Estate agent fees: Learn how much you should pay

If you're thinking of using a estate agent to sell your home, it's good to know the costs involved.

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A good estate agent can be a valuable asset when you’re selling your home. An agent who knows the market, understands how to advertise your home and has a good network of potential buyers can ensure you get the best price possible for your property. However, this service doesn’t come for free.

Before you decide whether or not to employ a estate agent, it’s important to understand how much it will cost and what you’ll be getting for your money.

How much do agents charge?

Estate agents’ fees will vary depending on your area and the level of work involved in selling your home. The market for agent fees and commissions is largely unregulated, which means agents can charge whatever they feel is fair.

In general, agents will charge for their services using one of the following structures:

1. Commission

An agent’s commission is calculated as a percentage of the home’s final sale price and are subject to VAT. Currently estate agent fees are often between 1% and 3% of the sale price depending on the size of the property and the location it’s in. On average,
estate agent fees are about 1.18%+VAT.

2. Fixed fee

Some agents will agree to a fixed fee rather than a commission based on a percentage of the sale price. The benefit of this model is it provides certainty around the price you’ll pay to sell your house. You’ll know ahead of time exactly the amount you’ll be paying your agent, regardless of the sale price.

Of course the drawback is that a flat fee might not motivate your agent to get the best price possible for your property. An agent negotiating a flat fee could prioritise a quick sale over receiving the highest price.

3. Multi-agency agreement

In a multi-agency agreement you have several agents working to sell your property. However, it’s the agent that is successful in making a sale that receives the commission. In most cases this kind of agreement means you’ll pay a higher fee – between 2% and 3% of the final sale price.

Are there any other fees?

Selling a house costs money. Your agent will generally utilise a variety of channels to advertise your home. These may include online real estate portals, real estate magazines, newspaper ads and window displays. The cost of this advertising will be passed onto you in one form or another.

Some agents include advertising and marketing costs in their commission, while for others this is an additional fee.

Can I negotiate?

Most estate agents are open to negotiation on the rate they charge. The best way to negotiate is to discuss with the agent their strategy for selling your home. Find out in detail how they plan to market and advertise your home, what price they think you can expect. Once you understand your agent’s strategy, you’ll be in a better position to assess whether or not you feel their rate represents good value.

Things to ask your estate agent

Before you sign with any estate agent, its’s smart to fully understand the terms of the contract. This is important if you want to make sure you are not caught unawares and sours the relationship with your agent.

Among the thing you should check for include:

  • If you can use more than one estate agent?
  • What happens you find a buyer yourself, for example, a colleague or friend?
  • How quickly you can out of the contract if your not satisfied?

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