Estate agents' fees are charged to the seller of the property. Estate agents normally charge the seller, on a 'no sale, no fee' basis, so that if the property doesn't sell, then the customer will not pay anything to the estate agent and the agent will have worked for the customer, free of charge. If the seller does sell the property and complete the sale of their property to a buyer that was introduced by the estate agent, then the estate agent will charge anything from 1% to 3.5%, with the average in 2018 being reported as 1.42% including
VAT and this is calculated based on the sale price of the property. Alternative estate agency models, most notably online estate agents, generally offer a choice of fees, most of which are either paid on an up front basis, or paid later on completion. Fees range from around £300 to £800.
Lettings Estate agents who handle lettings of commercial property normally charge a fee of 7 to 15% of the first year's rent, plus the whole of the first month's rent. If two agents are charging 10%, they will split the fee between them. Estate agents selling commercial property (known as investment agents) typically charge 1% of the sale price. The fees charged by residential
letting agents vary, depending on whether the agent manages the property or simply procures new
tenants. Charges to prospective tenants can vary from zero to £300 in non-refundable fees usually described as
application,
administration or
processing fees (or all three). There are no guidelines for letting agents on charges, except that they are forbidden by law to charge a fee for a list of properties. All charges to tenants are illegal in Scotland. Otherwise, they are free to charge as they please in England and Wales. The first month's rent in advance plus a refundable bond (usually equal to one month's rent) is also generally required. Most residential lettings in the UK are governed by
assured shorthold tenancy contracts. Assured shorthold tenancies (generally referred to simply as "shorthold") give less statutory protection than earlier, mostly obsolete, types of residential lettings. Shorthold tenancy agreements are standard contracts; the wording is generally available from legal stationers and on the internet for around £1.00, although most lettings agents will charge £30 to provide one. It is important that tenant referencing checks are in place prior to a tenant moving into a property. The credit check can be run using credit history data from Equifax, Experian or Call Credit (the three main UK providers) using an in-house website system or a managed referencing service. A reputable agent will also ask for an employment reference and a previous landlord reference to attempt to verify that the tenant can afford the rental on the property and that there were no serious problems with the previous agent. It is also essential that proof of identity and proof of residency are also collected and filed.
Selling Estate agents selling residential property generally charge between 0.5% (sole agency) and 3% (multiple agency) of the achieved sale price plus VAT (
Value Added Tax). Some agents may charge for additional marketing such as newspapers and websites; however, generally, the advertising is included in the fee. All fees must be clearly agreed upon and noted in the agency agreement before market so there is no confusion of additional charges. In July 2016,
Which? found the national average estate agents fees to be 1.3%, although fees vary widely. Other than for the cheapest properties, estate agent fees are generally the second most expensive component of the
cost of moving house in the United Kingdom after
stamp duty. High Street agents rarely charge upfront costs for selling, nor costs for aborting a sale and withdrawing a home from the market. So whilst other options are available to sell property with online agents they do often charge upfront fees with no guarantee of selling or perhaps the motivation a no-sale no-fee High Street agency will offer.
Other approaches Since around 2005,
online estate agents have provided an alternative to the traditional fee structure, claiming cheaper, fixed fee selling packages. These online estate agents claim to give private property sellers the ability to market their property via the major property portals (the preferred medium used by traditional high street estate agents) for a fraction of the cost of the traditional estate agency. Online estate agents claim that they can advertise a property as effectively as traditional estate agents by using
digital marketing techniques and centralising their back office operation to one location, rather than having physical offices in the town in which they are based. Online estate agents normally cover the whole of the UK, therefore claiming to be able to reduce fees due to removing geographical boundaries that traditional estate agents generally have. Lastly, online estate agents often charge up front, instead of a traditional agent, who would normally charge nothing if the property is not sold In February 2010 the
Office of Fair Trading (OFT) announced that a change in the legislation for estate agents has led to a shake up in the way homes are sold, allowing cheaper online agents to become more established than they could before. Intermediary estate agents and or property portals that are based in the United Kingdom have started to encourage UK and worldwide estate agents to collaborate by showing all their properties, thus allowing site visitors to see a vast array of UK and overseas properties all on one website. Research undertaken in 2007 said that the most effective way of selling property is via 'For Sale' signs, 28% of customers had seen the estate agent's
For Sale signs before researching more in depth into the properties. Searching for houses via the internet came in a close second (21%), with newspapers third at (17%). The fourth most effective way, and the most traditional, was customers visiting an estate agent's office (15%). In 2010 80% to 90% of properties were found via the internet and agents see fewer people walking into their offices. Boards are still very effective, but many agents are now cutting out paper advertising and moving just to digital such as eMags and just the web. Other methods included auctions (11%), word of mouth (3%) and leaflets (2%). ==Technology==