Estate agent fees and contracts
By Joe Elvin
Article 5 of 12
Estate agent fees and contracts
Learn about average estate agents' fees and the factors that will affect the amount you pay, and find out how to negotiate cheaper fees.
If you sell your house using a traditional, high-street estate agent, their fee will usually be based on a percentage of the price paid by the buyer. This kind of estate agent's fee is called commission.
The average high-street estate agent fee is 1.3% including VAT, according to conveyancing firm MyHomeMove.
However, the percentage charged as an estate agent fee can vary from less than 1% to as much as 3.5%, depending on a number of factors including how many estate agents are selling your property.
Estate agent fees used to be quoted 'plus VAT' most of the time (meaning you had to add on another 20% of whatever you were quoted), but new rules from the Property Ombudsman which came into effect in October 2016 state that quotes should now always include VAT.
- If you're going to need a new mortgage as part of your move, call Which? Mortgage Advisers for a free consultation on 0808 252 7987. The expert, impartial team can advise you on deals across the entire mortgage market, and as they work for salaries rather than commission you can rest assured that they really will recommend the best deal for you.
Estate agent fees: how to haggle
You should always invite several estate agents (ideally three) to value your home and quote you a fee. Make sure you grill them on their recent performance and what's included as part of the service - use our downloadable checklist of questions to ask, which you can find on our page about choosing the best estate agent.
Estate agents will not want to lose your business, so you can often negotiate on the fee or other aspects of the service (for example the notice or tie-in period). If one agent has quoted you a lower fee but you'd prefer to use another firm, mention that you've found a cheaper deal and see if they're able to offer a reduction.
If your favourite estate agent refuses to lower their fee, a compromise that can work really well is a sliding scale, where you pay different rates of commission based on how much the agent gets for your property. This can act as a strong incentive for them to achieve the best possible price.
Some estate agents also offer a scaled-down service for a fixed fee that's payable upfront, whether your property sells or not. This service usually includes producing property details, promoting your property online and sometimes (but not always) in the local newspaper.
Should you choose the cheapest estate agent?
While the estate agent's fee can seem like an eye-watering sum, it's not always advisable to choose the company offering to sell your home for the lowest fee just so you can save money.
The best estate agents often do charge slightly higher fees than their rivals. Compare the stats, looking at who is selling property like yours most quickly and for the highest amounts. You're likely to have a lot of contact with your estate agent over the coming weeks and months, so it's also worth thinking about who you'd be happy to do business with, and make your decision based on these factors as well as the fee.
If keeping costs to a minimum really is a priority, you might also want to consider using an online estate agent. Online estate agent fees are typically charged at a flat rate, rather than as a percentage, and range from around £400 to £2,000.
Find out more: online estate agents - understand how they differ from high-street agents and compare prices and services from some of the biggest brands.
Estate agents' insider tips: choosing your agent
We asked estate agents to share insider tips to help you sell your house more quickly and easily. In this short video, they explain how to choose the best agent for your needs and why you shouldn't necessarily choose the agent with the lowest fees.
Estate agent contracts: things to check
Despite estate agents' sometimes dubious reputations, only 16% of the 1,990 recent home-movers we spoke to for the 2015 Which? national property survey said they were dissatisfied with the service they received from their agent.
An important way of ensuring that the relationship between you and your estate agent remains positive is to read the contract before signing, and question anything you're unsure or unhappy with. The bottom line is that if you don't understand the contract, you shouldn't sign it.
A few things to check when reading the contract include:
- What happens if I find a buyer myself, for example a work colleague, friend or neighbour?
- If I'm unhappy with the service I'm receiving, how quickly can I get out of the contract? (You should ideally look for a tie-in period of no more than six weeks.)
- Can I try and sell my home using more than one estate agent?
Find out more: problem with your estate agent? - find out how to complain
Estate agent contracts: glossary
Here are some of the typical contract terms you'll come across, what they mean and how you can make sure you get the most for your money.
Some estate agents will offer their services for a fixed fee, rather than as a percentage of what your home sells for. This generally works out cheaper but you often have to pay upfront, meaning you'll pay the same amount regardless of whether your home sells quickly or slowly, for above or below the asking price, and even whether it sells at all. Fixed fees are particularly common among online estate agents.
This means that several estate agents act for you, but only the agent that sells your property is entitled to receive a commission. You'll pay a higher fee to go multi-agency - usually between 2% and 3.5%.
Given that any estate agent worth their salt will list your property on portals like Rightmove, and being advertised several times in the same place can seem a little desperate, it's probably not worth paying the extra for this kind of contract.
This is the period of time you have to wait between telling your estate agent that you want to terminate the contract and this happening. The notice period is often two weeks, but you'll also have to factor in the tie-in period (see below) if it still applies.
With open-ended agreements the agent can claim commission if you sell to someone who they originally introduced to your property, even if months or years have passed since then.
Ready, willing and able purchaser
If this clause is in your contract, don’t sign it. It means you’ll still have to pay the agent for finding a buyer even if your situation changes and you have to withdraw from the sale.
Sole agency agreement
Sole agency is the most common type of estate agent contract. This is the same as sole selling (see below) with the exception that, if you find a buyer yourself, you don’t have to pay the estate agent fees. The typical estate agent fee for sole agency is 1-2%.
Sole selling agreement
This means that the estate agent is the only agent with the right to sell your home during the term of the contract. The estate agent is entitled to claim a fee (typically 1-2%) even if you find a buyer yourself. We don't recommend signing a contract with sole selling rights.
Terms of payment
Choose an agency that allows a few days for the money to transfer before they start charging interest.
This is the period of time that you are tied into the contract for from the date you first sign. If you change agents during this time you will still be liable to pay fees to your original agent.
The shortest contract you will typically be able to get is six weeks; try to avoid anything over eight weeks. Remember to factor in the notice period, too (often around two weeks - see 'Notice period', above, for more information).
Find out more: the Which? home-buying quiz - test your knowledge of mortgage and property jargon
Your rights with estate agents
Legally, your estate agent's contract must use clear terms. They must pass on all offers promptly in writing, reveal any financial interest they have in offers made on your property, keep records for six years and be a member of one of the two Office of Fair Trading-approved redress schemes - the Property Ombudsman or Ombudsman Services: Property.
If you suspect that an estate agent has acted in breach of these regulations, you should contact your local authority trading standards department, which has a duty to investigate and take enforcement action.
It’s a good idea to keep detailed records of your dealings with your estate agent in case problems arise.
Know your rights: I don't want to use my estate agent any more - how to end your contract with an estate agent
- Last updated: October 2016
- Updated by: Joe Elvin