Property Tips by Chartered Surveyors  from the Haynes House Manual series

Estate Agents’ Fees

How much should you expect to pay an estate agent for selling your property?

Typically agents’ fees vary between 1% and 2% + VAT  of the completed sale price that’s ultimately achieved. There should be no fee if they don’t achieve a completed sale.

Deals below 1 per cent do exist but are rare. Budget and online agents charge lower rates of commission but are unlikely to spend as much on marketing your home. On the other hand, just getting your property listed on www.Rightmove.co.uk should be enough to ensure its exposure to most potential buyers.  And just because one ‘posh’ agent charges twice the fee of a less expensive firm it doesn’t necessarily follow that they will do a much better job –  they may just spend it all on flash cars.

But, in theory, a good agent should recoup the difference in the fee for you by creating more buyer interest. However, you may still be able to negotiate lower fees, for example if you’re willing to show prospective buyers around yourself.

Competition

Competition between local estate agents is normally pretty fierce. Yet most turn over large sums and seem to do very nicely financially come rain or shine.

For some agents the primary objective is to get the most ‘instructions’ and maximise the number of properties placed on their books.  Some target-driven corporate firms have ‘negotiator of the month’ incentives to this end. But the easiest way to win business is to appeal to sellers by overvaluing.   This can cause problems further down the line if the property sticks on the market for months on end, or when the property is ‘downvalued’ by the RICS chartered surveyor carrying out the  mortgage valuation for the purchaser’s bank.

The other way is to attract more clients and boost the level of instructions on their books is by charging lower fees than the competition.

Unlike conventional estate agents some online services like Purple Bricks charge a flat fee at the outset – of around £1,000 – rather than charging commission on the actual sale achieved.  But questions sometimes arise about the quality of service and how motivated staff will be if payment isn’t conditional on achieving a sale.

Agency terms

As noted earlier, estate agents normally qualify for commission upon the successful completion of a sale to a buyer they have introduced.

However, watch out for contracts that refer to introducing a buyer who is ‘ready, willing and able’ because it means that if an agent simply finds a buyer who is ready, willing and able to buy, you may be liable to pay the agent’s commission if you later decide to pull out for any reason, regardless of the fact that the sale never completed.

Some agents will think nothing of suing you for commission.

Bear in mind also that it’s important to check the minimum term stipulated in the small print of their contract when instructing sole agents. Many sellers sign up for several months, promising not to instruct an alternative agent within the specified time. But if your sole agent then fails to perform, you are unable to appoint another estate agent to market your property until the agreement expires.

Watch out for a clause saying that only by serving a two-week notice after the minimum term has expired may an agreement be terminated.

Commission wars

Nasty disputes occasionally break out between rival agents. It’s not unknown for one agent to poach a property from another, and both then claim commission for selling it. Disputes occasionally go to court.

This happened in a recent case when London agent Foxtons had arranged for an applicant to look round a £1.15 million property, but no offer was made because the house needed too much work. So no deal was reached. Some months later, the same buyer agreed to buy the property after the seller was contracted to another agency, Hamptons.

Foxtons claimed their £20,000 commission fee from the seller on the grounds that they’d ‘introduced’ the buyer. But the Courts held that an agent has to do more than simply introduce the buyer to the property – they have to introduce them to the purchase. So commission was paid to Hamptons and Foxtons went home empty-handed.

This ruling suggests that commission should only be payable if an agent has already persuaded the buyer to make the purchase.

See Rightsurvey.co.uk for a quick guide to valuation and survey prices

We would always recommend using RICS certified surveyors in every instance – don’t get caught out, get instant quotes for RICS surveyors here.

 Ian Rock’s Rightsurvey property tips are taken from the Haynes House Manual series.