The Commission
Perceived wisdom tells us that being an estate agent is money for old rope. You arrange a few viewings, get an offer accepted and then sit back and wait for the solicitors to do their work before collecting a large cheque. While I can think of many harder jobs, running an estate agency is far from an easy life. In most areas it is extremely competitive and much of the work that they do goes unrewarded. So don’t begrudge paying a fair commission to your agent as long as you get a first class service in return.
The first rule is to never instruct an estate agent without knowing the commission that they will charge and how it is structured in advance. You should ask about this during the valuation appointment. Most agents work on a straightforward “No sale, no fee” basis although there are a couple of exceptions to this which are outlined below.
Once you’ve had 3 or 4 agents in to value you should have an idea of what the average commission rate is in your area. There are large regional variations but you should expect between 1% & 2.5% for houses and 1.25% & 3% for flats. The fee is always higher if you instruct more than 1 agent. Your aim should not be to instruct the agent that offers you the lowest commission rate but rather the agent that you think will do the best job of selling your property at a fair commission rate.
The problem with agents that cut their commission rates is that it follows that they have to cut their expenditure as well. Do you want your property appearing in a small black and white advert, being phoned out by untrained staff or not being prominently listed on the internet? This is the service you should expect if you instruct a cheap agent. Also, soon you will be relying upon your agent to negotiate the best possible price on your property, how likely is this from an agent that so willingly throws away a chunk of their fee?
Coming back to the exceptions to the “No sale, no fee” commission structure. In some areas agents will charge extra for advertising. This practice is dying out fast but you should check your agency agreement. The other clause that you should be aware of refers to what happens if you withdraw from the sale when contracts are ready to be exchanged with a willing purchaser. This is discussed further in our article The Agency Agreement.