November 3, 2020
Paying estate agent fees – how much should you pay?
One of the biggest criticisms that traditional UK agents face is the fees they charge for their services, but on a global basis average agency fees in Britain are actually very low. Some of the lowest in the world, in fact.
According to advice website TheAdvisory, the current average high street agency fee is 1.18%-plus VAT for a sole agency agreement on a no sale no fee basis.
That’s compared to other countries where only the seller pays – in some countries buyer and seller both pay – which have fees of 5% or more. In the US, sellers pay fees of 5.5%. In Brazil, France, Jamaica and Spain, they all pay 5%. In Mexico, they pay a whopping 7.5% on average.
The UK also has lower fees than the Netherlands, Norway, Ireland, Russia, Israel, Thailand, Greece, Italy, Japan and Germany. Which makes the criticism of UK agents charging unfair fees all the more baffling. Where has this perception come from?
It’s important to be aware of how fees work and question whether the lowest fee should always be your ultimate goal when selling.
Below, we explore more.
Different models, different fees
There are two main types of agent fees in the UK. High street agents typically only get paid when your transaction completes. They will receive a commission on the final asking price of, normally, between 1%-3% – although this can vary by company, region and location.
Most online agents, by contrast, will require you to pay fees upfront. This could range from as low as £99 to more than £1,000. The fees are still owed regardless of whether the home sells or not. Some of these operators now have ‘no sale no fee’ options; typically twice the price of their upfront deals.
In the UK, only the seller pays fees to an agent in the transaction. Buyers don’t have to do the same, despite very often using the services of agents to purchase their dream home. Some people use buying agents – to help them source a property and manage the buying process thereafter – but this is rare. Some agents do also charge the buyer, but this isn’t the norm.
Consumers might think that agents with the lowest fees – very often the hybrid/online operators – offer the best, most cost-effective option. But it must be clear what you get for this.
While a traditional high street agent will cost more, you also get the benefit of years of experience and expertise on your side. Agents will help you to market and advertise your home in the best way possible. They’ll conduct virtual and in-person viewings for you. They’ll make sure these comply with Covid-19 regulations at all times. They’ll carry out negotiations with buyers on your behalf. They’ll arrange the conveyancing process and the transfer of any required fees.
They’ll facilitate strong lines of communication between you and your buyers, and both sets of conveyancers. They’ll ensure the right surveys are carried out. They’ll do all they can to get you the highest asking price. Plus, they’ll go above and beyond to ensure the process is as smooth as possible.
When looked at like that, you get a lot of value for money out of an agent. Especially when you compare the average fees to equivalent nations.
It doesn’t correlate that the lowest fees agents offer the best option. Because you only get a fraction of the service. Equally, it doesn’t follow that those charging the highest fees are the best. An agent could charge a much higher commission and not get your home sold in the way someone charging 1.5%-plus VAT would.
It’s all about research. Recommendations. Reviews from trusted sources. These will help you to choose the right agent for your circumstances.
Fees shouldn’t be the be all and end all. But equally it’s important to remember that if you opt for an upfront fee approach, you will have to do a lot more for yourself. Within the commission charged by an agent, that helps to pay for portal listings, advertising and sales progression to improve your chances of selling.
In the UK, most home sellers still opt to use high street agencies – working on a commission-based structure – employing a ‘no sale no fee’ approach. The fee will be a percentage of the final sale price. Most sellers choose to use only one agent at a time. This is commonly known as sole agency. Multi-agency contracts are sometimes entered into, but these are much rarer. And more expensive. A multiple listings service is seen far more in the US. But there are plans to increase the use of this in the UK.
What else do sellers get for their estate agent fee?
All those things that are often take for granted in a sale – which play a vital role in making it happen – are covered in a traditional agent’s fee. This includes very useful things like floorplans and For Sale boards. As well as professionally taken photographs and accompanied viewings – both more important than ever in the current Covid climate.
While high street agents might sometimes charge additional costs for extra services, typically the above – as well as sales progression, negotiations with buyers and accompanied viewings – fall under the agreed commission fee.
All estate agents are compelled by law to quote their fees inclusive of VAT. Meanwhile, all fees (including what they’re for and when they will be payable) should be laid out and confirmed to you in writing before you commit. Lastly, agent fees are negotiable, and you may want to haggle. But it’s important once more to remember how much bang for your buck you are getting.
Even more than the fees they charge, it’s vital that you work with an experienced, reputable agency when selling your home. This can make all the difference between selling quickly and being left disappointed and frustrated.
If you have any questions about selling, buying, letting or renting a home in the London area, Atkinson McLeod are here to help.
To find out more about our services and current operations, please get in touch with our expert team today. You can find out how much your home could be worth on the current market by requesting a free and instant online valuation here.