyers and clinch a sale.
However, high street agencies tend to operate at the more expensive end of the spectrum. They have a lot more overheads to cover than online agencies, such as renting a storefront. Opening hours will be more traditional too — some may extend slightly beyond office hours, but there certainly won’t be a 24/7 service.
Online or “internet only” estate agents are a relatively new development in the property industry. They often represent a more cost-effective option than high street agents and many offer around-the-clock support and services via online portals. But beware of “add-on” charges. Some online agents do not offer services such as accompanied viewings as standard but will do so for an additional fee. You’ll also likely have to pay an upfront fee. High street agents typically take a percentage of the sale price, which means you only pay when you have the funds to.
“Hybrid” agencies may offer a mix of online and in-person services. However, there is no clear definition of this type of estate agent. Some class themselves as a hybrid service because they have a shopfront and a website, while others offer a truly hybrid experience by providing online services and working with local agents to conduct viewings.
The type of estate agent you choose will affect the fees you pay. Online agencies are generally lower in cost than high street agencies.
What Do Estate Agents Charge?
Every estate agency will have its own contracts and charge differently. There are two main types of fee agreement: commission-based and fixed fees.
An agency that charges based on commission will take a percentage of the final sale price achieved. According to a 2018 survey by TheAdvisory, the average estate agent fee is 1.42% of the final selling price (including VAT). However, the figure can be as low as 1% or as high as 3%. On a price of £231,855 (average property value in the UK, 2020), this would mean a fee of between £2,319 at the lower price and close to £7,000 at the 3% level.
A fixed-fee estate agent will charge an agreed figure for a set list of services. This often works out as more affordable than paying a commission-based fee, but it’s important to check that the fixed fee covers all the services you need. Prices usually start at about £800, but this can quickly escalate if you want to add on “extra” services.
Many estate agents quote their fee exclusive of VAT, making their offer seem more cost-effective and appealing. All estate agents, whether they operate online, on the high street or as a hybrid of the two, are required by law to quote their fees inclusive of VAT. Watch out for this sneaky trick and make sure that the price you agree to is inclusive of fees so that you don’t get stung by a more expensive bill.
Do I Have to Use an Estate Agent to Sell My House?
There is no legal requirement for a homeowner to use an estate agent to sell their property. Many people opt to sell their home privately, without an estate agent, to keep their costs down. However, managing a house sale on your own can be extremely stressful and time-consuming. If you work and have a family, it’s unlikely you’ll be able to juggle all the elements of selling a house — marketing, valuations, viewings and negotiations — alongside your existing commitments.
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