The fees that estate agents can charge when facilitating the sale of a property can vary considerably. This can affect your final costs to the tune of tens of thousands of pounds. That’s why it’s so important that you understand estate agents fees before you enter into any formal negotiations.
In the UK, the majority of people employ the expertise of an estate agent when selling a property. And for good reason: a professional estate agent will know your local market, be a skillful advertiser and capitalise on their wide network of potential buyers to get you the best price for your property. This, like any service, comes at a price.
While estate agent fees are virtually unavoidable, they do vary from agent to agent and they are negotiable. This guide will help you better understand estate agent fees in the UK so that you can keep your costs to a minimum and still get the best estate agent for your money.
How much are estate agent fees?
The vast majority of estate agents charge a percentage fee, also known as commission. According to property sale experts The Advisory, the average estate agent fee is currently around 1.42% of a property’s final selling price (including VAT).
The exact estate agent fee (or commission) you pay on the sale of your property will ultimately depend on the value of your property, its location and the type of contract you opt for with your chosen estate agent.
As a general rule, you can expect to pay between 1-3% plus VAT in estate agent fees.
When it comes to higher value properties – such as properties worth over £1M in London or over £500,000 in the rest of the UK – some estate agents are often prepared to accept a lower than average fee, sometimes below 1% plus VAT.
However it is vital that you find the right estate agent, regardless of their fee, as the added value they bring to your sale price, will easily cover their fee.
You can use our free tool to find the right estate agent
Other types of estate agent fees
- Fixed Fee – some estate agents will agree to a fixed fee that isn’t tied to the final selling price of your property. While this may help you budget for cost it may not motivate your agent to get the best possible price for your property.
- Multi-agency Agreement – in this scenario, your property will be promoted by several estate agents with the agent who successfully sells your property receiving the commission. This route can help sell your property faster but it often comes with higher estate agent fees, typically 2-3% of the final sale price.
Online estate agent fees
A relatively new option, online estate agents typically charge set fees upfront. Their fees are generally lower than traditional estate agents who charge a percentage of final sale price, with some online estate agencies only charging between £600 to £2,000.
While online estate agents may be cheap, you have to consider the level of service you will receive for your money. It’s likely that online estate agents will not have the local knowledge or industry expertise to match the level of service provided by a traditional estate agent. Some credible sources have reported that the failure rate of online estate agencies is 45-50%, which is significantly lower than traditional agents. This can be particularly troublesome when you are obliged to pay estate agent fees up front, which is often the case with online estate agents.
When do you pay estate agent fees?
Most estate agent agreements will state that fees/commission will need to be paid on legal completion of the sale of the property i.e. when the new buyer officially becomes the legal owner of the property.
Typically, your estate agent will send their invoice to your solicitor as soon as binding contracts are exchanged with the buyer. Then, once the property sale is legally completed, your solicitor will pay your estate agent the agreed fee directly out of the funds secured from the property sale.
Clarify when you want to pay estate agent fees
It’s important to ensure the agreement you have with your estate agent specifies exactly when agent fees are due to be paid. While some agents may want to claim their fee on exchange of contracts, it’s strongly advised that you stipulate you want any agent fees to be paid on completion.
This will ensure you are not out of pocket while the sale is finalised and, more importantly, you don’t have to pay fees if the sale falls through between contract exchange and completion.
Can you negotiate estate agent fees?
Absolutely – while cost is not the only factor you need to consider when choosing an estate agent, it is one of the most important.
Estate agent fees are not regulated in the UK which means that while estate agents can theoretically charge whatever fee they want, you have the power to haggle over the final price. Negotiating the fee amount is part and parcel of selling a property and most estate agents will be happy to negotiate.
As mentioned above, estate agents are more likely to lower their fee if they are dealing with a higher value property, such as the London properties that Helmsmen specialises in.
How to negotiate estate agent fees
An effective way to negotiate estate agent fees is to sit down with the agent and discuss their sale strategy. How do they intend to market your property? What advertising channels would be most effective? How well do they know your local property market? How much do they think you can get for your property? And of course, what fee do they charge?
These are all important questions that will contribute to the success of your sale, your final costs and they will also help you get a better understanding of the value you think a particular estate agent can bring to the table.
Don’t settle for the first estate agent either. Talk to several estate agents, asking them about their fees and any other associated costs. Let each of them know that you are talking to other agents as this will encourage competition and should ultimately lead to you negotiating a lower estate agent fee.
Choosing the right estate agent for you
It’s important to remember that the more expensive estate agents are not necessarily the best estate agents for you. Estate agent fees are just one factor to consider when looking for an agent to sell your property.
At Helmsmen, we allow you to compare local estate agents on multiple levels, including fees, experience and qualifications, as well as average asking price and average sale time.
Whether you’re looking to buy or sell a London property, or even just to get an up-to-date valuation of your home by an expert, it’s imperative that you find the right estate agent for your needs. We handpick only the most successful estate agents in your area so you can be sure you find the perfect person for the job.