Find out the average sales commission charged by estate agents in your area

Estate Agent Fees

Couple discussing fees with a real estate agent

One of the first factors that people think of when selling a property is agent fees. Given that fees commonly vary from 0.75% to 3% +VAT, it’s quite understandable that property sellers can often become so fixated on getting the best commission rate, they lose sight of the main goal – selling the property at the highest possible price. Paying a lower estate agent fee is not always in the seller’s best interests. That said, there is no point paying an agent 3% of the sale price only to receive minimal service.

Consider all of the aspects of each estate agent, rather than just looking at their selling fees. There are a number of important factors, for example, quality, reputation, and experience, which may garner you a higher profit, despite higher fees.

Types of Estate Agent Fees

There are generally two types of estate agent fees. These can be broken down into the following:
  1. Fixed estate agent fees – These fees involve the estate agent setting a fixed fee for the sale of the property. No matter what the property eventually sells for, the fee is fixed.
  2. Variable estate agent fees – Variable fees will change depending on the property’s sale price. The vast majority of agents use this type of fee structure, and it can encourage the agent to obtain a higher sale price.
There are advantages and disadvantages associated with both types of fees. A fixed fee allows the seller to know the cost up front. But this could result in higher-than-market fees if the property sells for less than the seller anticipated.

Variable fees can be financially advantageous to the seller if the property sells for less than anticipated, but the seller won’t know the total amount of the fee until the sale price has been set.

You can also suggest paying your agent by a sliding scale. For example, if you think your home may be worth around £400,000 (the average home in London), you could suggest:
  • 1% fee if the property sells for under £350,000
  • 1.25% if it sells between £350,000 and £399,999
  • 1.5% if it sells between £400,000 and £450,000
  • 1.75% if it sells over £450,000
The benefit of a sliding scale is that it offers the most direct incentive for your agent to sell your property at the highest possible price.

Things to Keep in Mind

Remember to pay attention to the lock in period if you are signing a sole agency agreement. The most common periods are four weeks or three months, any longer is unnecessary and may reflect the agent’s lack of confidence in being able to sell your property.

Fees can vary significantly from 0.75% to 3%. On a £300,000 property this range represents £2250 to £9000 – a big difference.

Don’t forget the VAT!

Using the same £300,000 property, the 20% VAT on fee means that 0.75% + VAT is actually 0.9% (including VAT), or £2700. VAT on 3% is 0.6% more, and 3.6% of the property’s value is £10,800. It works out to be a significant difference in the fees you pay.

Signing a sole agent agreement will usually get you a lower fee, but be aware that you may potentially be limiting your exposure. For higher value properties, agents will also generally be willing to accept a smaller percentage.

Agents are required by law to explain what is included in the fee, so you should check that it includes advertising costs, For Sale signs, photography, and any other items your agent has discussed with you. You shouldn’t have to face any additional costs.

Other Factors That Influence Estate Agent Fees

The local selling prices of homes in the area, greater market forces, advertising and even how much work is required to sell the property will all influence fees.

Be sure to find out exactly what the agent is planning to do for you, as the level of service and the work that the agent will put into selling your property should be reflected in the price.

You can compare agent fees and their service through localagentfinder.co.uk. With the free and easy-to-use online dashboard of our agent comparison tool, you can look at various real estate agent fees and other important characteristics before making your final selection.

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