Make estate agent fees transparent

The amounts charged by estate agents should be made freely available so homeowners don't feel ripped off. Help us put this right by completing our short survey....

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What’s the problem?

Estate agent fees are a murky world of unknowns. There is little regulation to protect the inexperienced and it is one of the few areas of British life where haggling is normal. Yet for many haggling is unnatural or not recognised as an option which leaves them open to exploitation by unscrupulous agents who can charge whatever they like.

As we all know house prices have rocketed over the last two decades but there has been no obvious drop in estate agents fees. It takes no more effort to sell a home in 1995 priced at £50,000, than it does to sell a home in 2013 priced at £200,000, but a 2% commission on both means a huge pay hike.

Obviously not all agents are out to rip-off their customers. The majority are providing an important service. What we want is for the cost of this service to be open and transparent. That way there will be competition between agents driving down the costs for homeowners.

We want to find what your experiences of estate agents’ fees. Please take a couple of minutes to fill out this survey

I feel this campaign is misdirected and more attention should be made to the rise of ‘Sale by Tender’. At this time I’ve not the energy to write an essay on the topic, sorry, but I will quickly respond to some of the points posted above.

To Edward and Dennis, in my experience, the reason agents don’t advertise a fixed price is because it is necessary for them to sit down face-to-face and be given a [fair] opportunity to explain and justify their fees. I frequently read and hear people state they chose their agent simply because they were the CHEAPEST! What nonsense is this? Estate agents are responsible for selling homes, which is for the majority of owners, their biggest financial (/emotional?) investment. It’s a false economy – you pay budget, you often get budget; and then these experiences are used to tarnish the whole industry. It’s daft decisions like ‘select the cheapest’ that these service providers have to contend with.

Also, fees are negotiable. Before quoting, estate agents will want to see and discuss the job because of the variables. For example:
Will the clients be demanding of time and energy, i.e. divorcing couple?
Will viewings need to be accompanied (cost of petrol compared to 1995!), requiring agents to be away from the phones?
Will the property sell itself or require extra effort to convince buyers?

On the subject of “why their rates are purely based on a % of the cost of the totally selling price, which does not directly relate to the effort it takes to sell a property”…..
Clientèle at the higher-end DO require more effort. Imagine having the task of marketing a 10+ bed house. It takes a great deal of time to measure all of the rooms and hallways, draw the floorplan and then study for and accompany a tour. Oh, and remember, agents don’t get paid a penny if the vendor does not sell. Also, 1-2% of a £100,000 leasehold is not worth a busy agent’s time, which is why those owners should expect to pay a marginally higher figure. However, the fee for a £2,000,000 property would have a lot of room for negotiation.

I came across a nice analogy today for the value in a good estate agent. In short, think coffee from a greasy-spoon compared to that from Costa Coffee. There will always been people that scream with conviction ‘coffee-is-coffee’, but choosing the right agent can pay-off. In one example, when I was working for a Countrywide estate agents, I negotiated an offer of £142,000 for a maisonette in our first week of marketing. The vendors had accepted an offer of £134,000 from a smaller agent only a few weeks prior – the fee was just £500 more than the independent was charging.
So, to the previous poster, do you feel you achieved the best possible price for your property?

Anyway — this response ended up taking a lot longer to write than I had planned. Thank you for reading.

  • When I was selling my house I hired an agent to help me. It was the first time when we were selling and dealing with real estate agents. Our good friend recommended us to negotiate agent’s fees. He told us one very wise thing that even a little negotiation can actually bring fees down quite considerably. You can save your money simply by negotiating. As a rule, agents know that every seller and buyer will accept the terms of the contract without arguing. That’s because people don’t know nothing about the real prices they can pay for each service. Ask you agent about his terms as later you may face the problem of some additional costs further into the selling process. Keep in mind that real estate agent is also an interested part as he wants to earn money. So don’t be afraid of negotiating a discount from your real estate agent.

  • Why should there be a DROP in EA fees between 1995 and present day?

    All the costs have gone up – premises, business rates, petrol, advertising, stationery etc. Cost of living has gone up, so staff need to be paid more merely to maintain the same standard of living. House prices have gone up, so even EAs need more income to own their own homes – unless that should be forbidden for some reason …. ? Rightmove and other portals increase their charges year on year. etc etc

    The average house price in 1995 appears to be around £65,000, taking the average of a couple of online sources. The average in Feb 2014, according to the BBC, is £166.874. Average EA fee in E&W, according to OFT, was 1.6% a couple of years ago, so 1.6% of the difference in average house price is (166874-65000)*0.016 = an extra £1,629 in fees for the agent between 1995 and 2014 on those sales which complete successfully.

    The EA still shoulders the burden of all their expenses on all sales which flounder, regardless of the reason. It’s perfectly possible for these reasons to not be attributable to any failing on the part of the EA – lenders changing their mind, others in the chain withdrawing from sale, etc etc – but the EA still has to cover expenses on these failed sales from income on the successful sales.

    I think it’s fair to say that since the mortgage crisis kicked off in 2009 or thereabouts, there’s likely to have been more failed sales, wouldn’t you think ….?

  • Edward wrote above – “we … would question why their rates are purely based on a % of the cost of the totally selling price, which does not directly relate to the effort it takes to sell a property. ”

    What kind of charging structure would you prefer, then?

    A flat fee?
    Payment by the hour?
    Something else?

    Consider this; given the current scenario where EAs are routinely paid by the sellers with whom they have a contract to sell, the majority of an EAs time, once a property is on the market, is spent with people who don’t actually pay them – casual enquirers, viewers who may or may not actually view, buyers who may or may not buy, surveyors, solicitors and mortgage advisors, etc. Would you be happy for the EA to bill you for every hour/minute spent with each of these folk relating to your property?

    Or do you have something else in mind?

  • During 2008 and 2011 I had to sell £300m of residential property for the investment bank I worked for. The process of dealing with even the most prestigious brand of estate agent left me bewildered by the industry. Therefore I decided to take my own action and set up my own business, Hooper Rees, which is based in Bath.

    My fee is £15,000 and I work mainly for private clients who are selling high value property in the West Country. I have also completed work for a private bank and other institutions.

    The premise of what I do for my clients is to provide them with a combination of property and commercial experience that cannot be attained from an estate agent and charge them a fee that reflects my experience rather than a percentage of their house, which has no relevance to the amount of work I do on their behalf.

  • Just sold my house and also just found that the estate agent want 2percent then minimum of 2700 I have had my house for sake for a long time and thought no one was interested so we reduced it to 82000 rang estate agent and I was unsure about fees as we needed 80.000 to walk away with he advised me over the phone that 2000 would cover fees still no interest and branch were rude sarcastic so we decided to leave then the next day they had a viewing and the bought home no sign outside house,old photos on next no viewing I will be happy to pay 2 percent for hole fees as they have been terrible now before I reduced the house if they bothered there backside to do work and get viewing I would not have lost money the contract I have is 12 months old with old price before reduced help what can I do

  • why do EA’s provide a valuation and yet ask the customer “how much do you want for your house?” is this to get an easy task of selling if the customer under prices their home. i’m sorry but i dont see how after the “valuation” has been done and the photo’s and floorplans done i dont see how the sale of one house to the next should be any more expensive whether it be for £100k or £1M.

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