What Do Estate Agents Cost

When you are selling your house, it involves various costs, and one of the main expenses is the estate agent’s fee. In this article, we delve into the world of estate agent fees to give you an idea of all of the costs associated with using an estate agent and precisely what you get for your money.

How Much Are Estate Agent Fees?

Estate agent fees can vary, typically ranging from 0.75% to 3.5% of the property’s sale price, but they usually sit somewhere around 1.5% (check this includes VAT). Fees are likely to be higher if you instruct more than one estate agent to market your property. A sole agency agreement means the agent you sign with is the only agent who has the right to sell your property, but if you sell your home yourself, you won’t have to pay a fee.

Some agents offer fixed fees, which means it will be the same price regardless of the asking price and time taken to sell. These fees cover the services provided by the estate agent throughout the selling process.

Example:

For instance, if your property sells for £300,000 and the estate agent charges a 1.5% fee, the fee would amount to £4,500.

What Do Estate Agent Fees Include?

Estate agent fees include a range of services such as property valuation, marketing and floorplans, arranging viewings, negotiating offers, and overseeing the transaction process until completion. Some additional services may come with extra costs. More than anything, you are paying for the local knowledge and expertise of the agent, and if you choose a good agent, they will help to guide you through the process of buying or selling your property and make the journey that bit easier.

What Is A Sliding Scale of Fees?

A sliding scale of fees means that the percentage charged by the estate agent may increase as the property’s sale price increases. This can offer a more cost-effective arrangement for sellers and give the agent more incentive to achieve a higher price for the property.

Why Compare Estate Agent Fees?

Comparing estate agent fees is crucial to ensuring you get value for money. Different agents may offer varying services and fee structures, and this comparison helps you make an informed decision. You should always get several quotes and not necessarily go with the agent who quotes the highest price. Always ask what similar properties they have sold in the area and how they have come up with the valuation to make sure they are not just giving you the highest price to get the business. 

Hidden Costs When Using Estate Agents

Hidden costs could include additional charges for premium listings, professional photography, floor plans or administration fees. It’s essential to clarify these potential extras with your chosen estate agent before appointing them. The Property Ombudsman advises that ‘Fees advertised by estate agents must be shown inclusive of VAT  – alongside a statement confirming that VAT is included.’

How You Can Save With Estate Agents

Negotiating fees, opting for online agents, and carefully reviewing contracts are ways to save on estate agent costs. Some agents may also offer fixed-fee packages. By getting several quotes, you will be in a position to negotiate with different agents on fees and packages offered.

What Additional Services Do Agents Offer?

Apart from standard services, agents may provide professional photography, Energy Performance Certificates, virtual tours, premium listings, social media promotion and accompanied viewings. These extras can enhance the visibility and appeal of your property, but may or may not be included in the package, so always check with the agent.

How To Negotiate Estate Agent Fees

Negotiating estate agent fees is common. Consider discussing a fixed fee, a lower percentage, or a sliding fee structure to ensure a fair deal for both you and the agent. Having quotes from several agents can help to negotiate fees.

Do I Need to Have a Contract With an Estate Agent?

Yes, a written contract is essential. It outlines the terms and conditions of your agreement, including the agreed-upon fee, services provided, and the duration of the contract.

What Are The Typical Terms and Conditions?

Typical terms and conditions include the duration of the contract, the agreed fee structure, any additional costs, and the agent’s responsibilities throughout the selling process. Things to check in your contract or ask your agent are:

• What happens if I find a buyer myself? Will I still be liable to pay the entire fee?
• How will you market the property?
• Who do you have on your books who might be interested in my property?
• Am I able to get out of the contract if I am unhappy with the service? 
• What is the notice period and tie-in period? (Notice is the time between notifying the agent and the contract being terminated. The tie in period is how long you are tied into the contract from the moment of signing, typically 4-12 weeks)
• Can I use more than one estate agent if the property doesn’t sell?
• Do I have to pay you to find a buyer if I have to pull out of a sale?

Can I Change My Estate Agent?

You can change estate agents, but you will need to follow the terms outlined in your current contract. This may involve giving notice and potentially paying any fees owed.

Is an Online Estate Agent Better?

The choice between traditional and online estate agents depends on your preferences and needs. Online agents often offer fixed fees and a limited service and may be suitable for someone who wants to be more in control of the selling process or a property that is likely to sell easily or in a hot market, while traditional agents provide a more hands-on service, using their own methods to market your property, taking viewings and offering you more support through your home selling journey, but will charge a higher fee. 

When Do I Pay Estate Agent Fees?

Agent fees are typically paid upon completion of the sale, and the estate agent will usually invoice your solicitor, who will pay the agent from the completion funds. It’s crucial to clarify this with your chosen agent. Many agents offer a ‘no sale, no fee’ structure, where you don’t pay if your house doesn’t sell. However, others, including some online agents, may offer a fixed upfront fee, which will be less but will mean you have to pay it even if your property doesn’t sell.

What Does My Estate Agent Have To Do By Law?

Estate agents have various legal responsibilities to ensure a fair and transparent property transaction. Here’s a list of things that estate agents must do legally:

• Provide accurate property details: Estate agents must ensure that property listings are accurate and not misleading
• Provide on all offers in writing: Estate agents must ensure that offers on properties are passed on all the way up to contracts being exchanged and the sale is finalised. Estate agents must inform sellers of offers in writing – either by letter, email, or fax.

• Reveal conflicts of interest: Agents must disclose any potential conflicts of interest, such as if they or a connected person has a personal interest in the property being sold. They must also reveal any financial interests they have on offers made on your property.
• Comply with anti-discrimination laws: Estate agents are legally bound not to discriminate against any individual or group based on factors such as race, gender, disability, or religion.
• Follow data protection laws: Agents must handle personal data in compliance with data protection regulations. This includes obtaining consent before processing personal information and ensuring the security of data.
• Provide terms of business: Estate agents are required to present clear terms of business to clients, outlining the services offered, fees charged, and any other relevant information.
• Confirm the identity of clients: Agents must take steps to verify the identity of both buyers and sellers to prevent money laundering. This includes collecting proof of identity and address.
• Hold client money securely: If an agent is entrusted with holding client money (e.g., deposits), they must follow strict rules to ensure the security and proper handling of these funds.
• Maintain professional conduct: Agents must adhere to a code of conduct set out by professional bodies or regulatory authorities. This includes acting in the best interests of their clients and providing honest and transparent communication.
• Provide Energy Performance Certificates (EPCs): When marketing a property for sale or rent, agents must provide an EPC, which outlines the property’s energy efficiency.
• Offer redress mechanisms: Estate agents must belong to an official redress scheme, providing a route for clients to resolve disputes if issues arise during the transaction (The Property Ombudsman, The Property Redress Scheme or Centre for Effective Dispute Resolution).
• Ensure proper record-keeping: Agents should maintain accurate records of transactions, communications, and client information in accordance with legal requirements. The Property Ombudsman (TPO) has published Codes of Practice which stipulate that, by law, estate agents must maintain clear and full written records of transactions for a period of six years.

These legal obligations are designed to protect both buyers and sellers in property transactions, promoting fairness, transparency, and professionalism within the industry.