Given most of us would rather pay lower commission for a property sale, it's worth considering how to effectively negotiate estate agent fees.
As a Brit, you may cringe at mere mention of the word ‘haggling’, but when it comes to dealing with estate agents, being too bashful to barter, means you could end up missing out on big savings.
Recent findings from HouseSimple revealed that four out of five sellers admitted to agreeing the first fee they were quoted, without trying to negotiate estate agent fees.
But it’s worth remembering that while estate agent fees are unavoidable, they are not non-negotiable. You may well find your estate agent will lower their fees, potentially saving you hundreds of pounds.
Here we take a closer look.
What fees will estate agents charge?
When it comes to selling houses, estate agents usually charge a percentage fee of between 0.75% and 3.5% of the agreed selling price for your home.
The price you pay will usually depend on the kind of contract you have opted for.
With sole agency, you have just one agent acting for you for a certain period and they get all the commission.
At the end of this period, you are free to use one or more other estate agents. With this arrangement, the fee is usually between 1% and 2.5%.
With multi agency, you can instruct as many agents as you like. They will all act for you at the same time and you only pay commission to the one who sells your property. With this arrangement, the fee may well be closer to 3%. Read more at: What does sole agency mean?
Are estate agent fees negotiable?
Estate agents will usually come up with a fee on the basis that most sellers won’t try to haggle, but that doesn’t mean they aren’t open to negotiation.
Most agents are prepared to be flexible and have a bit of room for manoeuvre. After all, agents are in the business of negotiation, so haggling around contract details is not unusual.
Equally, if an estate agent is not willing to reduce their rate, they should provide a strong case as to why – particularly if the quote is significantly higher than other agents are quoting in the area.
When should you try and negotiate estate agent fees?
- If you have opted for sole agency, you should try to get a fee that is as close to just 1% plus VAT as you can.
- If you are selling a higher-value property – say a flat or house over £500,000 – an agent may be prepared to accept a lower fee. You may find that if you haggle, an agent may be willing to go below 1% per cent plus VAT.
- If your estate agent is trying to build its customer base in your area, they may be more willing to negotiate.
- Note that small estate agents are often more willing to negotiate than corporately-run nationwide chains. The larger chains often follow strict policies surrounding commission levels.
How to go about negotiating
- Save discussions about fees until you are nearing the end of the appointment where the agent is valuing your property. This gives the agent chance to get their mind set on the property and the commission it could bring.
- When an agent gives you their sole agency fee, consider it thoroughly. If you feel it’s too high, don’t waver on this.
- Don’t feel pressurised by your estate agent. They may deliver a convincing argument as to why they are worth the commission they are charging, but it is your decision.
- Be confident about challenging the fee they have suggested. Stay firm and stand your ground.
- Compare agents using Zoopla’s AgentFinder tool. If you find better value agents, then be prepared to return to those that gave you the higher original offer to see if they will better it.
- Bear in mind that if you can demonstrate your home will be an easy sale, an estate agent may lower their fees just to get you as a client.
How much money could you save?
Savings can be substantial. Say, for example, you are selling a property at an agreed selling price of £500,000. If you manage to negotiate estate agent fees down from 1.25% to just 1%, this would equate to a saving of £1,500.
As part of your negotiating you could, for example, offer to include a percentage bonus if the agent manages to sell the property above a certain price threshold.
Alternatively, you could offer an incentive if the estate agent sells your home before a certain date. This can be a useful approach if you’re hoping for a quick sale.
Check the contract before signing
Whatever you do, don’t sign on the dotted line until you’ve scoured the small print.
Check on costs such as the ‘For Sale’ board, fees for 360-degree photos and fees for floorplans. All these marketing costs should be included in the percentage fee.
Be sure to review and amend the estate agent contract and ask questions about anything that is unclear.