It sounds a reasonable enough question, doesn’t it? If I’m involved in buying or selling my home, how much commission will the estate agent charge? Reasonable question or not, however, the answer is by no means so certain.
First the good news though – if you are buying a property, you don’t pay any commission to an estate agent. You can approach as many agents as you like, pick up the details of as many properties as you wish, and you’ll find that the estate agents are so eager to make a sale that they won’t charge you a penny.
The boot’s on the other foot if you are selling your home. If you want to engage the services of an estate agent (you don’t have to, but it makes selling your property considerably easier) you will find that any agent will charge a commission on the successful sale.
So, just how much commission might you have to pay? It’s at this point that the picture becomes less clear. In March of 2011, for example, the consumer magazine Which? published the results of a survey which showed that whilst some estate agents charged a commission of just 0.75% (of the property’s selling price), others charged up to 2.5%, with at least one agent claiming as much as 3.5%. The survey found that the national average was 1.8%. (http://www.which.co.uk/news/2011/03/estate-agents-fees-exposed-248666/).
When expressed as a percentage, 1% or 2% may sound like a pretty small sum – on the sale of a house, however, even a small percentage can amount to a lot of money (between £1,000 and £2,000 on a £100,000 property, for example). With sums of this order at stake, therefore, how might you decide whether you are getting good value for your money?
• When buying any service, of course, it pays to shop around and secure competitive quotes before committing to any agreement. You are not indefinitely tied into dealing with the estate agent you first chose, but the contract is usually written for a minimum of 12 weeks (and a further two weeks of your giving notice to terminate the agreement);
• Simple arithmetic might tell you that estate agents prefer to sell expensive houses on a percentage commission – the higher the price, the higher the commission. This is so much so, that sales which are likely to attract a relatively low price might be offered by the estate agent at a fixed rate fee. If this is the case, then you might want to compare what you might actually pay if one agent offers you a fixed fee and another offers a percentage commission;
• The amount you can afford to pay in estate agent commission, of course, will largely depend on the price that your home actually fetches. If two agents offer the same percentage (or fixed rate) commission, for example, but one values your property higher than the other, this might be the one to choose;
• When choosing your estate agent, it is also worth remembering that you are likely to have nothing to lose – and a lot to gain – by negotiating the rate of commission that is charged.