Estate Agent Fees
Estate Agent Commission
We aim here, to give you the best and most up to date advice available on the subject of estate agent fees. As you are probably aware, MoveWise.co.uk are not an estate agent, and are not affiliated with any, so you can rest assured that you aren't going to read a sales pitch. What we do offer is free advice surrounding estate agent fees following by a look into the alternatives options to using an estate agent.
WHAT ARE ESTATE AGENT FEES?
Estate agent fees, or sometimes referred to as commission, is the price paid for the services of your appointed estate agent for selling your property or land.
WHAT DO ESTATE AGENTS DO FOR THIS FEE?
Estate agents carry out a number of various services to earn the estate agent fee including : -
1. Setting the "asking price" for the property or land for sale. The estate agents set this price using a combination of recent house sold prices in the area, current house price trends and their own assessment of the proerty itself. The estate agent is not, however, qualified to assign a proper valuation as they are simply not qualified to do so. If you require a full valuation, you would need to instruct a surveyor who has specialist training in this field. An estate agent, unless new to the job, will have some level of local experience, whcih will help them to reach the asking price figure that they would like to market your property or land at. Remember, it is always pertinent to speak with more than one estate agent if you are deciding which one to appoint; that way you can assess not only their fees, but also how professional they are. The true value of a property is not set by an estate agent, but ultimately dictated by the property purchaser themselves. The old saying, "its only worth what someone is willing to pay for it" comes into play here.
2. Producing property sales material. To earn the estate agent fee, they will photograph the property, and this usually includes the pictures of the best features and an image of the front of the house. The estate agent will also compile a more detailed description of the dimensions, features and good points about the house. They do so following a tried and tested format, which basically the buyers expect. What can be missing from the process is "insider knowledge", the estate agent doesn't know the property as well as the owner and salient information can be lost at this stage.
3. Promote the property with advertising. This is where they use their skills to attract potential property buyers. Estate agents will use several methods, including putting up a for sale sign, advertising in the local press and sending out the property details to awaiting potential buyers. Some estate agents do more than this, some do less, so its important to make sure that you check what level of advertising your chosen estate agent will undertake for the fee that they charge.
4. Conduct viewings. Most estate agents will offer to carry out the viewings with a view to receiving an offer on the property or land for sale. The estate agent will show the interested buyer around the property pointing out features and "selling" it to them. A measure of how good an estate agent is how well they perform during this task, and unfortunately, its where may of them fall down. The range of skills in this area can be vastly different, ranging from an estate agent who can simply point out which you are in to those who really spend time with th buyer identifying those parts of the property that are particularly important to them. Conducting viewings is the most important part of the property sale so its important that you feel confident in the estate agent's ability to do this well.
For anyone who has been shown around a property by an estate agent, they will know too well how varied their skill sets are. In the UK, an estate agent is fairly unqualified and the best are often those with the most experience. Our property market is vastly different to that of say, the USA, whose realtors (the American name for estate agents) train for years to become skilled at home staging, negotiating, and promoting a home. Anyone, but anyone in the UK can become an estate agent or set up an estate agency. Property is one of the largest industries (billions of pounds change hands), and it is always surprising that our estate agents are unregulated.
HOW MUCH SHOULD YOU EXPECT TO PAY AN ESTATE AGENT?
On average, you can expect to pay between 1.5 and 3% of the total sale price of the property or land being sold. The estate agent only gets paid if they are sucessful in selling your home. This figure is also subject to V.A.T. (value added tax) which is at a rate of 17.5%, this needs to be added to the percentage figure at the end. The estate agent doesn't get this extra amount, but the property seller still has to pay it as it is a government requirement to pay tax on the service given by the estate agent.
So, lets take a look at the actual figures of what an estate agent's fee works out at. Using an average figure of 2.2%
Example 1. A property that sells for £100,000. The commission to the estate agent will be £2,200 + vat = Total of £2,585
Example 2. A property that sells for £200,000. The commission to the estate agent will be £4,400 + vat = Total of £5,170
Example 3. A property that sells for £500,000. The commission to the estate agent will be £11,000 + vat = Total of £12,925
As you can see, the more you property is worth when sold, the higher the fee to the estate agent will be. The average price of a UK property is around £191,000, and so a seller in this case would be expected to pay their estate agent a fee of around £4,937.
WHY DOES IT COST SO MUCH?
An estate agent fee can be perceived as quite expensive, and their job can be relatively easy in comparison to the amount they charge. They do, however, find a buyer for the property or land for sale and as such, it is a specialised task especially if the estate agent has a difficult property to sell. It is for individual property sellers to decide whether or not the estate agents are worth what they charge. More and more people are questioning this practise for the sole reason that the estate agent fee is so expensive in line with what they actually do. Growing numbers of people are deciding to sell their own property themselves and save themselves having to pay an estate agent at all. This practise has increased in recent years, largely due to the vast increase in household internet useage, which has made buying and selling most things a lot easier for all. Today's consumer demands choice and value for money due to the high levels of competition in the marketplace. Some would argue that an estate agent does not provide value for money, especially when you consider that an estate agent fee is determined by the sold price of the property: - is that fair?
WHAT ARE MY OTHER OPTIONS?
What many people don't yet know is that you can sell a property or a piece of land without an estate agent. It is not a legal requirement to appoint an estate agent to sell a property. There are private property companies, such as ourselves MoveWise, that have proved that it can be easy to sell a property privately: without the need for an estate agent. Many people chosing this option as the future of UK property selling. The single biggest reason for choosing to not use an estate agent is to save the thousands o punds in estate agent fees. Other reasons include sellers wanting to control the ale of their own property themselves: - you could just do this directly with the buyer. Also, you have to do most of the work anyway, e.g. preparing the property for each viewing, speaking directly to the solicitor/conveyancer, deciding on how to handle the offers, co-ordinating viewing times and much more.
IF THAT'S TRUE, WHY DO PEOPLE STILL USE ESTATE AGENTS?
People still use estate agents for several reasons. The main reason is that there is a lack of knowledge surrounding the private property process. People are simply unaware that you can save thousands of pounds in estate agent fees by selling the property themselves. Another reason is that people don't feel that they can sell their own property themselves, in some respects they over estimate what is involved. Also, some buyers don't have the time to carry out the viewings or deal with enquiries from potential buyers. Private property selling isn't for everyone, but if you decide that its worth a try, considering the massive savings that can be made then all of the information you need is to be found on this site. So it is easy to avoid costly Estate Agent Fees.
