How Much Are Estate Agent Fees When Selling a House?

Written by Martha Lott Reviewed by Graham Norwood

19th Feb 2020 (Last updated on 10th Dec 2020) 10 minute read

How Do Estate Agents Make Money?

Before going through the average estate agent fees, it’s important to understand how the agents make money. The commission earned through selling your house is not their only source of revenue. Some estate agents will also earn money through referrals.

If your estate agent recommends any of the following, they may be receiving an added referral fee: 

• Surveyors
• Conveyancers or conveyancing solicitors
• Mortgage services
• EPC
• Utility switching services
• Architects
• Removal companies 

There are other companies or services they could also recommend. Before agreeing to use these services, it’s vital you do your own research and read reviews to ensure they’re professionals within their area who can provide quality services. More often than not, your estate agent will only recommend reliable services due to The Property Ombudsman’s code of conduct. However, some may only see the benefits of the referral fee so it’s essential to do your own research.

Cost of Online Estate Agents vs Traditional

Many people are turning to online estate agents as they usually offer a fixed fee for their service, which works out a lot cheaper than high-street agents. However, most online estate agents will charge fees for additional services such as photographs, accompanied viewings and accepting offers whilst these services are included in traditional estate agent fees. This is worth keeping in mind if you decide to sell your house online. 

You will usually have to pay online estate agent fees upfront whilst many traditional estate agents offer a ‘no sale, no fee’ service. Although typically more expensive, especially if your house is worth a lot of money, traditional estate agents’ fees include a thorough selling service. High-street estate agents will include the following in their fee: 

• Photographs 
• Creating an advert
• A ‘for sale’ sign
• Accompanied viewings (usually)
• Sales progression
• Negotiating offers
• Accessing buyers’ financial position
• Liaising with property solicitors and third parties

Online estate agents will charge extra for these services. However, there’s been an increase of online estate agents that have developed into hybrid estate agents, which means they do very much the same as high-street estate agents but operate online. They hire a local property expert to arrange viewings, take photographs and negotiate offers. Hybrid agencies charge higher fees because of the labour involved.

The Department for Business, Energy & Industrial Strategy data shows that 66% of sellers sold through an estate agent who charged a commission percentage as their fee, whereas 18% opted for a fixed price service.  Whether you choose an online or traditional estate agent, the choice will be yours. It will ultimately depend on your personal preference, how much your house is worth and how quickly you want to sell your house.

What Does the Contract Say About the Fees?

When you use an estate agent, you will have to sign a contract. The type of contract will determine how the estate agent earns their commission fee.  

1. Sole Agency

A sole agency contract means you won’t have to pay if you find your own buyer. This usually comes with a cheaper fee than a multi agency, too. This is the recommended estate agent contract to go with.

2. Multi Agency

If you are using more than one estate agent to sell your house, this is known as a ‘multi agency’. They will charge a higher fee but you only have to pay commission to the estate agent that sells your house. 

3. Sole Selling Rights

Sole selling rights works the same as sole agency, but you have to pay the estate agent even if you find your own buyer. They will be the only one allowed to sell your house.

5. Ready, Willing and Able Purchaser

With this type of contract, you have to pay the agent for finding a buyer, even if you decide not to sell. You should stay away from this contract.

Do Estate Agent Fees Include VAT?

All estate agents, whether they’re an online, high-street or hybrid agent, are required by law to list their fees with VAT included according to The Property Ombudsman. Unfortunately, not all estate agents will comply with this rule and will surprise you with the added VAT after the sale.

Data from Yopa discovered that 56% of estate agents quoted prices without VAT, meaning sellers had to ask if it was included. An unsettling 20% of agents also quoted prices without VAT but instead stated that it was “plus VAT”. It’s important to remember that you ask for a full breakdown of the estate agent quote, as the research shows not all agents include it in their price. Therefore, if the agency you choose does not openly state whether VAT is included, it would be beneficial to add 20% onto the cost for a more accurate fee. 

For example, if the initial commission is priced at 0.75% but it does not state if VAT is included, you would add the appropriate percentage making it 0.90%. Again, if without VAT, the commission is 1%, you should add the extra percentage making the final commission quote 1.20%.

Should You Choose The Cheapest Estate Agent?

Whilst some estate agents will offer cheap fees for their service, they may not include other necessities like the ‘for sale’ sign or accompanied viewings. Be wary of estate agents that charge less than 1% plus VAT for their service as it usually is too good to be true. A high-street estate agent offering cheap fees won’t offer the best service available, meaning your house will likely take longer to sell with an increase in delays. 

If this occurs and the agent does not perform to the expected standards, you do have the option of making a complaint against the estate agent. If they have breached their code of conduct during their time working with you, your complaint may be successful. However, good research, shopping around and asking the right questions should help you ensure you're not put in this position. 

As mentioned above, online estate agents offer cheaper and fixed fees, but this means you will have to pay upfront. Online estate agents can offer their services cheaper as everything is done online and with online-only estate agents, the seller will have to do a lot of the work such as taking the photographs and conducting viewings. 

Whichever estate agent you choose, make sure you ask if they have sold similar homes in the same area in recent months, to show their expertise in your property’s section of the market. Don't forget to ask questions before deciding which estate agent to go with, so you know they're right for you and your situation.

Can You Haggle with Estate Agents?

Traditional estate agents will provide their quote based on the price of your house, the package you choose and the progress of other local properties. Estate agent fees are typically negotiable and it’s recommended that you try to haggle with them.

Online estate agents will usually offer a fixed-fee that you’ll pay regardless of how much your house is worth. Online and hybrid estate agents fees are not typically negotiable as they are already cheaper than high-street agents. 

You can incentivise your agent, offering a higher percentage commission if they sell quickly (say, within six weeks), with the commission level diminishing as time goes on. Another common way sellers negotiate with estate agents is by suggesting their fee be as close to 1% plus VAT as they can. But be realistic, the average estate agent fee is 1.18% plus VAT and anything under 1% or above 3% should be a red flag.

Estate Agent Fees That Are Often Overlooked

If an estate agent is offering additional services, or if they are included in the quote, they should let you know upfront. Typical services estate agents might offer include:

1. Energy Performance Certificate (EPC)

An Energy Performance Certificate is a vital service when selling a house. Whilst estate agents don’t offer this for their financial benefit, some will offer it to simply speed up the sale. To save time and money, get your EPC now from an accredited assessor.

2. Featured Listing on Rightmove

A featured listing on Rightmove will instantly put your house at the top of the searches. This is optional and will be down to you to decide if you want that extra bit of marketing. If your house is priced accurately and has a decent advert, there won’t be a need for this service.

3. Premium Marketing Service

A premium marketing service will showcase your house via drone and 3D tours. This might be a good opportunity if you have a higher-valued home that needs more than just photography. 

When Should You Pay the Estate Agent?

When you pay your estate agent fees will depend on the type of service you choose. Almost all online estate agents will require an upfront payment as they offer a fixed-fee service. Many traditional estate agents will require payment only once they’ve sold your house.    

It’s recommended to never pay fees upfront unless you are confident your house sale will go through successfully.

Do I Have to Pay The Fees if I Decide Not to Sell?

If you decide not to go through with the sale, or if the sale falls through on the buyer’s behalf, you might still have to pay the estate agent’s fee. It’s advised to never pay upfront fees, as you can never guarantee a successful sale. 

For peace of mind, use an estate agent that offers a ‘no sale, no fee’ service as you won’t have to pay if the sale falls through. You still may have to pay to cover the cost of other services such as viewings, photographs and creating an advert. You should discuss this with your estate agent before signing any contracts.

Estate Agent Fees in Scotland

Estate agent fees in Scotland will likely be similar to that in England and Wales. However, the main difference is that many Scottish solicitors will also act as an estate agent and help you with both marketing your home and the legal work required. The laws are slightly different in England and Wales meaning your conveyancer or conveyancing solicitor will act separately to your estate agent. 

Before signing any contracts, you should ask your solicitor if they will also be acting as your estate agent and what fees these services will include.

Next Steps of Selling a House

This has been part of our selling a house guide. In our next article we take a detailed look at how to sell your house online, from comparing estate agents to learning how they will market and list your home, we cover it all. To learn more, read selling your house online.