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
- Overwhelmingly, estate agents charge a percentage fee, which can be anywhere between 0.75% and 3.5% of the price you sell your home. A survey for Which? found the national average was 1.8%
- You should aim to get a fee that is 1%
- For higher value properties – such as over £500,000 – agents are often prepared to accept even lower fees, and perhaps go below 1%
- The upside for the seller in the fee structure is that the estate agent has an incentive to sell the property for as much as possible, so they get higher commission
- For more expensive homes fees can end up being tens of thousands of pounds – which many sellers will feel is a lot of money for not much work. There is perhaps a reason that estate agents tend to drive such flash cars
- 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 - which we have summarised here
- Fees usually exclude VAT, which is currently 20%. So a 1% fee is 1.2% inc VAT, or £3600 on a £300,000 home and a 3% fee is 3.6% inc VAT, or £10,800 on a £300,000 home
- If you appoint a sole agent, fees are lower than if you appoint a multiple agent (normally in the range of 1%-2%, rather than 2.5%-3.5%)
- 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, and For Sale boards? Ideally, you should not face any added costs
- More expensive estate agents are not necessarily better
- There are regional variations, with estate agency fees higher usually in London than elsewhere (even though properties are also far more expensive)
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
- 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. You will probably get three different fees, although estate agents sometimes effectively operate in local cartels all charging the same fee
- Estate agents often ask for 2% or 2.5% 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%
- 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% you can be pleased with yourself – you might have to settle for higher fees
Give the agents sliding scales to get a higher sale price
Sometimes estate agents agree to a sliding scale of commission, to give them a big incentive to sell the property at a higher price. This more closely aligns their interests with yours, getting around the problem that agents are often just keen to get the sale, even at a low price, so they can move on to selling the next property to earn another commission. You will probably have to offer the agent a sliding scale, as they are unlikely to suggest it themselves.
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
Online estate agents
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. But you need to do your research. See How to save money with online agents?
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 (see How should I choose an 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
We think the amounts charged by estate agents should be made freely available so homeowners don't feel ripped off. We are campaigning for more transparency in the commission fees charged by estate agents in order to encourage competition on price. If you have every sold a house or flat, please complete our 5-minute survey. All data we collect is anonymous.
How do I lower my estate agent fees? What about online agents?
What price should I sell my house for?
Should I sell my home myself?
How should I choose an estate agent?
How many estate agents should I use?
Step-by-step guide to selling your home
Top Tips: How to make your home sell faster and more valuable
The legal side of selling a home made simple
Find out what people are saying in our forum on estate agent fees or leave a comment below
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The legal stuff is here. Last updated April 2013
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