Most homeowners will accept that they will have costs associated with selling their property, including an estate agency fee. Here we explain what that fee could be and ways to identify if it’s worth paying.
What is an estate agency fee?
It’s what you pay in return for the specialist help, work or support that you need in selling a property. Estate Agency fees usually relate to the selling price of the property (expressed as a percentage of this), so there’s a real incentive for the agent to get the best price for you, and it won’t be payable until your property is sold; on a no sale, no fee basis.
There can be exceptions to this, with some agents choosing not to charge a fee or some asking for one ‘up-front’ which, whilst often less than a ‘traditional’ estate agency fee, can be kept by the agent - even if they are unsuccessful in selling your property.
What does an estate agency fee cover?
More than some may realise. An estate agent will use the fee to pay for specialist staff who can value your property, take time to conduct viewings and to find the right buyer, negotiate a sale (so you get the best price), liaise with solicitors, surveyors, mortgage lenders and give ongoing support and advice which, especially if things don’t go smoothly, can be invaluable. In a recent survey it’s clear that many movers think that scrimping on a fee may not be worth it, with more importance being placed on the agent’s specialist skills including their market knowledge and communications. (*).
Do you have to pay the estate agency fee?
Yes, provided you have signed the estate agency agreement and the agent provides the service that is set out within it. You should, however, fully understand what the fee is likely to be, what this covers and what restrictions, if any, apply. i.e. if you sign a sole selling agreement, it means that you can’t go to another estate agent for help during the term of the contract; even if the original agent is not having any success in attracting buyers. The estate agent can also claim a fee if you find a buyer yourself.
Open-ended agreements can also result in you having to pay a commission to an agent, even months or years after you originally instructed them, if they can prove that they originally introduced the property to your buyer.
What to consider as well as the fee amount?
It would be easy to think that, the more you pay, the better the service you get or, it’s better to pay nothing at all, but it’s really important to understand what you get – or don’t get – in each case.
Question your agent and ask them what sets them apart from the competition to justify the fee. Local knowledge and expertise (as recent research has highlighted (*)) is vital, and you should get proof of this, but try to find out what their success rate is for selling, what prices are being achieved and what marketing methods they use. Check if they appear too focussed on rushing a sale through – no matter what the price is that’s being offered. The fact is it takes time to find buyers, create competition amongst them and to achieve the highest price possible. It can’t be rushed and you need to feel confident that the agent won’t do this. Speed is not everything.
Check too what services are included within the fee. Whilst some agents choose not to charge a fee, their services are limited and you could find that you are paying for ‘add on’ services that you’d normally receive, as standard, from other agents. All of which can ‘add up’.
Understandably too if there’s no fee, or the fee is paid at the outset, there may be no incentive for the agent to work their hardest and to get the best price for you. You may think you are saving money but actually you might be losing it in other ways.
Overall when considering the cost of selling it’s really important to understand what you are – and are not – paying for and importantly understand that, aside from the estate agency fee itself, there can be a whole lot more to consider when choosing an agent to help you
(*) mio - February 2022
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