Buying and selling a home is no easy task and that’s why so many people elicit the help of estate agents. Estate agents are experienced professionals with connections and in-depth knowledge of the real estate world. But some people are still unsure about paying estate agent fees when they can just sell or buy a home themselves.
Is hiring an estate agent worth it? What jobs do they perform and how can it help expedite the sale or purchase of your home? Keep reading for an estate agent overview and fee guide that’ll help you make an informed decision.
1. What is the Role of an Estate Agent?
So what exactly does an estate agent do? A lot of things!
The estate agent you hire is tasked with listing your home, helping you decide on a price, handling all inquiries, and settling all details surrounding the final sale.
Pricing Your Home
Choosing the right price for your home is a crucial step in the selling process. A lot of factors go into this decision and it can be an emotional one. Oftentimes, a seller thinks their home is worth more because of their emotional attachment to it. An estate agent offers an unbiased, objective opinion based on the current market value.
Agents can also provide sellers with comps or a CMA or comparative market analysis. This is a report of recent homes sold in your area. The report compares the size, location, and price of other homes like yours.
Your estate agent will consider the home’s specs, the number of days on the market, and the final selling price. This gives you a better idea of how much buyers are willing to spend based on the current market. The CMA is a useful tool for buyers as well and gives you leverage when it comes to negotiating a reasonable price.
Listing Your Home
Once you settle on a listing price, it’s time to advertise your home for sale. While this may sound simple, it’s actually quite involved and complicated. Some people choose to go it alone (or list their home as “for sale by owner”) but using an estate agent puts you in a better position to sell.
Estate agents have access to some of the most popular selling platforms, such as Zoopla and Rightmove, which puts your listing in front of countless prospective buyers.
Most estate agents are also part of a core group that shares information, resources, and listings. One of your agent’s professional colleagues may have the perfect buyer for your home. Many agents also do walk-throughs where all agents from their office or company walk through your home to see if it’s a good fit for their clients.
Estate agents have connections throughout the real estate world, which means more eyes on your home than you’d be able to obtain yourself. They also have resources for advertising to a select group of buyers, which many homeowners don’t have access to. Estate agents greatly increase your pool of prospective buyers.
Handle Inquiries and Organize Viewings
Once you list your home and your agent starts advertising it, the calls should start flooding in. Now it’s your agent’s job to not only field these calls but schedule viewings that coordinate with your schedule.
The homeowner usually isn’t home during the viewing. This takes the pressure off the buyer and allows them to freely explore the home without the homeowner looking over their shoulder. Your agent will check with you and schedule a viewing on a date and time that works for you.
Most people can’t be bothered with countless phone calls and scheduling viewings at their home. This is where an estate agent comes into play. Estate agent fees cover a long list of tasks including scheduling viewings and fielding phone calls for inquiries.
Most people who contact your agent are interested in seeing your home first-hand. You might be at work, on vacation, or tied up with other obligations. That’s why having an estate agent means never missing the opportunity to show your home.
Keep Things Moving
There will inevitably be a time during your house sale when things grow quiet. Whether it’s following an influx of interest but no offers or after an offer has been made but while inspections, permits, and paperwork are being drafted.
This silence can be torture. You’ll drive yourself crazy wondering if the buyers changed their mind, if their financing fell through, or if something else went wrong. Your estate agent acts as the go-between for your lawyers and the buyer’s realtor. It’s their job to keep the sale moving forward.
They’ll follow-up with any contractors involved, the other realtor, lawyers, and inspectors. Some people believe that the estate agent’s job is done once an offer is made and accepted, but the opposite is true. It’s during this crunch time that reputable estate agents really shine through.
Close the Deal
Closing a house deal requires specific paperwork, inspections, and other details that most homeowners aren’t familiar with. Property agents, on the other hand, know all the ins-and-outs of closing a deal.
They guarantee that no steps are missed and no-stone goes unturned. This is a benefit for both the buyer and seller. Your agent will also negotiate the price and deal. They are your point of contact and their fees cover all communication between you and the buyers. This helps maintain positivity during the sale and prevents any emotions from getting in the way.
2. How much are estate agent fees?
When looking for the best letting agent or estate agent, fees aren’t the end all and be all, but they are probably the biggest factor!
Now that you understand the role an estate agent plays and their importance in the buying and selling process, let’s talk money. And no, we don’t mean the sale price of your home. We’re talking about how much estate agent fees are and if it’s worth it for you to hire one.
A quick search online will show you a wrath of estate & letting agent marketing, focused on bringing in customers based on low fees. So let’s dig a bit deeper on the prices on offer.
How Much Do Agents Charge?
Estate agent fees range from 1% to 3.5% depending on the location and value of your property. You must also consider VAT fees, or value-added tax, which can tack on another 20%. VAT taxes, also known as consumption taxes, are added onto any product that has a value from the production stage to the sale.
The percentage an property agent charges isn’t a direct reflection of their level of service but is usually based on the type of contract you enter into. Be sure to read the entire contract before signing. If you don’t understand any part of it (including specific charges) ask your estate agent to explain. A few things to look for when examining the contract are:
- Am I locked in with just one estate agent? What are the penalty fees for changing agents?
- What happens if I find my own buyer without the help of the agent?
- If I’m unhappy with the agent’s performance, how quickly can I terminate the contract?
As with letting agent fees, estate agent fees are negotiable, so don’t be hesitant to haggle or ask for a better deal. Just avoid insulting an agent with years of experience or a proven track record of fast sales. You can also use an estate agent fee calculator to give you a better idea of how much a quality agent will cost.
Additional Services Estate Agents May Charge Fees For
Estate agents do more than just market and sell properties. For additional fees, estate agents offer a wide range of services, including but not limited to:
When you hire an estate agent, you get access to more than just their personal knowledge and experience. They often have relationships with other professionals in the field, like mortgage lenders.
Not only can estate agents offer their own expertise on obtaining a mortgage and current rates, but they may refer you to a specific lender who can help.
Some agents charge a fee for this service while others get a kick-back from the lender. Research the mortgage lender your agent suggests to ensure they’re qualified and reputable.
Surveying and Conveyancing
Every property needs a survey prior to selling. The purpose of a survey is to verify the property lines and boundaries.
A surveyor will provide a legal description and documentation of the results. Some estate agents offer this service or know someone who does.
Once you’ve obtained a buyer and the sale is almost complete, you’ll need a conveyancer to legally transfer your property to the new owners.
Most estate agents work closely with one conveyancer, saving you the time and hassle of finding your own. Similar to a mortgage lender, most agents receive compensation from the conveyancer for the referral.
Property Improvements and Upgrades
Does your home need a facelift? Is it in need of major renovations or a few repairs or upgrades?
In the interest of getting a higher asking price, some estate agents will help with improvements and upgrades. This doesn’t mean the agent will pay for these changes, but instead, lend advice and recommendations for improving your chances of getting your asking price.
Many estate agents have good relationships with contractors in different industries from landscaping and plumbing to electrical and even general contractors. For an additional fee, you can not only get professional advice on money-making upgrades but also access to qualified professionals to get the job done right.
Renting or Letting Property
If you’re ready to move but not ready to sell your home just yet, a qualified estate agent can help you rent or let out your property. With thousands of renters in the UK, letting out property is a great investment opportunity.
Earn passive income to use towards your next dream home. Estate agents can help find and reference tenants, collect rent, and even perform maintenance and repairs.
Of course, all of these services come at a cost. Fully-managed services will cost you more than individual, fix-fees but mean less aggravation and stress.
Sit down and do the math to make sure letting your property makes more financial sense than selling.
Are Online Estate Agents Fees Lower?
The biggest difference between online property agent fees and high street agents is that through an online service you’ll pay fixed fees for specific services, whereas high-street agents charge a percentage. Online agents also deliver basic services and usually deal with high street agents anyway. Most online agents work through websites and call centers.
There are two common types of online agents: online-only agents and hybrid agents. Here’s the difference.
Online-only agents require you to perform most of the work yourself. You’re tasked with taking photos, creating the advertisement, handling inquiries, conducting viewings, and even negotiating final offers.
Hybrid agents do most of the work online but also hire local property experts to conduct viewings, field inquiries, and negotiate offers.
Because online agents charge a fixed fee rather than a percentage of the sale, sellers with high-value homes will pay less using an online service. However, you may not get the extensive, hands-on service offered by high-street agents. This is why many sellers opt for a hybrid service that offers the best of both worlds.
What Add-On Options Are Available for My Listing?
If you feel that a basic advertisement or listing isn’t enough, you can add certain features to make it more appealing. Premium listings offer perks like listings toward the top of the results page, better quality images, and reach a wider audience. While you’ll have to pay for these bonus features, it’s worth it for motivated sellers who are eager to make a deal.
Other add-on options include virtual tours and open houses.
3. Tips for negotiating with Estate Agents
If you’ve decided that using an agent and paying estate agent fees is right for you, you could probably use a little advice on how to deal with agents.
While you both share the same goal — to sell your house — you don’t want to overpay estate agent fees and the agent wants to get paid. Here are a few tips for dealing with agents so you don’t get take advantage of.
How to Get a Better Estate Agent Fee Rate
We already mentioned the biggest difference between high-street estate agents and online agents is that online rates are generally fixed whereas high-street agent fees are based on the home’s value, location, and other factors. If you want the best rate for agent services, it’s best to opt for an online or hybrid agent.
Hybrid agents give you the best of both worlds. Not only do they work for a fixed fee (which is often easier to negotiate) but they perform the tasks of both online professionals and high-street agents. This includes fielding inquiries, scheduling viewings, and negotiating pricing.
Although high-street agents will handle the sale from start to finish with minimal effort on your part, you’ll pay for this luxury. And sometimes, the percentage is simply too much for homeowners to swallow.
This is especially true if you need to income from your home sale to make your next real estate purchase.
There are a few ways to negotiate the best rate including:
- Don’t negotiate until after your meeting with the agent. At this point, they’re more invested in the project (and are seeing dollar signs), which means they’ll be more willing to negotiate.
- Don’t simply ask for a lower rate. Be prepared to haggle and play hardball.
- Don’t insult the agent or they might walk away altogether!
- A 1% fee is reasonable. Act shocked if they propose something much higher. Lowball them if need be with your end-game focused on hitting that 1% mark.
- Mention that you’re considering other agents with lower rates (even if you’re not).
- Be honest with yourself about the value of your home and the selling price. Negotiating when your home is already priced too high won’t end well.
At the end of the day, you want an estate agent you’re comfortable with and who is invested in selling your home. This could mean paying more than you want for their services. Decide how much you’re willing to pay before heading into negotiations and determine how valuable your time is.
Using Multiple Agents
One thing most people don’t realize is that you can use multiple ages at once and shop around. You aren’t limited to just one agent unless that stipulation is listed in the agent’s specific contract. There are pros and cons to this approach.
The benefit of using multiple agents is that you’ll have access to a larger pool of potential buyers. The more agents involved, the more knowledge, expertise, and resources available to you. On the other hand, if an agent knows you’re working with others, they won’t feel as committed or loyal to you. They may also offer contradicting advice which could ultimately confuse you.
Regardless of how many agents you use, only the one who sells the property will get the commission. This could lead to some healthy competition among agents, making them more aggressive about landing the sale. You can also use one or two agents and actively advertise your house yourself. If you find the buyer, no agent gets any commission, which could save you a hefty amount of money.
Shop Around for Estate Agent Fees That Make the Most Sense for You
Are you torn between selling your home yourself or hiring an estate agent? Do estate agent fees seem too steep for you? At the end of the day, it’s all based on how much time you have to dedicate to the sale of your home.
Most people would prefer to hire an agent to do all the leg work. You’re also paying for their knowledge, connections, and industry experience. But that doesn’t mean you have to settle on a high commission rate or a fixed fee.
Consider a hybrid agent or online services if you think a high-street agent’s fees are too much. Or, take things to the negotiating table to settle at a reasonable price that works for you both.
Should You Choose the Cheapest Estate Agent?
Are you trying to sell your home and save money at the same time? If so, you may be considering hiring the cheapest estate agent you can find.
People say you get what you pay for. The same holds true when hiring an estate agent, which is why you shouldn’t settle for the agent with the lowest price tag.
The truth is, the most qualified estate agents will charge slightly more for their expertise and services. Do some research before making a decision.
Which agents are selling properties and fastest and for the highest price? Sometimes, paying a higher fee upfront means getting a higher offer. Look at it as more of an investment than an expense.
Aside from price, you also need to consider the agent’s personality, marketing tactics, and approach to your house sale. After all, you’ll be dealing with them on a regular basis and need to see eye to eye on most issues.
It’s also important to note that you may end up dealing with different agents at different times in the sale process. The expert who performs your home valuation may not be the same one who conducts viewings.
If estate agent fees are your biggest concern and you’re worried about paying a high commission on your property, you may be better off hiring an online estate agent. These agents charge a flat fee for individual services rather than a percentage of the sale.
4. Things to Check on Estate Agent Contracts
The only way to guarantee you get what you pay for and don’t overpay estate agent fees is to read the contract carefully. Be sure to ask all your questions before signing on the dotted line.
Here are a few specific things to look out for:
- Can I use more than one agent?
- What happens if I find my own buyer?
- How quickly can I end the contract if I’m not satisfied?
Estate Agent Glossary
This estate agent glossary will help you better understand the language agents use in their contracts.
Here are some of the most common terms you’ll come across and what they mean.
If you’re considering an online letting agent, you’ve probably already heard this term. Fixed fees are prices tied to specific services like premium listings, viewings, and sale boards.
The agent’s contract should list each service with a fixed fee attached to it. Fixed fees are usually required upfront and paid regardless of if your home sells or not.
Open-ended agreements protect the agent. If your property sells to someone they originally showed it to, they can collect the commission even if months or years have passed.
This is the period of time that passes between you informing your estate agent that you want to terminate the contract and it actually happening.
Most agents require two weeks’ notice for termination. You must also consider the tie-in period when giving notice (more on this in a minute).
This describes the duration of the contract once you sign it, or how long you’re “tied” into it. If you cancel or terminate the contract prior to the end date, you may face additional fees.
Most contracts are at least six weeks long. Avoid committing to anything longer than eight weeks to give yourself flexibility.
This period also includes the two-week notice period.
Terms of Payment
Most estate agents charge interest. Find an agency that offers a several-day grace period for transferring money before charging interest.
Some estate agent companies have several agents working on your property sale at once, This agreement ensures that only one agent (the one who sells your property) receives the commission.
Multi-agency agreements generally cost more since you have several agents working on your behalf.
Different from multi-agency agreements, sole-agency contracts mean that only one agent is allowed to sell your property during the contract term.
The benefit of this agreement is that if you find a buyer yourself, you don’t have to pay the estate agent fees which typically don’t exceed 2%.
Sole Selling Agreement
Similar to a sole-agency agreement, only one agent has the right to sell your home. The selling estate agent can claim a fee of 1-2%, even if you find your own buyer.
Ready, Able, and Willing Purchaser
This is one important phrase to look out for in any estate agent contract. This clause requires you to pay the agent fees even if you withdraw from the sale or your situation changes.
Know Your Rights
You have certain rights when dealing with an estate agent. Knowing these rights will protect you from being taken advantage of.
For starters, all contracts must be written in clear terms. There are certain duties that all estate agents have to perform including:
- Reveal all financial or personal interests they have in all offers made on your property
- Respond to all offers promptly in writing
- Keep detailed records of your sale progression for six years
- Provide information on which government-approved scheme they’re a member of (The Property Redress Scheme, Centre of Effective Dispute Resolution, or The Property Ombudsman).
If you have any complaints about your agent or their practices, confront them first. If the agent is unresponsive after eight weeks or you’re not satisfied with their answer, you can (and should) take your grievances to the appropriate scheme.
In case of a grievance, it’s important you keep detailed records of all exchanges with your estate agent.