What Fee is your Estate Agent really worth?
It is quite a popular debate, both outside the industry and within, that evolves round what the real value in fees an estate agent is really worth. Throughout the year hundreds of thousands of property are sold up and down the country from studio apartments to estates and a majority of these happen thanks to the service of estate agents.
Today we have both high street agents as well as those online estate agents (hybrid) to choose from. In the mix also are single branch agencies to those which are national, cheaper option agencies focused on standard property listings to those which are more suited to handle the luxury side of sales. From new kids on the block to those which have been around for centuries, household names we all know and trust to ones which have gathered a somewhat poor reputation. Yourmove, Bairstow Eves, Haart, Fine & Country, Connells, Abbots and more… There are currently 21,641 estate agents in the UK.
One fee that many of us seem to begrudge and openly question the value of is that of estate agency fees for selling property – “What work does an estate agent actually do?“, “Why should I pay thousands when the house sold straight away?” or “I can sell my property myself” are all quite common quotes when it comes to selling property. What is important to consider though above all is that despite the somewhat negative atmosphere towards estate agents, we continue to use them and the sector continues to thrive – This tells us that they must be doing something right no?
Estate agency fees do vary considerably as do the services on offer. From small upfront fees via online estate agency concepts (with untold extra costs to surprise you) to multi-listing commission rates of 3% and above, you have a great deal of options to choose from. As with anything you purchase or get in to contract with, you are always advised to do plenty of research prior to committing – There are numerous websites that help you to decide the best estate agent in your area / suited to selling your property.
What exactly are you paying your estate agency to do? If we take an average estate agency, high street concept, and we consider for this article an average priced property of £300,000 for a two bedroom semi, urban location:
- Valuing your property.
- Photographing / drone / filming your property and preparing marketing materials / listing details.
- Place your property for sale online (website / property portals / social media) and via shop front window / local press.
- Engage with potential buyers from accompanying viewings to receiving telephone calls.
- Achieving the best price for you, the buyer.
- Handling the sales process and liaising between seller and buyer.
- Confirming the completion of the sales and offering after sales care / key exchanges etc.
What are the average fees you will be asked to pay an estate agent? Here we will look at a few options that you will have open to you when it comes to selling your property:
- £100’s will be the start off point and usually via online estate agency concepts. This service you will likely not see an estate agent physically with much of the ‘work’ being done online. The service will be rather basic / standard and will involve many paid for extra such as for professional photography, accompanied viewings etc. It will be an upfront fee and this will not be refundable if the property does not sell.
- £1,000’s will be where online estate agency fees can go to and depending which brand you choose will depend on the quality of your selling experience.
- £0 is a price I wish to cover also as you can try to sell the property yourself, perfectly legal to do so and no reason why you can not succeed. There are several websites that help private sales that includes also the likes of Facebook (Marketplace) and eBay (online auction website). A local advert in the paper, a Tweet or self made for sale sign outside your property might just attract a buyer and if so, then you will have no commission to pay any estate agency!
- The realistic and most popular way will see you paying 0.75% to 3.0%+VAT for a professional high street estate agency. Prices will vary between regions and also estate agencies too – Some will have better results over others and will be more protective of their commission structure. Depending on the market and sales figures for each estate agency, negotiating commission fees down can happen between property owner and negotiator. Property of around £500,000 and above will usually be somewhat easier to negotiate the commission structure on with your estate agent.
Sole agency is when you give exclusive rights to selling your property to one estate agency and this will enable you to get a better commission (lower) price. Multi agency is when you instruct several agencies to sell your property and this will mean you having a higher commission rate. Remember that a high street estate agent will take on the job of listing your property at no cost to you initially, only when a sale is completed is when you are expected to pay for their services (no sale no fee).
Once you realise the value of a / your estate agent then the easier it is for you to respect the commission / fee they charge. Time and time again we hear of stories that show the mistakes of those selling property make by going cheap – By choosing pricier estate agents who are likely to get the asking price for your property actually puts you in a better financial situation upon completion compared to going for cheaper fee estate agency options and under achieving on the sales price.
For example:
3% + VAT commission Estate Agent sells your property for 100% of its asking price thus £300,000 – You pay fee of £9,000 + £1,800 (£10,800). You walk away with £289,200
£500 + VAT commission Online Estate Agent sells your home for 95% of its asking price thus £285,000 – You pay fee of £500 + £100 (£600). You walk away with £284,400
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