Whether you are a first-time buyer or have bought and sold many properties over the years, estate agent fees can be a real source of confusion. They vary significantly between different estate agents and often add up to thousands of pounds. This makes for a pretty significant investment, and it is important you don’t pay over the odds.
While it isn’t usually possible to avoid estate agent fees altogether, by properly understanding them and knowing what you are talking about, you can save yourself a lot of money. This guide covers everything you need to know about estate agent fees, and a few things to look out for when looking for an estate agent.
How Much Are Estate Agent Fees?
There is no one fixed fee when it comes to estate agents, and the overall cost will vary on a number of factors. A traditional high street estate agent will generally charge their fees as a percentage of the selling price and this is known as commission. On average, the estate agent commission is somewhere between 1% and 2% but can be anywhere up to 3.5%.
Usually, this number depends on how many estate agents are selling the property and the value of the property itself. A good commission fee to aim for is 1%+VAT if you are looking to use just one estate agent, and bear in mind that most agencies are open to negotiation when it comes to their fees.
Are There Any Additional Fees?
A basic commission fee can sound very simple, but it is important you understand if there are going to be any additional fees on top of this. If you are selling a fairly cheap property, then estate agents may charge a fixed fee instead of a percentage. This can often end up being a very high percentage of the final selling price, so be aware of fixed fees before agreeing on any deals.
For high-value properties, usually those over £500,000, estate agents are often willing to go below 1% commission.
Always be aware of VAT on commission quotes when comparing estate agent fees. In 2016, The Property Ombudsman put rules in place which state that all estate agents must include VAT in their quotes, but it is still important to double-check before signing. If for any reason VAT is not included, you could end up paying an additional 20% on top of your quote.
When it comes to estate agent contracts, the fee should be expressed as an actual amount which is based on the agreed asking price. Be aware that this is not likely to be the actual commission you will pay, as it will be calculated from the final selling price.
What Is Included In Estate Agent Fees?
All estate agents are required by law to inform you what is included in their fees. In most cases, this should consist of advertising costs, preparing the property details, photos and for sale boards. You should not be charged any additional marketing costs as most estate agents should incorporate these within their commission, however, if you are quoted additional fees then it is worth shopping around. There should also be no fee for withdrawing from selling if you change your mind.
The main thing that is not likely to be included in estate agent fees is an Energy Performance Certificate (EPC). Most estate agents can arrange these on your behalf, and you will be charged for this. There is no obligation to use the provider your estate agent uses for EPCs, and you have the freedom to shop around. You should bear in mind that you are never under any obligation to use any estate agent services such as conveyancing and mortgages, and it is always worth researching these thoroughly to get the best deal.
How To Get The Best Deal On Estate Agent Fees?
Many estate agents are open to negotiations and willing to cut their fees to get a sole agency contract. Don’t be afraid to haggle and use these tips to help you get the best deal;
- Remember that the most expensive estate agent is not always the best one.
- Contact at least three estate agents for quotes and ask about their fees for a sole agency agreement. Be sure to let them all know you are also in discussion with other agents; that way, they will know they need to compete.
- Small estate agencies are likely to be more flexible on negotiations than major chains which are likely to have national policies in place.
The majority of estate agents will start with 1.5% to 2.5% for a sole agency agreement because they will try their luck that sellers will not haggle. Always aim to pay around 1% or less for more expensive properties.