If you have decided to put your house on the market soon and you are thinking about which estate agent to use, the average estate agent on the High Street will charge 1.4% commission on the agreed selling price of your property – according to a survey by The Advisory made in July 2018. The average price of a property in the UK is now £219,000 so that means a staggering £3,066 in agent's commission.
This probably sounds a huge amount, but to soften the blow, since the 2016 ruling by The Property Ombudsman, this commission rate does include VAT. However, this figure can vary between estate agents from 1-3% so it is worth "shopping around".
How to decide on a good estate agent
Unfortunately, this is one of those situations when it is not always wise to be dictated by cost alone. Be wary of any estate agency charging less than 1% this could indicate poor performance. Sometimes, agents charging higher commission do so because they are exceptionally good – but they must prove this to you! It is worth considering the following points...
- How quickly does the agency sell similar properties?
- Does the agency get a good price? If the answer is yes, it could well be cost effective to choose an agency with a higher commission rate if a higher price can be secured for you.
- Do you get a 'good feel' about your chosen agency? Is it a well-established company? Are the staff members efficient and easy to work with? Sounds a daft question, but you will be dealing with them several times each week!
- Will they earn their commission? Where will they advertise? Will they show all prospective buyers around? Do they have potential buyers 'on their books' looking for similar properties?
- Check what service is offered, as this should include photographs, floor plans, online and newspaper advertising and viewings.
It is best to commit to a short tie-in period of four-six weeks so that you have an 'opt out' if they are not performing as well as you would like.
The only extra charge will be made for an Energy Performance Certificate (EPC) for your property, but it is worth checking if you can get this cheaper elsewhere – prices for this vary between £50 - £120. You are not tied in to using your estate agent for a mortgage or conveyancing – both may be better priced elsewhere.
You can of course opt for a multi-agency agreement but the commission for this is usually 2-3% and with properties well-advertised online on such portals as Rightmove, there is little to be gained by opting for this.
Ways to cut the cost
- Never just opt for the first estate agent you speak with. Approach a minimum of three and get them each to give you a valuation and estimate of their commission fees.
- Try negotiating with the agent to bring their charge down. If they will not budge, suggest a sliding scale for the commission depending on how much they get for your property – this works as a good incentive!
- Extra incentives for selling the property in under four weeks work well too! (You will have to pay a bonus, but will be gaining in the long run).
- Some estate agents offer a fixed fee which is usually payable up front – these should be avoided as the maxim should be 'no sale no fee'.
- Consider using an online estate agency. These usually charge a flat rate between £600-£2,000.
- Consider selling your property to a cash buyer – but safeguard yourself and always make sure that they are members of the National Association of Property Buyers (NAPB).
An important point is to check the terms and conditions carefully as these do vary between estate agencies. To help find the best agents in your area, www.getagent.co.uk is a website with some helpful information about local agencies.
Of course, having your property sale handled by a really good estate agency certainly lowers the stress of moving and if your property is speedily sold for a good price the agent will have earned their commission. Whilst you are working out costs though... don't forget these must be added to your final bill.
- Solicitor's fees.
- The cost of a packing and removal service.
- The redirection of mail by the Post Office (this service starts at £31.99).
Having thought everything through carefully, you might just find that your idea of building an extension is suddenly becoming more attractive!