The last 18 months have seen unprecedented government action to save the property market from the devastating effects of the Coronavirus Pandemic - and the market’s done more than rebound.
In June 2020, a Stamp Duty Holiday was introduced to galvanise the property market and incentivise first time home buyers to continue spending. Meanwhile, lockdown-induced mortgage payment holidays and low mortgage approval ratings saw the monetary gap between homeowners and renters widen. Combined with an acute shortage of housing, these actions have set the property market ablaze, with house prices soaring across the country.
While the boom means it’s a good time to be a homeowner (and even better, a home seller), it’s important to remember its effect on other areas within the industry, especially where estate agents are concerned.
Estate agent’s fees have risen due to an increase in the value of property. Most high street agents earn a percentage cut from the sale of properties. Average rates usually range from 0.75 to 3% (including VAT) based on the following factors:
While location and property type often dictate property value, it’s also affected by the state of the housing market. During the Great Recession for example, house prices dropped by nearly 19% between the third quarter of 2007 and the first quarter of 2009. In other words, the market became what’s known as a ‘buyer’s market’.
A buyer’s market describes conditions where purchasers have distinct advantages over sellers. In the Great Recession, house prices plummeted. This meant that while it was theoretically easier than ever to buy property, it was a lot harder to sell because less people could afford to buy. In a recession, people are much more likely to be frugal with their money than invest in property.
In a buyer’s market, estate agent fees usually decrease because the industry is suffering from a lack of sales.
Currently, the property market is a ‘seller’s market’ - meaning that it’s a very good time to be a home seller, but not so much a buyer. House prices are on the rise, meaning that agents can not only earn more from their commission, but they can adjust their rates accordingly to boost their earnings.
Using our handy Estate Agent Fees Tool, we looked at agent rates across the most popular cities in the UK, and how they equate to current house prices:
To help you decipher our findings, we’ve picked out some juicy snippets:
While it might be tempting to view agent fees as a major consideration when selling your home, it’s important to remember that fees don't matter as much as you think.
Our research shows that agent rates often vary without relation to average house price. Residents in Liverpool are charged an average rate of 1.4% to sell their homes. This is the second highest agent rate from our data, despite Liverpool being a city with historically low house prices.
However, our research also shows that Liverpool ranks among the most affordable cities to sell in the current market, despite high agent rates. This is because agents charge a proportional cut from property sales. The 0.7% difference between the lowest agent rates (Glasgow, Newcastle, Edinburgh) and the highest rates (London, Liverpool) is negligible in comparison to the £363,812 disparity between properties in London and Glasgow. Ultimately, you can still pay higher agent rates without truly impacting your sale.
What’s more, quality high street agents view their commission as an incentive to get your property sold. This means it’s in their best interests to achieve the best final sale price for your property.
However, this doesn’t mean you should get complacent. Estate agents handle the most important transactions of our lives. Their level of expertise could result in a sale well above asking price, or a bungled opportunity. Although fees shouldn’t be a primary consideration, you should still get your money’s worth.
The main thing you should take into account is agent performance.
Like any type of service we purchase (insurance packages, phone contracts), estate agents should be compared. Although an agent’s marketing and negotiation abilities may vary considerably, home sellers often mistake fees as the main indication of an agent’s reliability. This is because many people find agents difficult to distinguish from one another at face value.
So how do you find the right estate agent for your property sale? Our free Agent Comparison Tool uses data from the Land Registry and property portals to rank local estate agents according to:
Everyone has different motivations for selling their property. Whether you’re after a quick sale or the most money possible, hard data allows you to easily distinguish which agents perform best in your local area.
|Location||Average estate agent fee %||Average house price||Average fee £|
The average rate for estate agents is 1.9% (0.75 - 3%) in the UK. For a £268,000 property, an average agent fee would be £5092.
You can expect your estate agent to take care of a number of things in your sale, including:
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