Although estate agents fees should be simple enough to calculate, as with all legally binding documents the devil is in the detail. House selling fees can run to thousands so it's worth pausing before you sign any agreement.
Before you sign a contract or agreement, your estate agent is legally obliged to give you written details of:
how much you will be charged, or
the way the cost is calculated
an estimate of the final amount
when payments will be due
Calculating estate agents' fees
In the UK, estate agents fees are typically a percentage of the selling price of your property paid as a commission.
The fees are also subject to VAT at 17.5%. However fees may not be the only cost charged by your estate agent. Calculating the final cost may not be as straightforward as first appears.
Some estate agents charge a lower than normal percentage but charge extra for advertising and 'For Sale' boards. Your estate agent should tell you exactly how much the additional charge will be. If this isn't possible, get an estimate of the charge and a breakdown of how it will be worked out.
If you find your house takes longer than expected to sell, keep tabs on how much is being spent on advertising, as it soon mounts up. If you want a quick sale, you may believe additional advertising is necessary anyway. But itís best to avoid surprises.
An estate agent may opt for charging a fixed fee rather than a percentage. Indeed agencies are springing up that only charge on this basis.
It should be clear from your estate agent's terms and conditions when you have to pay. Estate agents fees are usually due when contracts are exchanged, and paid on completion.
Note: If you have Ďa ready, willing and able purchaserí contract, you have to pay as soon as a suitably qualified buyer is found. This applies even if you withdraw your property before the sale completes. The estate agent may also charge you for 'For Sale' boards and advertising.
Saving money on estate agents fees
Some of the online estate agents charge less than 1%. On average for a typical high street agent expect to pay around 1.5%-2.5%. However, for high-end properties fees can go up to 4% or more resulting in house selling fees running to tens of thousands of pounds.
But remember estate agents fees are negotiable. From time to time agencies go out of their way to offer discounts Ė for example when properties are in short supply or when opening a new office. Often discounts are seasonal.
At any time of the year it pays to ask any agent what their current best rate is or whether you can structure the fee to incentivise the agent to find a suitable buyer quickly.
Use commonsense and be fair
Quite often estate agents' terms are advertised as 'no sale, no fee'. Advertising may or may not be included in such a deal. Again, it pays to read the small print.
Under this kind of arrangement, if an agent fails to secure a sale then they don't get paid. However, if your house has been extensively promoted then you may believe it fair to pay for some of the advertising costs, particularly if you did not take the agent's advice about pitching the asking price of your property.
It is true that estate agents's fees are generally viewed as high. But when many sales fail to complete for one reason or another, be guided by more than the letter of the agreement. Commonsense and fairness should prevail.