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Estate Agent Fees
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There are over 18,000 agencies in the UK. And, in the average postcode they are 62 estate agents currently listing property for sale. On top of this there are agents that offer remote, online, or hybrid services. So how do you choose which one to work with?
In almost all cases working with a good local agent will provide the best outcome for your home sale. Our research shows that working with an online estate agent is likely to leave you with less money overall. We also found that online agents have a much lower success rate than high street agents (about 50% of their listed properties remain unsold after a year).
Choosing an online estate agent to sell your property means you are taking the sale of your largest financial asset into your own hands. The experience, and additional marketing offered by high street agents mean they'll get the best price for your house - and sell it quicker.
Research by The Advisory has shown that the best high street agents are able to get a 5% higher selling price than online only agents. This is significantly greater than the 1.5% average fee charged by local agents - and a much greater increase than the amount saved by using a cheap online service.
Below we outline each type of agent, what they offer, and the pros and cons to working with them.
An online agent is an estate agent that operates completely remotely. Your estate agent will conduct a valuation before listing your property, but after this the majority of contact will be over email, telephone or online chat.
Many online estate agents promote their services on the basis of being a flexible and modern way of selling your home. Home sellers are able to track the progress of their sale through an online platform, and will take control of the majority of the selling process. This can include taking photographs of the property, arranging floor plans, and creating the advert. Then the homeowner will handle enquiries from buyers, host viewings and negotiate offers.
Because many services aren't included as standard in online agent's fees, they are generally cheaper than traditional high street estate agents. The majority of their fee goes towards purchasing adverts on the major online property portals - Rightmove, Zoopla, and OnTheMarket.
A traditional agent is the kind of estate agent you find on most high streets in the UK. They are key members of the local community and take a personal approach to selling homes. This involves using a mixture of online and offline marketing to sell your home. Offline marketing includes getting in touch with known potential buyers, putting up 'for sale' signs, and advertising in their high street stores and newspapers.
Because local agents go beyond just listing your property online, their fees tend to be higher than online estate agents. The fee covers advertising, vetting potential buyers, handling viewings and negotiations, and guiding you through the sales process from valuation to completion. However, agent's fees are usually offered on a 'no sale, no fee' basis. This means that if a traditional agent does not sell your house, you will not have to pay their fee.
In theory, a hybrid agent offers the full range of services you’d expect from a traditional agent but with the convenience of being able to manage the sale online. Hybrid agents distinguish themselves from online-only companies by offering a more complete service. This includes conducting viewings, and having a ‘no sale no fee’ policy as standard - like a traditional estate agent. They’ll probably also have a ‘post-sale’ team to help you with the conveyancing process.
But, in practice estate agents offering a hybrid service aren’t able to offer the same level of expertise as a local high street agent. They're usually not large enough to have ‘local experts’ to cover every area, and the ‘post-sales’ teams are often handling a huge number of cases. But, because of their limited expertise, hybrid agents are likely to be cheaper than their high street counterparts.
The main difference between using online estate agents and a high street agent is level of service. Online agents don't include many of the features that people expect to come as standard when paying someone to sell their house.
Traditional estate agents offer a full marketing package as standard, along with a single point of contact, and continuing support throughout the whole sales process - from valuation to completion.
Online estate agents offer a pared-back approach. Their standard fees include a valuation and an advert on the major online property portals. Things like hosting viewings and drawing up floor plans are usually available as add-ons that will cost more. Additional options for sales progression services further down the line, including negotiations and chasing solicitors from online estate agents are sometimes available, but are very limited.
It's a common misconception that online agents offer the same service as a traditional agent. Many home sellers aren't aware of how much of the responsibility they will have to take on if they opt for an online estate agent.
We interviewed a group of home sellers who had worked with an online agent. Almost half of those we spoke to felt the online estate agency they chose was poor value for money. 40% of respondents told us they had spent more time than expected managing the sales process.
Another difference comes in the way fees are paid. Online estate agents charge fixed fees which are paid upfront. If you end up switching to another estate agent, this money will not be refunded.
In contrast local agents charge a commission fee. This is a percentage of the final sale price of your property. If a local agent is unable to sell your home, or you're unhappy with their service and switch to another agent, you won't have to pay them anything.
And, because commission fees are based on the final sales price, high street agents are highly incentivised to get you the best price for your home.
Inevitably there are pros and cons to using both types of agents. Below we outline the main advantages and disadvantages to working with each type of estate agent, to help you weigh one up against the other.
You know upfront what your estate agent's fee will be
The standard fee for online agents is usually lower than the fees for high street agents
You will be able to contact your agents online and out of hours
You have to take responsibility for hosting viewings, vetting potential buyers, and offline marketing
You might not have one individual point of contact throughout the sales process. Most online estate agents operate a call centre type service. This means you can get in touch with the agency whenever is convenient, but you may deal with people who are not fully briefed on your home sale
Online agents won't have extensive experience and knowledge about your specific neighbourhood
Properties sold by online estate agents usually take longer to sell
Properties sold by online estate agents usually sell for less than those sold by high street agents
Around 50% of properties listed by online agents don't end up selling
In most cases an online estate agent's fee is payable whether your home sells or not (though one or two agencies now offer a more expensive 'no sale no fee' deal)
High street agents consistently sell properties quicker than online agents
Good high street agents have extensive local knowledge, experience, and connections in your community
You will be provided with one dedicated point of contact for the duration of the home sale process. And, you'll be able to meet with them physically at their office
Your agent will handle viewings with potential buyers, as standard
Offline marketing will also be included as standard
'No sale, no fee' - meaning you don't pay your estate agent until they sell your home
Commission fees incentivise your estate agent to get you the best possible sale price for your property. The higher the price they achieve for your home, the higher their commission payment
Usually traditional agents work normal office hours (though alternative options of contact and online tracking are becoming increasingly available)
Commission-based fees are dependent on your final sale price, so you'll only have an estimated figure until your property is sold
Traditional agency contracts usually have a fixed term length. You’ll have to wait till the end of your contract term to switch agent if you're unhappy with the service
There are two things to consider when looking at the money you save using an online agent. Firstly, the money you save in fees, and secondly, the final sale price achieved. Together this will help you work out your 'walkaway' figure - the amount of money you're actually left with in your pocket.
Our research has confirmed that the top local estate agents consistently outperform even the best online agents. This means that even though it may seem cheaper to go with an online agent, they are often not actually the best value for money. They don’t achieve the highest final sales prices, nor the quickest sales. And the amount they lose on your home sale is not compensated by the savings you'll make on fees.
The Advisory, an independent advice service, found that sellers using an online agent could be missing out on: up to 48% more viewings, 64% more offers, and an extra 5% on their final sales price. Based on this research, the Advisory worked out that good high street agents could charge up to 4% commission plus VAT, and still achieve a better ‘walk away figure’ than those using an online agent.
Some online agents are able to achieve good results. But the best high street estate agents will consistently outperform online agents.
Paying slightly more for the best agent pays off.
Analysing an agent's performance in your local area is a great way to see who is likely to sell your house quickly and for the best price.
To do this, you should look at:
How many properties an agent has listed in your area. This gives an indication of the agency's experience and involvement in the local property market.
How long it takes an estate agency to find a buyer. If an agent is able to achieve a sale much quicker than others, it shows that their marketing strategies are particularly effective. They also probably have strong connections with interested buyers in your local area.
What percentage of the asking price they usually achieve. This demonstrates the agency's skill at valuing and negotiation.
You can do this research by trawling through online property portals, and the Land Registry. Or, GetAgent's free comparison tool can do it for you. We analyse data from hundreds of thousands of property sales all over the country, collated from a wide range of sources, to give you an objective analysis of the best performing estate agents in your area. Try it out here.
Did you know that location is the most important factor in determining the value of your home?
An expert local agent will be able to give you a much more accurate idea of how much your home is worth than an agent that does not focus specifically on your area. And, the more accurately a property is valued, the more likely it is to attract interest from the best buyers.
To understand how important locality is to a home sale, we spoke to a number of estate agents, both corporate and independent, across the UK.
Interestingly, the large corporates use a very scientific approach when deciding what area they should cover and the size of that area. They use a number of data sources, including the number of households and the frequency of property sales.
The independent estate agents we’ve spoken to tend to choose a location they know very well, and the size of the area they cover depends on customer reach.
What all the high street estate agents we spoke to have in common is that they see their local knowledge and their local database as a key factor to their success.
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