How Much Commission Do Estate Agents Make on a Sale?

If you have decided to sell your home, the estate agent’s fees may have come as a bit of a shock. What are the fees for, and how much commission do estate agents charge? What do you get for your money, and why is there such variance between the rates charged by different agencies? You might be wondering whether paying more means that you will get a better service and if the outlay is worthwhile or whether you should consider selling your house without an estate agent.

The property experts at House Buyer Bureau have put together this guide to answer all your questions and provide all the information you need to decide on the best way to sell your property.

How Much Commission Do Estate Agents Charge in the UK?

The fee is typically calculated as a percentage of the sale price. According to figures published by The Advisory, the current average estate agency fee for a sole agency agreement is 1.42%, rising to 3% if you choose to list your property with multiple agencies. Some agencies charge a fixed fee for properties that sell for a low value (typically under £100,000).

In October 2016, The Property Ombudsman introduced new rules that require agencies to include VAT in their fees — previously, sellers had to add 20% to the quote provided.

How Does the Agency Use My Commission?

The fee you pay is used to cover the estate agency’s costs, including salaries, office space, maintaining company cars and all other business expenses. Only a small percentage of the fee goes to the individual estate agent as a commission. Personal commission is generally not a flat rate, instead, it relies on factors such as office sales figures and the sales performance of the individual.

As an example, it may be that for every £5,000 difference in asking price the estate agency would earn only £70 and the individual agent would get only a fraction of this. As a result, you may find your particular agent isn’t too motivated to sell your house as quickly as you’d like, or they may be keen to reduce the asking price so that they can just get it off their books.

What Do I Get for the Estate Agents’ Fee?

Estate agents’ fees and what these include vary according to the individual agent, the area and the type of property being sold. All reputable agents will ask you to sign an agency agreement that contains their terms and conditions. Under The Estate Agents Act 1979 and The Estate Agents (Provisions of Information) Regulations 1991, estate agents are legally required to provide the vendor with certain information about their services before expecting them to sign a contract. High-street agents usually include the following services in their commission fee (but be sure to check, as not all do):

Photographs and floor plans
Writing an advert for your property
Putting a “for sale” board up
Listing the property on property portals such as Rightmove (estate agents pay a fee to post listings; private sellers cannot post on some of the major portals)
Price negotiation
Assessment of a buyer’s financial status
Coordinating the sales process (liaising with solicitors and surveyors, for example)
Accompanied viewings are often (but not always) included.

Check that the contract includes all the services you are expecting the estate agent to provide. Equally, make sure there are no “hidden fees”, such as charges for marketing or other costs you are not happy paying. Once the agreement has been signed, any additional charges need to be agreed with you in writing before the estate agent can charge you.

Important Things to Consider When Choosing an Estate Agent

Consider which type of contract suits your needs — Open-ended agreements and sole selling rights agreements involve significant and long-term commitments.
Review the contract before signing — Check that all the services that you need included in the fee are written into the agreement, and ask for any “hidden” costs that you have not agreed upon to be removed.
The commission price should include VAT — As per the 2016 Property Ombudsman rules, the estate agent’s commission price should be inclusive of VAT, but be sure to check this before signing.
Check when commission is payable — This is typically upon completion, but some agencies — especially online agencies offering a fixed-fee contract — will require payment upfront.
Be clear on the length of your commitment — “Open-ended” agreements can tie you into paying commission for years to come. Make sure the contract defines a fixed period of commitment that you are happy with.
Avoid the “ready, willing and able purchaser” clause — If this appears in your contract, don’t sign it or at least argue the case with the agent. Contracts containing this clause require a seller to pay the agent for finding a buyer even if your situation changes and you take your property off the market.

What Do the Different Types of Contract Mean?

If you haven’t sold a property via an estate agent before, the range of contracts can be daunting and confusing. Each has pros and cons, so make sure that you understand what you are committing to before signing.

Sole Agency Agreement — This is the most common type of contract. By signing a sole agency agreement you agree to give one estate agency sole selling rights to your property for a fixed term stipulated in the contract. If you agree on a private sale, there will be no fee payable to the agency.

Multi-Agency Agreement — For a higher fee, you can opt to have several estate agents market your property. The agent who successfully sells your property earns the commission.

Sole Selling Rights — This is similar to a sole agency agreement in that you give exclusive selling rights to one agency. However, with a sole selling rights agreement, you will be liable to pay the estate agent a fee even if you find a buyer yourself.

Fixed Fee — The estate agent’s sales commission is given as a fixed fee rather than as a percentage of the sale price. This often works out cheaper, but the fee must be paid upfront. Fixed fees are most commonly offered for low-value properties or by online estate agents.

Open-Ended Agreements — You will pay the agency a fee for any sale that comes out of an introduction they made, even if there is a gap of several years between the original introduction and the completion of the sale.

What Types of Estate Agents Are There?

Long gone are the days when homeowners had just one or two local high street estate agents to choose from. Sellers can now pick from high street agents, online agents and agencies offering a hybrid service that combines the two.

High street estate agents offer a personal service and can provide peace of mind because you can see who you’re working with face to face. They usually offer to conduct viewings on your behalf as standard, saving you time and hassle. Brick-and-mortar agencies also tend to have a thorough knowledge of the local area, which puts them in a decent position to attract the right buyers and clinch a sale.

However, high street agencies tend to operate at the more expensive end of the spectrum. They have a lot more overheads to cover than online agencies, such as renting a storefront. Opening hours will be more traditional too — some may extend slightly beyond office hours, but there certainly won’t be a 24/7 service.

Online or “internet-only” estate agents are a fairly new development in the property industry. They often represent a more cost-effective option than high street agents and many offer around-the-clock support and services via online portals. But beware of “add-on” charges. Some online agents do not offer services such as accompanied viewings as standard but will do so for an additional fee. You’ll also likely have to pay an upfront fee. High street agents typically take a percentage of the sale price, which means you only pay when you have the funds to.

“Hybrid” agencies may offer a mix of online and in-person services. However, there is no clear definition of this type of estate agent. Some class themselves as a hybrid service because they have a shopfront and a website, while others offer a truly hybrid experience by providing online services and working with local agents to conduct viewings.

The type of estate agent you choose will affect the fees you pay. Online agencies are generally lower in cost than high-street agencies.

Are More Expensive Agencies Better?

There are several factors you should consider when choosing an estate agent, rather than focusing solely on price. Does the fee include all the services that are important to you, or will you have to stump up for additional costs? Does the estate agent have a good reputation locally? Word-of-mouth advertising should not be ignored. Does the agency seem to be well-staffed or are a few team members struggling to keep on top of a heavy workload?

The estate agents that provide a premium service do tend to charge more commission. Choosing a cheaper option may work out as more expensive in the long run if the standard agreement does not include the services you need. Review the agreement carefully to make sure that the “cost-effective” option is a good deal.

Online estate agents often charge a fixed fee that works out cheaper than going to a traditional high-street agent. But will a national online agency have the local knowledge necessary to market your property well and get you the sale price you need?

There is no one-size-fits-all when it comes to choosing an estate agent, and the commission price should be one of many factors in your decision-making process. Opting for the cheapest option could end up costing more in the long run thanks to slower sales and essential services added on as additional costs.

Also, don’t be afraid to haggle. Invite several estate agents to value your home and submit a proposal. They will all be vying for your business, so there is no reason that you can’t barter for a better price with the agency that your gut tells you is right.

When Is the Estate Agent’s Fee Payable?

The estate agent fees in the UK are usually payable upon the completion of your house sale. Your solicitor will generally settle the agency’s bill out of your sale proceeds before sending the balance to you.

However, fixed-fee contracts — commonly used by online estate agents — may require payment upfront. It may seem tempting to opt for the fixed-fee option but this can result in your estate agent putting less effort into getting you a sale than they would if their commission was paid on completion and calculated as a percentage of the final sale price. Check your estate agent’s agreement before signing if this is important to you.

If you are late paying your estate agent, they may start charging interest on the balance due — check your agency’s terms and conditions to find out how many days grace you have after completion to pay the bill.

Do I Have to Use an Estate Agent to Sell My House?

There is no legal requirement for a homeowner to use an estate agent when it comes to selling their property. Many people opt to sell their homes privately (i.e. without an estate agent) to keep their costs down. However, managing a house sale on your own can be extremely stressful and time-consuming. If you work and have a family, it’s unlikely you’ll be able to juggle all the elements of selling a house — marketing, valuations, viewings and negotiations — alongside your existing commitments.

House Buyer Bureau is the UK’s favourite house-buying service. We buy all types of property in any condition or location. There are no legal, valuation or estate agency fees to pay. Take a look at what we pay and how it works.

How to Sell Your House Without an Estate Agent

If you want to avoid estate agent fees entirely and want a fast, guaranteed sale, you might like to sell to a professional house buying company, such as House Buyer Bureau. We’re known for providing a safe, fast, and convenient way to sell your home – just look at our Trustpilot reviews.

By selling directly to House Buyer Bureau, you can avoid lengthy viewings, negotiations and the uncertainty that comes with selling to a private buyer. And with no estate agent, legal or valuation fees to worry about, you can sell your property quickly and safely. We buy all types of property in any condition, offering a guaranteed cash offer, so you can move forward with confidence.

Get your cash offer today, and we can complete your sale in as little as seven days. There are no estate agents or solicitor’s fees to pay.

Chris

Chris has worked in property all his career, first as a successful estate agent before spotting a gap in the market for buying property directly from people looking for a simple, quick sale.

He has a passion for property and as an experienced valuer, has looked at well over 50,000 properties so far at HBB. He has extensive experience in property buying and regularly comments in the press on property matters, trends and promotes ways to simplify and speed up the selling process.

View articles by Chris