What do estate agents do, and why do they charge fees?
Traditional estate agents will take care of many aspects of the home selling process for you, from listing the property for sale, advertising the listing to get the interest of potential buyers, and scheduling and hosting the viewings where buyers come to tour your house or flat.
This can be a great stress relief for many homeowners who either don’t know how to do all of the work involved with selling a home, or who simply need someone else to do it for them.
But estate agents will charge you fees for doing all of this work, although the precise amount of the fees will vary between different estate agencies. The consumer rights advocacy website Which? has a useful summary of what to expect from estate agent charges, noting that the fees are typically in the form of a percentage of whatever final sale price they are able to secure from whoever buys your home.
On average the fees charged by your estate agent are roughly between 1.15 percent and 1.40 percent of the final purchase price, and this figure includes value added tax (VAT). It’s a requirement from The Property Ombudsman, an independent entity that issues rules for estate agents, that the charges they quote you include the amount of VAT you’ll have to pay.
Depending on which estate agent you visit, you might see fees quoted from as low as 1 percent or even less up to 3.5 percent, based on the location of your property and its size. We would advise you to ask as many questions as possible of your estate agent regarding their fees and the work they will be doing to ensure there are no hidden surprises at a later state.
Some estate agents might charge you a fixed flat fee instead of making you pay them a fee that’s based on a specific percentage of whatever final sale price they are able to secure. Homeowners might find this preferable because they’ll known at the start of the process the exact amount that they will have to pay the estate agent. But it’s also possible that having a flat fee might not motivate your estate agent to try as hard as selling a property based off a percentage fee, because they could stand to make more money with the latter option.
Or you might have to pay a fee as a result of a multi-agency agreement, which occurs when you ask several different estate agents to try selling your house or flat — with the estate agent who succeeds in selling your house being the one that you’ll eventually pay. Under these agreements you can expect the overall fee to be slightly higher compared to dealing with one estate agent, with the charge being about 2 percent to 3 percent of your home’s sale price.
Are there any options for lowering estate agent fees or avoiding them altogether?
Once you have decided to use an estate agent to help with your sale, you could ask them to see whether they are willing to negotiate on the total amount of fees they will charge you.
Have an honest and open conversation with your estate agent; ask them to provide a comprehensive list of all of the fees that they expect you to pay for taking care of the sale of your house or flat. And then talk with them about whether they would consider negotiating some or all of those fees down to a lower price. They will never waive the fees completely, but even a slight reduction means you get to keep more of the profit for selling your property.
There is another alternative to paying estate agent fees, which is not using their services and instead selling your house or flat to a quick property buying company. These businesses give homeowners speedy cash offers to buy homes, typically at very competitive rates and never charging any fees — meaning you get to keep all of the profit from the sale of your house.
Pros and cons of using an estate agent to sell your home
It’s possible you might still be undecided on whether to use an estate agent to find a buyer for your house or flat after reading about the fees that they charge. If that’s the case, it can be helpful to learn all the advantages and disadvantages with selling via this method.
Some of the benefits of selling a home via an estate agent include:
Less effort: Estate agents handle almost every aspect of the selling process, as Move iQ notes. This can be a great relief for those homeowners who lack the time of interest in the work needed to secure a buyer.
Broader reach: You will find that many long-established estate agencies are likely to have extensive lists of potential buyers and a strong knowledge of the local property market, which in turn could make it easier for them to identify a larger number of people interested in your home.
Beyond fees, drawbacks associated with using an estate agent can be:
Buyer viewings: When you sell a home through an estate agent, you’ll need to agree to potentially dozens or more viewings where potential buyers will get to see the inside and outside of your home in person. Many owners find these to be time-consuming and intrusive.
Slow sale: Selling through an estate agent can take a very long time, and you should be prepared to wait many months, or even more than a full year in certain cases, to sell your home. This is not ideal for those owners that want to find a buyer for their property as fast as feasible.
Having a better understanding of the potential pros and cons of selling a property might assist in you choosing whether or not to sell this way. If you ultimately decide against using an estate agent, the next section of this guide offers more details on alternative options to find a buyer.
Alternatives for selling a property instead of using an estate agent
For those homeowners that have decided after reading this guide to not use an estate agent, you usually have three other options available for finding a buyer for your property. These are selling at an auction, selling to a quick home buyer or selling on your own, meaning without the help of a third-party.
Just as selling via an estate agent has its own benefits and drawbacks in terms of fees, time taken and more, the same is true of the three other methods. For example, selling without any assistance or through an auction could take at least many months to complete, whereas it should only take a handful of weeks to finalize the sale of your home to a quick buyer, and this includes the important last steps of paying you the sale proceeds and exchanging contracts.
Take time to carefully review the specifics of the three other strategies below, and see which one best matches your unique aims with the sale of your flat or house, including your preferred sale price, whether you are willing to pay commission, and how fast you want to sell.
Selling at an auction
Using an auctioneer to sell your house or flat is similar to using an estate agent in the respect that both options won’t require you to put much effort into the process. The auctioneer will prepare and advertise your home’s listing, host the auction, and oversee a successful sale.
But this is also a method that will charge you fees if the auctioneer manages to sell your home. Typically this is set at a rate of about 2.5 percent of your property’s final sale price, and this will increase your expenses because it will be subtracted from the eventual sale proceeds.
You might want to ask individual auctioneers if they are prepared to reduce the rate of commission that they charge you, or to have the winning bidder pay a share of your fees, because this can help with reducing your total costs. But auctioneers are not required to agree to these steps, and some might charge commission at a level even higher than 2.5 percent.
Selling a property via an auction can also be a relatively slow process, with lots of waiting involved, including several weeks or even months between when you choose to use this method and when the auction is held. If your property manages to sell at the auction, the winning bidder then has about a month to sign all of the required documents and complete the other tasks needed to finalize the purchase, which will extend your selling schedule even further.
It can be a good idea to ask an auctioneer if they might be open to shortening the deadline for the buyer to do these tasks, as they can help speed up the timeline. But just note that other auctioneers might give the buyer even more than a month, resulting in a slower sale. If your main goal is selling as fast as you can then you should review some of your other choices, for example selling to a quick buyer where the entire schedule should only be a few short weeks.
When you list your home for sale at an auction, you might not receive any bids on it, and this means it does not sell. After the auction is over, you would then need to start again with searching for a buyer, which might extend your selling timeline by many weeks or even months.
Or you could just get a single bid on your home at the reserve price – this is the lowest price at which you are prepared to sell your property. This bid would then be deemed a binding legal agreement to sell your home that the buyer could sue to enforce if you try to abandon it.
That’s why you must calculate a reserve price that is estimated to produce a profit from the sale of your home, even after you have paid the auctioneer their fees. If you don’t take this step then you create the risk of only breaking even on the sale of your house or flat by selling it at a price close to what you paid for it, or even worse, the danger of selling your home at a loss.
Selling to a quick home buyer
LDN Properties and other quick buyers are companies that have the financial resources to buy your home immediately, without needing to wait for many weeks or even months to first get authorized for a mortgage to afford the purchase. This cuts the typical timeline for selling to a quick buyer to just a few weeks, making them often the speediest way to sell a property.
Quick buyers are also an excellent choice for selling your home if it has any type of structural damage, legal dispute or other potential problem that other buyers might view as a dealbreaker that causes them to lose interest in the property. That’s because quick buyers make fair and fast offers for homes regardless of their age, condition, location, shape, size or type.
By way of example, LDN Properties launched in 2003 and its purchases to date include homes in a conservation area, dilapidated properties, unique houses, vandalized flats, flats that have a share of the freehold, homes located near a pub, properties that have lapsed planning permission, houses that have a defective lease, duplex flats, underpinned homes, properties situated close to a cliff, houses that have equity release, flats with a leak, homes that have a boundary dispute, properties with reinforced autoclaved aerated concrete, houses that are located in a bad area, flats that have service charge arrears, and many other scenarios.
Yet another perk of selling to a quick buyer is that the honest companies will never charge you any commission when purchasing your property, which helps with lowering your selling expenses. That compares favourably to selling through an auctioneer or an estate agent, where you would need to pay commission that will be subtracted from the final sale proceeds.
Selling to a quick buyer is a simple, hassle-free and no-stress process that starts when you get in touch with them about selling your house or flat. Within the first hour of talking they should make an initial offer to buy to you home, and you’ll have at least a week to think about it.
If you accept the initial offer, the next step is for a representative from the quick buyer to come to your home to assess it in person, ahead of the company making a final offer. This is the only such viewing you would need to have when selling this way, compared to possibly dozens or more viewings when selling through an estate agent, which can be good for those owners trying to avoid viewings.
And should you then accept the quick buyer’s final offer, they will work quickly with your solicitor or other legal representative to complete all of the paperwork and other tasks needed to finalize the purchase of your home. The entire process should only take a handful of weeks from the beginning to the end, and this includes paying you the proceeds and exchanging contracts.
Selling on your own
Selling a property without any assistance can be a very stressful and time-consuming choice because you will have to take care of all the steps needed to find a buyer. This starts with creating a listing, advertising it, scheduling viewings, and hearing offers from prospective buyers, with the eventual aim of getting one through to the exchange of contracts.
This is a huge undertaking and not something that you can only do in your spare time. Therefore, it is only usually suggested for those homeowners that have successfully sold a property in the past, or who have a suitably experienced friend or family member that might be willing to assist them with the selling process without charging any commission.
Even with prior knowledge of how to sell a home, this can still be a slow option as it might take more than a full year to sell. Remember that someone can make an offer on your property but then change their mind and rescind it, which would cause the sale to collapse. They are able to do this without risking any penalties, so long as you have not yet exchanged contracts. You would then have to start over with seeking a buyer, delaying a sale even further.
The only obvious benefit of selling without any third-party help is that you would not need to pay anyone commission on the sale of the property, which reduces your expenses. But you might find that this saving is cancelled out by the funds you will need to spend on advertising the listing for your house or flat, and various other tasks involved in the selling process.
If you are determined to not pay commission on the sale of your home, you might want to instead consider selling to zero-fee quick buyer such as LDN Properties. You would achieve the same goal of not having to pay any commission but with the added benefit of a much faster sale, because the entire timeline should only be a few short weeks – and that covers the crucial final stages of exchanging contracts on the property and paying you the full proceeds.
Seven top questions about estate agency fees
It’s because they do a large amount of work on behalf of homeowners for helping to find and secure buyers for their properties. Some of the many tasks that they take care of include writing and marketing the initial listing for your home, finding prospective buyers for the property, and taking them on viewings so that they can see the house in person.
Yes. If you sell to a quick property buying company such as LDN Properties then you will never have to pay any fees, because none of the reputable fast buyers ever charge sellers any fees. If the company is a member of The Property Ombudsman, which sets rules and standards for the industry, then you can typically trust them with buying your home.
Yes. Most estate agents will give you an initial statement of the fees that they plan to charge you for selling your home, but they are usually open to some negotiation. Ask your estate agent for an upfront list of the charges they expect you to pay, and then have a conversation with them about whether they are willing to lower those fees.
In addition to having to pay an estate agent commission, you may find that this is a very slow way to sell your home because it can take many months or even more than an entire year. When selling this way, you will also have to agree to viewings, where people that are interested in your house or flat get to tour it before deciding whether they want to make an offer.
No, you might also need to agree to in-person viewings if you decide to sell your home using an auctioneer, and you will almost certainly have to accept viewings as part of the process of selling a flat or house without any assistance. But you’ll only need to have one viewing when selling to a quick buyer, and that is a single visit from a representative of the company.
If you have decided that you do not want to use an estate agent in order to sell your home, usually you will be able to instead choose from selling at a property auction, selling without any help or selling to a quick home buyer like LDN Properties. All three of these alternative methods have their own advantages and disadvantages based on cost, fees and other factors.
No, you will only need to pay commission if you decide to sell your home using the services of an estate agent or an auctioneer. The fee will be subtracted from the final sale proceeds, which will add to your overall expenses. But you won’t have to pay any commission if you sell to a zero-fee quick home buyer like LDN Properties or if you sell your home without any help.
