How Much Should I Spend On Estate Agent Fees?
We know it is a sore subject… but when it comes to fees, you really do get what you pay for.
You may feel like many other sellers, that the only way to differentiate between so many estate agencies that appear to offer similar services is to go with the one offering the lowest commission.
More often than not this strategy backfires. Time and time again we see sellers losing literally thousands of pounds using a cheap agency. Low commissions are only possible if corners are cut. Marketing costs, when done properly, can be very expensive for Estate Agents and this is one of the most important aspects of your sale and unfortunately, not everyone gets this bit right. There may also be little or no sales training for their staff or after-sale support for you, which results in missed offers, a slower sale, and a lower sale price.
You can judge an Estate Agent's negotiation skills very early on...
If you are paying an agent a small fee or if they are prepared to negotiate so low on their fee, why would anyone spend the time negotiating on your behalf for every penny? You can usually spot them by the fact that they have early closing hours, little or no weekend and late evening viewings, no regular contact with their customers, bad marketing, hard-to-see photos (if they have proper photos), scruffy-looking boards and adverts with pages and pages of houses all crammed into as small a space as possible.
Choose an agent that values quality over quantity...
To guarantee a certain level of profit in the business, agencies offering low commissions need to secure a high turnover of properties to keep going. With so many properties on their books, they simply don’t have the time to ensure clients have the best possible care during one of the most stressful periods of their life.
You really don’t want your property just sitting there amongst a pile of others. I heard one agent describe his process as “throwing as much muck at the fan as possible and seeing what sticks”. Please keep away from this type of agent – it’s not healthy!
In addition, you will frequently find that these agencies place great importance on the number of boards they display. This is obviously no reflection of how many properties have been successfully sold through to completion, only that the property is currently for sale or that the sales process has begun. The same applies to any adverts. Just because one agency saturates them with properties, it doesn’t mean that your property will be easy to see. In fact, the reverse is likely to happen.
Rule number one: don’t expect a good agent to tell you over the phone what their fees are.
Like most industries, you can’t expect someone to give a quote for work if they have not seen what they are dealing with – you wouldn’t expect a decorator to quote before seeing the room. The same applies for quality estate agents – if you want them to do a fantastic job then let them tell you what the investment will be – and of course, listen to how they earn that fee. I promise you, they are not all the same.
If you are not investing properly in your Estate Agent, then you don't have the right to complain....
Low commissions (or budget agents as they are sometimes referred to) are not a good sign; they have to take on a lot of properties to reach a certain level of profitability and you can expect little if any, service as a result. In this case, what seemed as the outset to be a bargain may ultimately cost you much more than you planned to spend in money, time, and stress.
If you are paying a higher commission, you have the right to complain about poor service from your agent (and then negotiate a lower fee if you feel necessary)
If you have a discounted rate, it is much harder to complain. What does a low fee say about the agent’s confidence and negotiating skills? I would rather pay just that little bit more for an agent that I know was going to perform, stick up for me, and negotiate a higher sale price.
As local estate agents, the entire team at Campbells is aware that other agents charge less but these agents know what we charge, so why would they discount themselves so heavily to secure the business?
Here is an example of how you can check to see if the agent is worth the investment.
Ask each agent you speak to, what their average percentage of asking price achieved is. This is key to working out what your return on investment is and it is always different from agent to agent.
If you can’t find this out or the agents don’t know, then you can always use GetAgent.co.uk to compare your local estate agents. It is a third-party website that will give you the facts and it is free and easy to use – it’s just like a car insurance comparison website.
Let’s say you have three estate agents out;
Agent One
Charges 1% +VAT and on average, achieves 95% of the marketing price and sells on average within 6 weeks.
Fee= £5,700. Price Achieved: £475,000. Total walkway price for you: £469,300.
Agent Two
Charges 2% +VAT and on average, achieves 100% of the marketing price and sells on average within 2 weeks.
Fee= £12,000. Price Achieved: £500,000. Total walkway price for you: £488,000.
Agent Three
Charges 1.25% +VAT and on average, achieves 96% of the marketing price and sells on average within 4 weeks.
Fee= £7,200. Price Achieved: £480,000. Total walkway price for you: £472,000.
Now let’s assume they all value your property at £500,000. Who is offering the best value for money here?
Despite Agent One being £6,300 cheaper than Agent Two, the vendor would actually be £18,700 better off with Agent Two and £16,000 better off than Agent Three.
In some cases, a good agent may change marketing strategy in certain markets and may decide to go for a Guide Price, in this case, they may decide to market for £475,000 to achieve £500,000, so it is important to ask what price they expect to achieve and do your calculations based on that.
And don’t forget! Most good estate agents will not charge you a penny until you complete, so if you are not completely satisfied with the price achieved or the service then speak to your agent.
