How much should you pay an estate agent?

This is a common question and a fair one. Your estate agent plays an important role in the sale of your home, and you’ll want to know that you are getting the best value from your agent. In this blog we’ll take a look at how much you should pay your estate agent, and what you should expect to receive, as a service. Typically, estate agents charge a fee based on a percentage of the final selling price, though as we’ll explain, this is not the only fee model. What is key in the equation is the selling price which your agent manages to achieve for your property. This is as much a product of negotiation and experience as it is about marketing.

Here’s a way to think about the sale price of your home, versus the net amount you will receive:

A – (B + C) = D

A = price achieved on completion

B = agency fee

C = other disbursements – solicitors, stamp duty, removals etc.

D = net amount of proceeds from sale

The job of your agent is to maximise the sale price. The agent’s fee and the sales costs are only a very small part of this, so the key aim is to achieve the highest possible sale price on completion.

Your agent’s experience in managing the sale process is the key skill you are paying for. The success of their negotiation skills, and achieving a fair outcome, when, for example, faced with a critical buyer’s survey, and required works, will all help to maintain a strong sale price at completion.

The final sale price is the most important number in the equation, and determines what you will receive, after the estate agent’s costs, legal fees and stamp duty.

The fee you pay an estate agent for selling your property can vary depending on factors such as location, property value, and the level of service provided.

Here’s a rundown of the common fee structures and considerations when determining how much to pay an estate agent:

1. Percentage of the sale price

This is the traditional fee structure. Estate agents often charge a percentage of the final sale price of your property. This percentage typically ranges from 1% to 3.5%, although it can vary.

Higher-value properties may attract lower percentages, while lower-value properties may have higher percentages.

2. Fixed fee for the sale of your home

This is an alternative approach. Some estate agents offer a fixed fee regardless of the property’s sale price. The cost of the fee can vary depending on the agent and the services they include.

The value of a fixed fee is that it gives you transparency. Fixed fees provide clarity on the cost of selling your property, regardless of the final sale price.

3. Performance-based fee for selling your home

Some agents offer an incentivised fee structure. They have performance-based fees, where the fee is based on achieving specific targets, for example selling the property within a certain timeframe or achieving a sale price above a certain level.

Performance-based fees align the interests of the agent with the seller, because the agent is motivated to achieve the best possible outcome for their client.

What factors can affect an estate agents’ fees?

There are a number of factors affecting the fee structure of an estate agent:

1. Location: fees can vary depending on the local property market and competition among estate agents in the area.

2. Property value: higher-value properties may provide lower percentage-based fees but higher fixed fees. Ultimately you are paying for the amount of effort and attention the estate agents believes will be needed to sell your property.

3. Level of service: full-service agents (who handle all aspects of the sale, including marketing, viewings, and negotiations) will often charge higher fees than agents offering a more limited service.

4. Additional services: some agents may offer additional services such as professional photography, floor plans, or premium listings on property portals for an extra fee.

5. Negotiation: fees can be negotiated, so it’s worth discussing the fee structure and terms with multiple agents before making a decision. However, some firms will not negotiate their fees because they have strong capabilities in managing all aspects of your sale, providing close, personal attention, and excellent negotiation of the selling price, in your favour.

Sole agency vs. multi-agency: sole agency agreements may attract lower fees than multi-agency agreements, where multiple agents are instructed to sell the property simultaneously.

Other costs to consider: estate agent fees are usually subject to VAT, so make sure that you factor this into your budget as it will add another 20% to your estate agent’s bill.

Review the terms and conditions: make sure that you carefully review the terms and conditions of the agency agreement. It’s important to understand what services are included and whether there are any additional costs or charges.

Remember, when selecting an estate agent, to consider the level of service they will provide, their track record in selling similar properties, and how their fee structure lines up with your budget and sales objectives.

It’s also a good idea to obtain written quotes from multiple agents to compare fees and services before making a decision.

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We recently helped our daughter buy her first flat and Tom and Liza Donnelly were incredibly helpful throughout. It was a long process through no fault of theirs and they were both always readily available to help with good humoured and useful advice.

Nick Phillips

Absolutly incredible from start to finish, moving house is ment to be stressful but when you work with a professional like Tom. They take the stress away, we sold out house for what we wanted, even in a tough market.

Scott Lowther

Tom and Lisa recently helped me sell a rental property in Pudsey. They were both a pleasure to deal with throughout the process. Their advice was excellent, there was no hard sell or false expectations and their communication was brilliant. The service was multiple levels better than that we received from a regular 'high street agent' during a previous sale. I highly recommend them and look forward to working with them again in the future.

Andy Norman

Tom was our first estate agent while looking for our first home and, in short, he has set the bar exceptionally high. We were always greeted with detailed documentation and a big smile! He is extremely knowledgeable of the properties and areas. You can tell he puts in a lot of effort to get to know the sellers and their property based on the information on the neighbourhood and community, and getting to know us as buyers.
Tom is always easy to contact and responds quickly, answering all our questions. We're still looking for our perfect property, but we always look forward to viewings with Tom!

Jessica Mowatt

My son recently purchased his first property through Tom Donnelly Estate Agency. It was an amazing service with step by step help for the first time buyers. Any queries or issues that arose was immediately dealt with very efficiently and with fantastic communication. I would highly recommend Tom and his sister Liza, as they made the whole process happen very smoothly and very quickly. They make a fabulous duo and would not hesitate to use them again. Thankyou so much to both of you for all your help.

Kathleen Heyhoe

Dealing with Tom has been a pleasure. From beginning to end, he did an excellent job at selling our home. He is highly professional, has excellent knowledge of the housing market, and goes the extra mile to work for the best result and experience for his clients.
We first met Tom when viewing a property and we were impressed by his friendly, personable and professional nature. It was great to deal with an estate agent who actually knew about the home and the position of the sellers.

Lucy and Stephen

I had the pleasure of working with Tom and Liz at Tom Donnelly Estates while purchasing my first house, and I couldn't have asked for a better experience. In a market filled with slow, mismanaged, and unrealistic estate agents, Tom Donnelly Estates stand out for all the right reasons.
I highly recommend Tom Donnelly Estates to anyone looking to sell their house, especially if you want a quick, stress-free and seamless transaction.

Hamzah Ahmed

My partner and I recently purchased our first property where the sellers were being represented by Liza. She provided a much better service than I've experienced with other estate agents, making sure to communicate clearly and non aggressively. She was prompt and made things easy to organise (viewings, survey etc.) so would recommend.

Alice

Tom is an excellent estate agent who helped us to purchase our dream home and made the buying process as straightforward and stress-free as possible. We'd highly recommend Tom's services, knowledge and expertise to anyone.

Jodie Morrison