I'm a property expert that still remembers the days when having broadband was a selling point! My articles cover issues that homesellers face in the UK and answer the questions we're all asking. I've bought and sold properties and helped others do the same, so my writing comes from years of experience.
Read Full Bio >When you’re selling a property, something that’s often overlooked is the cost of selling. The way you sell will make a big difference to the amount you’ll need to pay.
Estate Agents
Most people automatically gravitate towards estate agents. A lot of high street agents work on a commission basis. What this means for you as a seller is that you’ll need to pay to the agent a percentage of the final sale price.
Typically this will be around 1%; although it can be up to 3%. At 1%, the fee you’d pay for a property valued at £179,950 is £1,795. At 3%, that would rise to £5,385. It’s going to be a significant amount of money – whatever the sale price of your property – so it’s worth keeping in mind.
A fee structure that is based on commission will give the estate agent an incentive to sell your property for more money. Then again, they may get greedy, and the result is that your property stays on the market and does not get sold.
An alternative is the fixed-fee pricing model. The benefit of this for you as a seller is that you’ll know exactly how much you’ll be charged. The downside is that the agent may feel that they’ve done all the work for your fee and not put in the extra effort to sell your property because they won’t gain any more money. It’s therefore important to understand not only the fee amount, but also the model that is used by the estate agent you’re considering.
If the agent does use a fixed fee model, you’ll usually have the option of paying upon completion of the house sale or paying before the property has been listed. Naturally, the second option may not be ideal if you need the cash from the house to pay for it to be sold. Also, paying before the property has been listed could prove to be expensive if your house does not sell at all.
It is usual for your solicitor to take out the cost of your estate agent fees when your house sale completes, so although you won’t actually see the transaction come out of your bank account, it is a big cost that cannot be overlooked when you’re calculating your finances.
What Does the Estate Agent Fee Include?
Knowing what you’re getting for your money makes it easier to understand the fees that are being charged. When you sign up with an estate agent, you’ll receive a contract that details all the jobs that they will do on your behalf. Typically, you can expect the estate agent’s fee to include:
- Valuing your property (based on their research and knowledge of the local market, sale trends and price history)
- Taking high-quality photographs
- Creating floorplans
- Creating an advert for your home, including writing an informative description
- Responding to enquiries and organising viewings
- Installing a ‘for sale’ sign at your property
- Conducting viewings
- Sourcing a buyer from their own contacts of previously interested parties
- Marketing your property on internet portals (such as Rightmove)
- Negotiating with buyers
- Conversing with solicitors
- Operating costs (such as their business overheads and fuel)
It’s common for estate agents to ask you to sign a contract that ties you into listing your property exclusively with them for a minimum time period. You’ll need to check this because you could find there are additional fees to pay if your circumstances change and you decide not to sell.
Whether the agent you choose is an online agent or a high street agent, it is usual for them to have a clause in their contract about withdrawing your property from the market mid-contract. If, for whatever reason, you do have to withdraw your property from the market:
- You will be asked to cover the costs incurred by the agent during the period that your property was on the market. These will be marketing and admin costs
- You will need to repay some or all of the agent’s commission for the sale
In some cases, an agent may attempt to charge you a withdrawal fee and then claim it against future business. What this means is that although you didn’t sell with them this time, they’re trying to ensure that you’ll go back to them when you sell in the future.
There are different types of contracts typically used by estate agents and these are the most common:
- Sole selling rights – If your contract gives the agent sole selling rights, it means that they are the only one allowed to sell your home during the period stipulated
- Multi agency – Having this in the contract means that you’ll be able to use as many agents as you choose and only pay commission to the one that sells your property
- Sole agency – This is similar to the previously mentioned ‘sole selling rights’ but there is a difference. If you find your own buyer, you won’t have to pay anything to the estate agent
It’s always best to clarify these details to make sure you’re not breaking the terms of your contract.
Are There Hidden Costs with Estate Agents?
Not all agents are the same so some may charge you extra for services that you would expect to be included.
We’ve previously mentioned the pricing structures that are in place, but it’s important to check if the quote includes VAT. Discovering afterwards that the quote was excluding VAT could be a shock that costs you more than you were expecting.
In addition, you’ll likely need an EPC in order to sell your property so that you’re following government legislation. If your agent isn’t including the EPC, this could be an extra cost to you (see Do I need an EPC to sell my house?). However, it’s worth remembering that EPCs are valid for 10 years, so if yours is still in date, you can make a saving by not having to renew it.
If your agent uses so-called ‘featured’ or ‘premium’ listings on the property portals, you may incur another fee. On average, these cost £125 and although they’re neither essential nor necessary, your agent might think that using this option will help to get your property a lot of attention and stand out, so as to garner increased interest and viewings.
Connected to this point is something called an ‘enhanced marketing package’. It might include virtual tours, drone photography and large listings in local newspapers. As with the ‘premium listing’, it isn’t strictly necessary, but you may decide that it’ll aid the sale of your property. Find out the full costs though before you sign on the dotted line.
Are Online Agents Cheaper than High Street Agents?
Online estate agents will usually offer you a one-off fixed fee without commission, but you’ll pay that whether your home sells or not. The expectation is that an online agent will be better value than a high street agent because it doesn’t have the same overheads. However, although there might be a low-cost price advertised, there can be additional fees for viewings, premium listings, photography and floor plans.
All this means that it’s not always great value after all.
What About the ‘No Sale, No Fee’ Agents?
You’ve probably seen adverts for ‘no sale, no fee’ companies offering to sell your home. Fact is, they are a business, not a charity, and as such they’ll want their fee. It’ll likely be a fixed fee and one that they will get no matter what the final sale price is for your property. As such, they could sell your home for a low price but you’d still have to pay their fee because they’ve done what was requested; sell your property.
It’s also worth keeping in mind that agents using a ‘no sale, no fee’ model will usually have a clause in their contract that states you have to pay a substantial withdrawal fee if the contract is terminated. This means you’ll be tied to that particular agent, so do your research.
How Can I Avoid Paying Estate Agent Fees When I Sell My Home?
Fortunately, there are a number of methods available that will help you to avoid paying estate agent fees when you’re selling a property. Here are some for you to consider…
Do it Yourself
The first is the DIY method. Selling your property on your own means taking your own photos, writing an advert, advertising on the big website portals, hosting viewings by yourself, handling all the paperwork and speaking with conveyancers.
Auctions
Alternatively, you might want to use an auction to sell your home because almost any property can (and usually does) sell at an auction.
Auctions encourage competitive bidding, frequently pushing the price higher, and you’re not obliged to accept any bid below your reserve price. Modern auctions are typically handled online and come in three forms:
Traditional Auctions
The most secure and quickest way to sell is the traditional auction. Before the auction, your agent or solicitor provides a legal pack that includes everything a buyer needs to exchange contracts. The buyers do their due diligence in the run-up to the auction, then they’ll bid and contracts are exchanged when the gavel falls.
The buyer is legally bound to buy your property from that moment and usually has 28 days to complete.
Flexible Auctions
The modern version of the traditional auction takes a step back from the well-known ‘going, going, gone’ approach. Contracts aren’t exchanged when the gavel falls. Instead, the winning buyer pays a non-refundable deposit (often called a ‘holding fee’, ‘reservation fee’ or similar) to secure the sale. They get a fixed period (usually 28 days) to exchange contracts and then a second period to complete. Sellers don’t need a legal pack as the buyer has time to do due diligence in the first period.
Although it’s often called a ‘modern’ option, flexible auctions have been around for a long time and have grown in popularity because they work well online. Bidders can be anywhere in the world and the auction is usually held over a period of time (such as 14-21 days) instead of having to be in an auction room on a specific day.
Buyer-Friendly Auctions
Traditional and modern auctions both put the fee burden on the buyer. Sellers pay nothing because the auction fees and reservation costs all come out of the buyer’s pot. As a model, this can limit the number of interested buyers; especially first-time buyers who discover there are additional payments to make.
Similar to the flexible auction, buyer-friendly auctions go a step further by being extra-flexible on completion times and moving the fees to the seller. While that may sound like it won’t work in your best interest, the flexible deadlines mean most buyers can participate. The ‘zero fee’ for buyers means there’s a greater number of interested people and that will push up your sale price.
It’s important to do plenty of research beforehand because auction fees could actually work out to be more expensive than estate agent fees, when you consider marketing costs, auctioneer commission fee, and legal fees too.
Assisted Sale
An assisted sale is specifically designed for homeowners who want to sell but whose property needs work and refurbishment. It’s especially good for people with second properties, or if you’re moving into rented accommodation.
With an assisted sale, you sell your property to a company for a fixed, guaranteed amount. When the deal has been done, you keep ownership on paper and the company markets the property for sale (using a Power of Attorney).
The difference here is that the company pays the running costs for the property until it sells to a new owner, without it affecting your agreed sale price. They will pay legal and estate agency costs, maintenance and service charges, ground rent, utility bills, insurance and council tax; even your mortgage payments. An assisted sale is just like selling your house in the traditional way but it’s quicker and simpler. This could be a great benefit to you if you are having trouble selling your house.
Part Exchange
Part exchange isn’t a new idea, even in the property sector. In fact, builders have been doing it for years. They take your old house as part-payment on a new build, reducing the price and giving you a guaranteed sale so you’re not stuck in a chain.
The advantages of this option of selling your house are numerous. You’ll have a guaranteed buyer, so there’s no fear that your sale is going to fall through. And with no chain, there’s no delay. If your dream-home purchase gets delayed, you can often stay where you are until it’s sorted. If the absolute worst happens and your purchase should somehow fall through, you keep your current property so there’s no worry about being homeless (although this isn’t the outcome you want if you’re trying to sell). Also, because you know exactly how much you’ll be getting for your house, you can act like a cash buyer and push for discounts or tight deadlines on your new home.
Whilst you’re able to guarantee yourself a sale for your property in exchange for money off a new build property, it’s not to say that a part exchange scheme doesn’t have its own flaws. Not all properties will be suitable for part exchange, with developers having strict criteria about the properties they want.
Cash Buying Company
A way to sell your home without paying estate agent fees is to use a cash buying company. A cash buying company is a property buying business that will quickly buy your home. The result is that you can sell your house fast without the hassle you’d have if you sold to a private buyer that is in a chain, and because they’ll often be using their own money, no time is wasted sorting out mortgages and they won’t be in a chain so the sale should be straightforward.
Cash buyers also work with motivated sellers to push through a fast sale. Their promotional tools are speed and simplicity. Their job is to buy properties that are either difficult to sell or whose owners need cash in their bank account very quickly.
To achieve fast sales, a seller will have to take a hit on the price. Cash buyers typically offer around 70% to 80% of the current market rate.
For your own security, check that the company is a member of the National Association of Property Buyers (NAPB) and The Property Ombudsman. This will give you independent help if there’s a dispute and also means that they have to abide by a code of conduct.
Get everything in writing, for extra peace of mind. This way, you can recheck any details and you’ll have evidence of the price that was offered to you for your property. And on that topic, make sure that the offer they give you for your property is fixed. It’s not uncommon for some less scrupulous companies to reduce their offer at the last minute, leaving you with little choice but to accept.
What About Other Costs?
According to the Homeowners’ Alliance, solicitors usually charge £500 to £1,500 on legal fees. However, this doesn’t include other charges which could total more than £600. These additional charges will include (for example):
- Title deeds: £25
- Property fraud fee: £10
- Transferring ownership: £200 – £300
- Bank transfer: £20 – £30
- Money-laundering checks: £8 per person
- Searches: £250
Cash buying companies will usually pay the legal fees for you, but it’s best to check before you commit.
Any Questions?
We hope this article has helped you to understand more about the costs involved in selling your property, hidden fees, and how to sell your home without paying estate agent fees.
If you have any questions about selling your property, we’ll be happy to have a chat. Contact us to find out what we can do for you.
