There are regular media articles about the costs of buying a home, but rather fewer about the costs of selling a home. On the one hand this is understandable since, at the end of the day, the buyer should, ultimately, pick up the cost of any sales transaction, leaving the seller with a profit.
On the other hand, the amount the seller has to pay in order to sell their home can influence how much profit they actually make and therefore it is well worth taking the time to understand these. From a seller’s perspective, probably the single, biggest cost of selling their house will be the estate agent’s fee, so here is a brief guide to how these fees are calculated.
Flat fees versus commission
Traditionally the online agents have used the former and the high-street agents have used the latter and this still tends to be the case, but it isn’t always. High-street agents can request a flat fee, typically for selling a lower-value property and while this at least lets the owner know where they stand, the reason high-street agents tend to go down this route is because it ends up putting more money in their pocket than they would have received had they worked on commission.
Online agents still tend to work on flat fees, but as the lines between online agents and high-street agents become increasingly blurred, it would not be at all surprising to see at least some online agents start to take a part or all of their fee as commission, although they will probably still price their services very competitively when compared to real-world agents.
Sole agent contracts versus multi-agent contracts
This currently tends to be an issue with high-street agents working on commission rather than online agents. In the high-street world, when you agree to work with a sole agency for a certain period of time (typically anything between 4 and 12 weeks) then you should expect a lower fee in return. At current time, this would be expected to be anything from about 1% to about 1.5%. If you opt for a multi-agency contract then you can expect the fee to be anything up to 3%.
In either case, the exact level of the fee will depend on various factors and two of the most important of these are the value of your house and the level of service included.
Value of the house
Those with more valuable properties should negotiate particularly hard, if necessary, to get the lowest possible fee as the sheer value of the house should ensure that the estate agent gets a respectable level of commission.
Level of service included
By law, estate agents must declare what is included in their service and even if it were not the law, it is reasonable for you to ask anyway.
VAT is charged on top of the estate agent’s fees and this will typically be passed on to the seller. Rates of VAT can change, so double-check what they are at the time you sell your home and remember to factor this into the total cost.
There’s more than just headline fees to consider
While it’s nice to get a bargain, beware of false economy. It can be worth paying more for a competent estate agent, who will get the best, possible price for your home in the shortest, possible time.
Indlu are a new hybrid estate agent based in Manchester, offering a ‘no sale, no fee’ fixed price service to rival traditional high street estate agents in Worsley, Monton, Swinton and Manchester City Centre.