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How much should I pay the estate agent?

Estate agents’ fees vary enormously, and add thousands of pounds to the cost of selling a home. It is difficult to avoid estate agents fees, but understanding them can help you haggle successfully – and save you serious money

The Basics: Fees & Contract Terms

  • Estate agent fees and contract terms vary.  Try to gather these facts before booking a valuation and hearing more about the agent’s service offering.
  • In terms of fees, overwhelmingly, estate agents charge a percentage fee, which can be anywhere between 0.75% and 3.0%+VAT of the agreed selling price for  your home depending on the type of contract you opt for with your estate agent. See: How many estate agents should I use?
  • Our recent mystery shopping research of agents willing to disclose their standard fee indicated the average fee for a sole agency contract was 1.5% + VAT, similarly, a survey for Which? found the national average was 1.8% + VAT
  • You should aim to get a fee that is 1% + VAT for a sole agency contract (on the agreed sale price)
  • For higher value properties – such as over £500,000 – agents are often prepared to accept even lower fees, and perhaps go below 1% + VAT.
  • Do not be shy about negotiating fees, most agents are prepared to be flexible
  • Occasionally, particularly for cheaper properties, estate agents charge a set fee, which can end up as a high percentage of the total property cost.
  • Online estate agents also often charge set fees. See: Should I use an online estate agent?
  • Ask agents to email standard contract terms. Pay attention to the sole agency lock in period which varies dramatically across agents and is very long in some instances (4 weeks or 12 weeks are the most popular terms); more than this is unnecessary
  • Review and amend the estate agent contract before signing and ask questions or seek independent advice about anything that is unclear. See: Clever questions to ask your estate agent

Watch out for additional costs

  • Fees are often quoted excluding VAT, which is currently 20%. So a 1% fee is 1.2% inc VAT, or £3600 on a £300,000 home and a 2.5% fee is 3.0% inc VAT, or £9,000 on a £300,000 home. Estate agents should clearly state whether fees include or exclude VAT.  If the agent does not say upfront, be sure to check this point.
  • In their contract, agents should express their fee as an actual amount, based on the asking price, as required by The Property Ombudsman — note the actual commission you pay will be calculated on the agreed selling price which may be slightly higher or lower than this
  • If you appoint a sole agent, fees are lower than if you appoint a multiple agent (normally in the range of 1%-2.5% +VAT, rather than 2.5%-3.0% +VAT). WARNING: if you agree sole agency make sure you read the contract carefully. If, further on down the road, you instruct another agent ensure that the original contract has been fully terminated so you don’t have to pay commission to both agents.

For an explanation of types of contracts and what to watch out for see our guide to Estate agent contracts

  • The estate agent is required by law to tell you what is included in the fee – does it include preparing the property details, advertising costs such as placement on property portals, and For Sale boards? Ideally, you should not face any added costs and most agents cover these services with their commission, so do shop around if you are being quoted additional up-front registration fees, fees for photos, fees for advertising or marketing incentive fees. You should not need to pay these
  • Additionally, there should be ‘no withdrawal fees’ if you change your mind and decide not to sell your property for any reason
  • Most agents can arrange for an Energy Performance Certificate (EPC) to be done on your behalf, and this should be your only up-front cost. Shop around as we think you can find cheaper elsewhere. There is no obligation to use the estate agent provider and you may already have a valid EPC if the property has been recently built or sold
  • Be aware that you are under no obligation to use any in-house estate agent services (such as mortgages or conveyancing).
  • Be sure to compare rates and service ratings as estate agents almost always earn a commission on these extra services

For more advice on selling, see our step by step guide to selling

Get the agents to compete on cost – and haggle over the fee!

It isn’t very British to haggle, but in a market where sellers are in short supply, you will probably find agents surprisingly willing to cut their fees to get properties on their books. If you are going for sole agency, you should aim for a fee of 1% – or even less for high value properties

  • More expensive estate agents are not necessarily better
  • Get quotes from at least three different estate agents, and ask them what their fees are for a sole agency agreement, and if there are any other costs. Make sure you tell each estate agents that you are seeing other agents, so they know they need to compete.
  • Estate agents often ask for 1.5% up to 2.5% (+VAT) for being sole agent, since they know that most sellers won’t try to haggle. But that doesn’t mean they aren’t open to negotiation
  • Go back to the more expensive agents, and tell them the others are offering lower fees. Tell them that you are expecting to pay only 1% (+VAT)
  • Small estate agents are often more flexible on negotiating commission downwards than large chains, which often operate nationwide policies
  • Agents who are trying to win business to increase their market share in an area will probably be more open to negotiation than the leading estate agent
  • If you insist on putting the property on at an unrealistically high price, the estate agent is likely to be less willing to accept a lower fee because it will be harder to sell
  • If you achieve 1% (+VAT) you can be pleased with yourself

Give the agents sliding scales to get a higher sale price or faster sale

Sometimes estate agents agree to a sliding scale of commission, to give them a big incentive to sell the property at a higher price.

For example, if you think your home is worth about £300,000, you could suggest:

  • 1% fee if they sell your home for under £275,000
  • 1.25% if they sell it between £275,000 and £299,999
  • 1.5% if they sell it between £300,000 and £325,000
  • 1.75% if they sell it for over £325,000

You could suggest the sliding scale if you think an agent is insisting on too high fees. In the example above, if an agent is insisting on 1.75%, you could agree to that but only if they sell it above £325,000

You can also use incentives to reward the speed of the sale, if a quick sale is important

Online estate agents may be a cheaper option

  • If you still feel you are paying too much for an estate agent, you can always use an online estate agent for a fraction of the cost – as little as 0.5% or even £200

See: Should I use an online estate agent?

When should I pay the estate agent?

Unless you made the mistake of signing a “ready, willing and able purchaser” contract with the estate agent, then fees normally become due when contracts are exchanged.

However, you don’t pay until the sale is actually completed. You should never pay an estate agent before you have the money in the bank, or if they do not sell your house for you. Agents usually refer to this as ‘no sale, no fee’.

 

The HomeOwners Alliance provides members with guidance on their agreements with estate agents. To see how we can help, find out more about the benefits of joining the HomeOwners Alliance.

 

“I negotiated so hard with my estate agency that the Head of Sales told me they have an empty desk in their office if I want it… that’s thanks to HOA’s advice!!” – Jan, home seller (March 2015)

 


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17 Comments

  1. I have just been visited by Express Estate Agency who put an estimated value on my property of £90k. There fees are £2495 excluding VAT, so approximately £2,800. This is for sole selling rights. Firstly are Express Estate a credible agency and is this fee too high?

    Thanks,

    Comment by Simon Evans — March 7, 2016 @ 4:54 pm

  2. I’m gkne to saay to my little brother, that he should aloso visit this weblog onn regular
    basis to geet updated from most recent news.

    Comment by Smartx Forbes Magazine — January 18, 2016 @ 4:50 am

  3. I am trying to sell my flat,which is leasehold. I am somewhat concerned about their Fees. They say no sale,no fee,but their Fixed Fee is £3495 plus Vat.which includes Solicitors fees.
    The flat is only for sale at £45000-00.
    This works out at £4194-00
    Seems a bit steep.it has been with them since Oct2014

    Comment by B abbott — October 22, 2015 @ 1:14 am

  4. An estate agent came round on Saturday, valued the property and signed me up to a contract at the same time. On Monday, a note put through through the door by a prospective buyer – an unsolicited request – asked if I’d be willing to sell. I told the estate agent today of this unsolicited enquiry and he has said all sales must go through them, irrespective of how contact was made. The buyer specified in their agreement is “anyone they have introduced, (attracted) through their activity directly or indirectly (incl. marketing), including anyone acting on behalf of the buyer…. It is possible for us to be the introducer even when there is another agent or website portal used by you”. ‘If you know of anyone who may be interested you must provide their details within 3 working days’. Am I liable legally for any fee if this prospective buyer is a stranger not solicited by myself and if the agency had not yet progressed any activity on my account? My agent says it is entitled to be paid, perhaps in part.

    Comment by Fiona Ford — June 17, 2015 @ 7:45 pm

  5. I want to pull out of the sale of my apartment, but estate agent still want me to pay fees. It was ment to be a cash sale but I have already waited 12 weeks, it has taken to long,and I’m fed up waiting. Is it right that they can do that.

    Comment by Carol whitehouse — May 20, 2015 @ 9:28 pm

  6. I today sold a flat that I inherited for £20,000. The estate agents have charged me £2000 +VAT. Is this excessive? I’m being told by my friends that I have been swindled!

    Comment by Cayne McIver — April 24, 2015 @ 6:58 pm

  7. Thanks for the tips!
    I have recently put our house on the market, the agent is charging 1% +vat. The contract also states that if we sell the house within 6 months privately or with another agent we will still have to pay the fee. My question is, if someone buys into half of the property with me so that I can change to a buy to let mortgage, will I still have to pay the fee?
    Thanks.

    Comment by Helen — March 26, 2015 @ 1:56 pm

  8. It I purchase a house in the UK but reside in the US, do I have to pay VAT or is that refundable?
    Thanks!

    Comment by Barbara Easton — March 8, 2015 @ 7:25 pm

  9. Some excellent hints and tips in this article – well done! So many people find the process of selling a property to be difficult and stressful, and this piece puts the power firmly back in their hands. Thank you for the excellent information – something I can point first-time sellers to.

    Comment by Cormac Henderson — January 13, 2015 @ 4:34 pm

  10. Hi James, It is too good to be true. You are referring to “Sale by Tender”. The responsibility to pay the fee is switched from the seller (usual practice) to the buyer. Unfortunately this fee is usually fixed at 2%+VAT. We believer there are problems with this practice. See http://hoa.org.uk/2014/05/the-sale-by-tender-double-whammy/ for more information.

    Comment by Paula — November 11, 2014 @ 7:36 pm

  11. We sold our house with an online estate agent. They only charged us £399+vat and then no commission. We saved a fortune and can’t believe anyone would pay the thousands the local agents tried to charge us when they came round!

    Comment by Dave Peacock — November 10, 2014 @ 12:14 pm

  12. Hi, I had a quote from one of the estate agent, not sure if this is genius, Fees, it said our selling fee for the property would be on a sale by tender bases. This would be £150 plus vat. This would include photography and right move and zoopla premium listing. This would be the only fee to yourself as the buyer pays the rest. Valuation and quote from high street estate manager. Is this genius or not true. Please reply. Thanks.

    Comment by James Dawson — November 7, 2014 @ 10:23 pm

  13. we sold our house and bought a new build with morris homes, as part of the deal morris homes agreed to put up to £1500 towards the fees, when we had moved into our new house we got an invoice for just over £2000 pounds, as morris homes were being instructed by us to sell our house they negotiated a price with estate agents without us knowing, we didnt know of the price untill we had moved, they had negotiated 2% of the house price, should we of been told of the price before hand? whilst the house was being sold, the estate agent wouldnt give us information regarding our house, i.e evaluatuion, is this normal?

    Comment by andy corrigan — September 18, 2014 @ 4:20 pm

  14. Hi.
    My husband and I are joint owners of a flat. My husband signed a confirmation of instruction which included the fees to be paid if the property is sold. I did not sign this and am not happy with the fees. Does the fact I’ve not signed this make the contract meaningless?

    Comment by Mandy Winter — August 29, 2014 @ 1:29 pm

  15. Real estate transactions involve one of the biggest financial investments most people experience in their lifetime.

    Comment by David King — August 27, 2014 @ 6:01 am

  16. Seems the tide is turning and the courts are taking rogue estate agents to task. Interesting article on estate agents today highlights how it is possible to fight back and win against unfair claims for commission – http://i8it.ly/2eFJs6 – Know your rights I say!

    Comment by Cathy Perkins — August 18, 2014 @ 9:31 am

  17. How does the fee vary if it’s a sell vs a buy of a property? I am currently a buyer and was under the impression (no evidence yet!) that the fee was small or could even be zero (i.e the seller pays their agent for selling the home, and I could conceivably find and buy the home without an estate agent?). Please advise. Regards, Victor

    Comment by victor ojeda — July 7, 2014 @ 11:29 am

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