Estate Agent Fees - What Is A Target Percentage Based On?

TojoRalph

I am just looking for a little help regards Estate Agency quoted selling fees and what the 1% for sole agency terms folk speak of aiming for is based on? I have searched for guidance on the breakdown of fees and what Estate Agency selling fees typically cover, but am still unclear. To explain, I have received the first quote in relation to a small flat in Scotland which the Estate Agent viewed and which their quote references as being a "proposed selling price of £65K" and thus the value which the quote is based on. There is no valuation as such, just an estimated Home Report valuation in the email body text. Note Home Report fees are separate to everything.

For the Estate Agency Selling Fee section of the quote the costs are listed as £1,560 inc VAT (2.3% of the £65K). However the Marketing Costs section also lists an additional £650 inc VAT for marketing fees and photographer fees. Thus the total Estate Agency selling fees are £2,210 or 3.4% of the £65K. Please note fees are not stated as fixed.

Have I been naive to assume that when advice and guidance talks about negotiating the percentage of the sale price as the Estate Agencies selling fee, this does not include the marketing costs? I had assumed marketing was part of selling? For the record the Marketing Costs have been requested up front, there is no reference to sole agency or otherwise and the sales agreement, letter of instruction and terms of business not supplied are described as to be issued upon instruction, which reads like I only get the small print when I agree to proceed. Lastly, this is not a back street Estate Agent, hence I ask the question. 

user1977

Does their quote actually say it's "2.3% of the £65k" or is that just your calculation? If the latter than I presume they've quoted a fixed price.

Normally the 1% or whatever people are talking about is the whole fee (perhaps with modest add-ons for photos etc, and often excluding VAT), but at the lower price levels there's obviously going to be a minimum fee they'd be prepared to charge.

I would get some other quotes anyway before you start thinking too deeply about this one.

eddddy

You're in Scotland - and I don't know what is customary in Scotland.


But if I got terms like that from an Estate Agent in England I wouldn't accept them, and look for another Estate Agent offering better terms.


In particular, I would look for 'no sale, no fee' - whereas your agent wants £650 in fees whether they sell it or not. (i.e they could be absolutely useless, but you still have to pay them £650)


People often talk about paying a fee of 1% on completion (with no other fees) - but you're unlikely to get those terms on a property selling for £65k.

The EAs I have dealt with might charge 1% for a more expensive property - but would set a minimum of around £1,200 plus vat on completion (but without any marketing fees etc on top).


But like I say, Estate Agents in Scotland might work differently.

TojoRalph

user1977 said:

Does their quote actually say it's "2.3% of the £65k" or is that just your calculation? If the latter than I presume they've quoted a fixed price.

Normally the 1% or whatever people are talking about is the whole fee (perhaps with modest add-ons for photos etc, and often excluding VAT), but at the lower price levels there's obviously going to be a minimum fee they'd be prepared to charge.

I would get some other quotes anyway before you start thinking too deeply about this one.

The EA selling section quotes £1,300 plus Vat, which is where I took my % from, but in a brief list of caveats below, it references the quote being based on a normal transaction requiring a normal amount of work with additional fees applicable if more complex. I take that to be not fixed and potentially wide open to abuse?

Appreciate the feedback on the 1% target being all inclusive within reason, VAT being additional and the possibility of a minimum fee applying. I guess I will just have to see what the additional quotations now booked come back with. Thanks.  

fishfingerbutties

It depends, different agents will charge different addons for different things and some will include as part of the quoted percentage - there isn't one universal rule.

Normally you'd say 1% + VAT of sale price, and this is often conditional on a minimum. So in your case although it comes out as 2.3%, it's fairly standard to say have a minimum of £1500 (we were selling a low price house recently and this was the same for all local agents).

Then that may or may not include marketing, photos, floorplans etc. Again, my house I'm selling it's all included, but other agents wanted to charge extras for professional photos and floorplans.

So there is no standard contract. Find out what each agent offers and compare and go from there.

user1977

TojoRalph said:

user1977 said:

Does their quote actually say it's "2.3% of the £65k" or is that just your calculation? If the latter than I presume they've quoted a fixed price.

Normally the 1% or whatever people are talking about is the whole fee (perhaps with modest add-ons for photos etc, and often excluding VAT), but at the lower price levels there's obviously going to be a minimum fee they'd be prepared to charge.

I would get some other quotes anyway before you start thinking too deeply about this one.

in a brief list of caveats below, it references the quote being based on a normal transaction requiring a normal amount of work with additional fees applicable if more complex. I take that to be not fixed and potentially wide open to abuse?

Not "wide open", no. Do you have any reason to suspect your sale will be unusually complex? You'd get plenty of warning if it turns out to be anyway.

TojoRalph

eddddy said:

You're in Scotland - and I don't know what is customary in Scotland.

But if I got terms like that from an Estate Agent in England I wouldn't accept them, and look for another Estate Agent offering better terms.

In particular, I would look for 'no sale, no fee' - whereas your agent wants £650 in fees whether they sell it or not. (i.e they could be absolutely useless, but you still have to pay them £650)

People often talk about paying a fee of 1% on completion (with no other fees) - but you're unlikely to get those terms on a property selling for £65k.

The EAs I have dealt with might charge 1% for a more expensive property - but would set a minimum of around £1,200 plus vat on completion (but without any marketing fees etc on top).

But like I say, Estate Agents in Scotland might work differently.

I fully get the low value part and appreciate that 1% is unrealistic, but other than the Home Report, I have not read or seen anything to indicate in guides and advice that Estate Agents at sufficiently differently to for example want marketing fees up front. That point gets a whole lot worse now i think about it, given that the EA will be working on the basis they are getting the business as a Sole Agent.

That said, there really is nothing whatsoever by the way of detail in the quote, just their numbers on one page and a whole lot of marketing blurb on the other three. If nothing else, I have something to compare other quotes against. Thanks.

eddddy

TojoRalph said:

The EA selling section quotes £1,300 plus Vat, which is where I took my % from, but in a brief list of caveats below, it references the quote being based on a normal transaction requiring a normal amount of work with additional fees applicable if more complex. I take that to be not fixed and potentially wide open to abuse?

The £1,300 plus vat on completion is reasonable.

I don't think the £650 fixed fee on top (whether they sell the property or not) is reasonable.

I would never want to agree to "additional fees applicable if more complex".- that's outrageous.


If I had no choice - for example, all estate agents were asking for "additional fees applicable if more complex" - I would expect to see a detailed contract explaining

• Exactly what work is included in the £1300
• A price list showing each potential piece of "complex work", and how much they would charge for each piece
• An agreement that they would contact me before starting a piece of "complex work" that incurred an extra fee.

But I'd still prefer to find another agent with a guarantee of no additional fees.

TojoRalph

user1977 said:

TojoRalph said:

user1977 said:

Does their quote actually say it's "2.3% of the £65k" or is that just your calculation? If the latter than I presume they've quoted a fixed price.

Normally the 1% or whatever people are talking about is the whole fee (perhaps with modest add-ons for photos etc, and often excluding VAT), but at the lower price levels there's obviously going to be a minimum fee they'd be prepared to charge.

I would get some other quotes anyway before you start thinking too deeply about this one.

in a brief list of caveats below, it references the quote being based on a normal transaction requiring a normal amount of work with additional fees applicable if more complex. I take that to be not fixed and potentially wide open to abuse?

Not "wide open", no. Do you have any reason to suspect your sale will be unusually complex? You'd get plenty of warning if it turns out to be anyway.

I have no reason to assume the transaction would not be straightforward and normal, it's just that with normal being such a vague description in a quote and my dealing with service related contract issues in my employment, it kind of jumps out and strikes me as being open to the application of additional costs. The phrase, "based on a normal working week" being an example that has tripped our business up historically. Thanks.

GDB2222

I would gladly pay extra for a professional photographer, and I’d expect to pay that up front, regardless of whether the property sells. Maybe £100-200. Otherwise, the estate agent will take some snaps, which won’t work as well. 

Likewise, I’d expect to pay for a home information pack, etc.

user1977

TojoRalph said:

user1977 said:

TojoRalph said:

user1977 said:

Does their quote actually say it's "2.3% of the £65k" or is that just your calculation? If the latter than I presume they've quoted a fixed price.

Normally the 1% or whatever people are talking about is the whole fee (perhaps with modest add-ons for photos etc, and often excluding VAT), but at the lower price levels there's obviously going to be a minimum fee they'd be prepared to charge.

I would get some other quotes anyway before you start thinking too deeply about this one.

in a brief list of caveats below, it references the quote being based on a normal transaction requiring a normal amount of work with additional fees applicable if more complex. I take that to be not fixed and potentially wide open to abuse?

Not "wide open", no. Do you have any reason to suspect your sale will be unusually complex? You'd get plenty of warning if it turns out to be anyway.

I have no reason to assume the transaction would not be straightforward and normal, it's just that with normal being such a vague description in a quote and my dealing with service related contract issues in my employment, it kind of jumps out and strikes me as being open to the application of additional costs.

You can expect to see a similar caveat to your solicitor's quote too - though I'm not sure what circumstances would involve an unusual amount of the estate agent's time. Perhaps a succession of sales falling through or something.