Estate agents tend to calculate their fee as a percentage of the selling price of your house – e.g. 1.2% + VAT. The commission-based structure is a good way of incentivising agents, by tieing their success to yours.
Fees can be tricky to get your head round, and unfortunately, most agents won't disclose their fees on their website or marketing materials. Typically, fees start at 0.75% and don't usually go above the 3.5% mark. The amount depends factors, including:
- Contract type: agreements typically charge more.
- Competition: in areas with a higher concentration of estate agents, fees are often likely to be lower.
- Service: some firms will also charge more simply because they believe they offer a superior service – for example, Foxtons generally charge a non-negotiable 2.5% + VAT fee (those Minis won't pay for themselves!).
- The Property: one of the reasons agents don't like set fees is because some properties are simply harder to sell than others. Conversely, an agent may have a potential buyer on their books for a property, and will therefore be willing to sacrifice part of their fee as less effort is required. This is one of the reasons why getting quotes from multiple agents is a good idea.
It's important to remember that you don’t actually pay until the sale is done and dusted.
What’s included in the fee?
In short, anything that’s required to help the sale of your property. Aspects such as marketing, lead management and valuation guidance are standard and should not cost you above and beyond your agreed fee. Here’s a rundown of what you should expect to be included.
- Guidance & advice: Chances are you’re new to the selling game so your estate agent is on-hand to offer you access to their experience and connections. This advice relates to things like valuing your property, tapping into local market knowledge and connecting you with local service providers such as conveyancers.
- Marketing & advertising: Your agent should have knowledge of both online and offline marketing channels, and will ensure coverage in both. At a minimum, this includes listing your property on the main property portals; Rightmove, Zoopla and OnTheMarket. OnTheMarket rules are that member agents are only allowed to hold membership with one of the two rival portals, so you won't find an agent that will list on all three. Some agents will also list your property on other classifieds sites, such as GumTree although this is less common. Offline, agents will ensure buyers have access to professional property brochures, and will also provide a ‘For Sale’ sign to place outside your property.
- Sales and lead management: An estate agent is responsible for managing the flow of prospective buyers. They're in charge of organising and hosting viewving, vetting individuals that don't fit the bill, negotiating a sales price and acting on offers from interested buyers.
It's important to remember that fees are only one side of the coin, your sale price is always the most important factor.