A commonly asked question regarding estate agents is, ‘what are the estate agent fees for selling?’. In a nutshell, there is no straight answer to this question. The main purpose of you establishing a contract with an estate agent is to get the highest selling price for your home.
Estate agents normally charge fees in the form of commissions. There are three types of commissions they charge you when they sell your home.
Fixed or flat fee structure – estate agent fees for selling
It is apparent from the name that you have to pay a fixed pre-determined fee to the agent for selling your home. This is also called ‘flat’ commission rate. For instance, the estate agent agrees with you that he will sell your home for a fixed fee of £4000. Now, no matter what the actual selling price of your house will be, you just have to pay him £4000 upon the successful sale of your home.
The advantages of fixed price commission is that you know from the beginning of contract that you have to pay this much amount to the agent. So, you don’t need to worry about how much you will have to pay to him. Another benefit is that you will not pay higher commission in case your house is sold above a price you were thinking to sell it for.
There is no motivational factor for the agent in this case because he knows that no matter at what price I sell that home I shall be paid the same fixed fee. So, he does not make any effort to sell your house at the best possible price.
If, unfortunately, your house is sold out at a price lower than you were expecting, the amount of fixed fee would be higher than the fee of some other agent if you would have hired him.
Percentage of the final sale price – estate agent fees for selling
In this type of estate agent fee, fixed percentage of the selling price of the house is paid to the agent. For instance, your estate agent agrees with you that he will be given a commission of 2% on the final selling price of your home, and finally your home is sold for £100,000, the commission will be 2% of this amount.
One advantage of this method is that the percentage commission factor motivates the agent to sell the house at the highest possible price because the more the sale price will be the more commission he will be paid. To get maximum commission, the agent tries his level best to sell your house the best price.
Another advantage is that in case your house is sold at a price lower than your expectation, you will pay lower commission. It is because the amount of commission is proportionate to the sale price.
Disadvantages of this type of commission is that you don’t have any idea about what amount of commission you will have to pay until the house is sold.
Tiered percentage – estate agent fees for selling
In this structure of commission, different rates of commission are charged to you on different sale prices. For instance, an agreement is made between you and your agent that if the house is sold for £100,000, the commission would be 2% of the sale price. But if the house is sold at a price above £100,000, then the commission would be 3% of the final sale price. This is called Tiered percentage method.
The advantage of this method is that this scheme of commission rate provides maximum motivation for the agent and he will put all his efforts to sell your house at the best price. In the end, you will get the highest price for your house.
Again, this method keeps the amount of commission hidden that you will pay to the estate agent. There will be a possibility of delays in the sale because the agent would wait for a buyer who would pay best price for the house.