Estate agent fees – how much should you pay?
Selling your home on the open market is no easy feat – but it can also be an expensive one. If you’re looking into selling your home with a traditional estate agent, it’s a good idea to get to grips with estate agent fees before you find a large sum taken from your completion monies.
What are estate agent fees?
Estate agent fees are essentially the cost of having an estate agent handle the sale of your home. What they cover completely depends on the estate agent, as each company will have their own service levels, but you’ll usually be paying for services such as:
- Marketing – Perhaps the most crucial part of selling your home on the open market, you’ll pay an estate agent to get your house in front of the right potential buyers. They’ll handle advertising in local press, online and on other relevant platforms.
- Signs – Estate agents will usually come to fit “for sale” and “sold” signs.
- Negotiations – Estate agents will usually deal with the negotiations back and forth between yourself and potential buyers.
- Solicitor communication – Usually the estate agent will liaise between both your solicitors and your buyer’s solicitors.
- House chain – Estate agents will often monitor and update you about the house chain you may be involved in.
These are the standard services you’ll find your estate agent fees cover, but estate agents may also add optional extras to your bill – so make sure you check your contract before you agree to any fees.
How much are estate agent fees?
Traditional estate agent fees sit around 1.4% of your final selling price – but this can range widely depending on which estate agent you go to, whether you choose to use multiple estate agents, or which area your home is in.
You can expect to pay around 1% to 3.5% of your final selling price with a traditional estate agent – and the price advertised can often be without including VAT, despite The Property Ombudsman ruling against this in 2016. While estate agents should advertise their prices including VAT, they often avoid this to make the fees appear smaller – always check your contract.
If you have a home of lower value, this doesn’t automatically mean cheaper estate agent fees either – most estate agents charge minimum fees, and they usually start at around £1,000. Some estate agents also charge fixed fees rather than percentage-based, but restrict the services you’ll receive depending on the amount you pay.
Can you haggle?
Haggling in the traditional sense can be tricky with an estate agent – but it’s always worth a try. You’ll have a lot more haggling power if your property is desirable, for example, a large home in a nice area, near schools and shops, that’s perfect for families, or the ideal flat in a city centre that’s modern and great for businesspeople.
With that, you may be able to knock off a hundred pounds or so, but it’s unlikely to be a large sum. A better way to barter is to collect multiple quotes and ask your favourite estate agent to match it – this can sometimes land you a better service for less.
Should you go for the cheapest option?
While it can be said ‘you get what you pay for’, this isn’t necessarily true when it comes to estate agents. Estate agents have reduced their fees significantly in recent years, thanks to a rising property market and more and more competition with online estate agents and cash house buyers in the industry.
The best thing to do is shop around – be wary of any estate agent that can’t give you an idea of fees and a contract before locking you in, as that’s a huge red flag. Always check reviews and take a look to see if an estate agent has had success in your area before, or with a very similar property.
It’s also worth mentioning that, if estate agent fees seem very low initially, there could be a risk of hidden costs and fees that crop up later down the line – always fully check a contract before you sign it.
What do I need to check in the contract?
When you sign a contract, you’re essentially agreeing that you will pay the estate agent for what they outline, and you won’t break any of the rules they’ve set out for you. If you do, you can be liable to pay expensive fees – this can sometimes even lead to legal battles, so it’s always highly important to read your contract and double check the following:
- VAT – Many estate agents quote the total of their fees not including VAT, most likely in an attempt to make the fees seem more affordable than they really are. Check to see if the price in the contract includes VAT.
- Minimum contract length – Ensure before you sign that you’re happy with the minimum contact length, if there is one. These tie you in for the duration of your contract, and require you to pay a fee if you’d like to end it early.
- Optional extras – Sometimes contracts automatically state that you’ve agreed to additional services, such as conveyancing or energy performance certificates. Review these and remove them if you don’t want the service – or could pay less for it elsewhere.
- Commission rates – Review the commission rates and ensure they match the rates you have been discussing.
- Handwritten changes – If you spot some handwriting on your contract, this can sometimes be a major red flag. Check it over carefully, as these can often be extra fees added in, like a marketing incentive fee.
When should I pay the agent?
In most cases, it won’t actually be you who pays an estate agent – it’s usually the solicitor that pays the estate agent fees after the sale is completed. The only estate agents that require payment upfront are online estate agents, who usually charge less, but don’t provide the same comprehensive service.
Can I change estate agent?
A lot of estate agents have a ‘minimum length’ term in their contract – which means, once you sign with them, you have to stay with them for allotted period or pay a sizeable fine to get out of it. Estate agents can set their own fee for this, so it’s important to read a contract in full before you sign it.
However, some estate agents don’t have minimum contract lengths – and they usually go out of their way to advertise this about their service. If you’re concerned about committing to an estate agent, maybe look out for this – but bear in mind, this may mean they have higher fees in other areas to make up for this.
How to avoid estate agent fees
When it comes to selling your house, there are other options to consider. Going with a direct cash house buyer can save thousands in estate agent fees – and while cash house buyers will buy your home at less than market value, this cost could be around the same price as estate agent fees or less and mean a much quicker sale.
It may be worth comparing the costs of both to work out which option is better for you – for example, Good Move provide a free, no obligation cash offer within 24 hours, and the offer won’t change unless there’s a serious fault with your home that you haven’t disclosed. Compare this with how much you would get selling on the open market, after deducting legal and estate agent fees, and consider which is the better option.