How Much Are Estate Agent Fees When Selling a House?

Written by Martha Lott Reviewed by Graham Norwood

19th Feb 2020 (Last updated on 27th Oct 2022) 8 minute read

What Do Estate Agent Fees Include?

When your estate agent quotes you their fee, you may be wondering what this fee actually covers. The selling process is complex and there are many tasks that the estate agent will have to complete in order to successfully sell your property. What your estate agent fee includes can vary from agent to agent, but here is a list of what you can expect:

• A valuation of your property
• Drawing up floorplans for your property
• Writing a description of the property
• Professional photographs to be taken of your property
• Installing For Sale boards and signs
• Negotiating sale prices
• Marketing the property on portals such as Rightmove and Zoopla
• Conducting viewings

Your estate agent may conduct other tasks using their fee, but the above points are the basic services that you should expect to see.

How Do Estate Agents Make Money?

It’s important to understand how estate 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

An important decision you will need to make is choosing between an online estate agent or a traditional estate agent. Traditional estate agents work from a brick-and-mortar shop and will act on behalf of the seller in person. However, online estate agents work on the internet, meaning they will probably not even see the property in person.

One of the big differences between traditional and online estate agents is the fees involved. Online estate agents tend to offer a fixed-fee that can range from £300 to £1,500. On the other hand, traditional estate agents will take a percentage of commission from the sale of the property on completion. High-street estate agents tend to take between 1% and 3% commission in fees.

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 a commission to the estate agent that sells your house.

3. Sole Selling Rights

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

4. 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 must include VAT in their listed fees according to the CAP code. It states that “VAT must be included in any quoted price unless all those to whom the price claim is clearly addressed pay no VAT or can recover VAT”.

However, not all estate agents comply with this law and will add on the VAT at the end of the sale. Therefore, it’s crucial to research whether the price listed on the estate agent’s website is inclusive of VAT.

If your estate agent has not stated whether the fee includes VAT or not, it’s best to budget the extra 20% so you are not surprised by the extra cost.

Should You Choose The Cheapest Estate Agent?

A general rule of thumb is the cheaper the estate agents, the fewer services they offer. For example, they may not be present for viewings or offer other necessities such as the For Sale sign. Be wary of estate agents that charge less than 1% plus VAT for their service as it is usually too good to be true.

A high-street estate agent offering cheap fees won’t offer the best service available. This means your house will likely take longer to sell with an increase in delays. This is why it is important to research the estate agent fees and match this up to what your estate agent offers.

Make sure you ask your estate agent questions such as if they have sold similar homes in the same area in recent months. This will 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 Negotiate with Estate Agents?

Traditional estate agents will provide their quotes based on a variety of factors. These include the price of your house and the package you choose. 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. Online and hybrid estate agent fees are not negotiable. This is because they are already cheaper than high-street agents.

You can offer a higher percentage of commission if the property sells quickly. As time goes on, the commission level can start to diminish. This incentivizes your estate agent. 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

Any additional services your estate agent offers should be made known at the beginning of the process. Estate agent fees need to clearly outline what is included and what will be added on top of the fee. These additional fees are often referred to as hidden costs.

Typical services that 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 and Zoopla

A featured listing on Rightmove and Zoopla 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 is dependent on what kind of estate agent you have hired. Traditional estate agents will require payment when the property has been sold. This is because the amount they are paid is dependent on the price that the property is sold for.

However, online estate agents will most likely request for payment to be made upfront. This is because they offer a fixed-fee rather than taking a commission on the property’s final sale price.

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

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 England and Wales. The main difference is that many Scottish solicitors will also act as estate agents. This means that they will help you with marketing your home and the legal work. The laws in England and Wales are different as your conveyancer will not be your estate agent.

Before selling a property in Scotland, ask your solicitor if they will also be acting as your estate agent. Make sure that you are made aware of what the estate agent fees are and what services are included.

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 the selling process in Scotland. For more information see our Guide to Selling a House in Scotland