Posted on Thursday, June 13, 2024
UK Estate Agent Fees
The commission fee that your Estate Agent will earn through selling your property is a question you, of course need answering during your decision-making process when choosing who to market with. Any savvy seller should never let this be the only deciding factor on their choice of agent as there are many to be considered in the larger picture. Here, we try to help you understand those fees in more detail, to help form a rounded view of the service you’re about to pay for.
What is the average commission fee?
Most UK Estate Agents are paid for their services through a commission that is based on a percentage of the property’s selling price and these fees typically range from 1% to 3.5% of your home’s final sale price. Only the seller pays an agent’s fee – usually after your home has sold.
According to the property sellers’ advice service, The Advisory: “Agents charging less than 1%+VAT make us deeply suspicious”.
[Source: https://www.theadvisory.co.uk/#fees]
An agent’s fee should be reflective of the commitment to the work they will put into the sale for you and therefore their value when it comes to dealing with inevitable issues. Stellar communication and striving to offer the best customer service is for the win – not a race to the bottom.
It’s a good idea to ask your agent exactly what the fee covers before signing a contract. Make sure to check any additional or hidden costs. Some agents charge an up-front fee and sellers should find out why this is the case and ask questions about what happens in the event of a failed sale for any reason.
Why do I need to pay my agent commission?
Essentially, it’s the cost of a service – just like you pay for the time and effort involved when your car goes in for a service, and not just for the ‘parts’.
Your home is as unique as you are. It’s quite misunderstood that listing your property on Rightmove (or other major property portals) is all it takes to sell your home. Listing your property is just one element and the tiny tip of the iceberg! Without going entirely under the bonnet, let’s look at a high level at what your agent will do from start to finish:
What if my buyer pulls out, do I still need to pay?
Most agents do not charge their seller a fee if this happens and only get paid once all the legwork is finalised and the property is successfully sold.
Do I still need to pay if my property doesn’t sell?
Most High Street agents operate a no sale, no fee contract and do not tend to charge a commission fee if your property hasn’t sold, unlike other industries where you have to pay for a service, no matter the outcome. Online agents operate differently – they take your fee up-front, regardless of whether your property sells or not.
However, should you take your home off the market for any reason, your agent will likely have written into their terms of business contract with you a ‘withdrawal fee’. This is normal and common and not commission – this will be a small charge to cover the costs that the agent has incurred through marketing your property. There will have been photos taken by a professional photographer, and maybe even drone or video footage, that the agent has been charged and paid in advance for. A withdrawal fee is passing these costs back to you, as the agent has no potential commission fee for the work involved on the sale (the hard part) on the horizon anymore and cannot be out of pocket if you choose to withdraw your property before it’s sold. Following the settlement of this fee, ownership for any images and/or videos taken of your property will be rightly transferred to you, the seller, so you can pass them onto another agent should you wish to relist with someone else.
Are UK estate agent fees fair?
You might be forgiven that thinking a UK estate agent fee is a lot of money. In fact, it’s the cheapest agency selling fee in the developed world! Take a look at most European countries and you’ll find Belgium, Croatia, Estonia, Luxembourg, the Netherlands and Poland all charge a flat 3%. Fees are 3.5% in Austria and 3.75% in Finland, while they are 4% in Czech Republic, Latvia, Hungary, Portugal, Slovenia and Sweden. They come in at 4.5% in Germany, Slovakia and Italy and 5% in France, Cyprus and Malta. In Mexico it’s a whopping 7.5%!
Could I save fee costs using an online agent?
The Advisory’s research states that the best possible outcome is only achieved 27% of the time when listing your home with an online-only agency and that the right agent with High Street presence brings far more added value to the table:
[Source: https://www.theadvisory.co.uk/estate-agents/online-vs-high-street/]
In conclusion, sellers should be careful not to pick up the pennies only to step over the pounds by being seduced by cheap fees. Based on The Advisory’s research, a good High Street agent could charge up to 4%+VAT commission and still achieve for their clients a better ‘walk away figure’ compared to selling with an online-only service!
One of the best ways to get to know your local agents and how hard they work for their commission is to have a good read through their reviews online. Real experiences from previous clients can help towards your decision making and how potentially valuable they are to your personal circumstances.