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How To Negotiate Estate Agent Fees?

Property Saviour » Estate Agents » How To Negotiate Estate Agent Fees?

With the average house in the UK now costing nearly a quarter of a million pounds, and the typical property in London worth £500,000, the estate agent’s fee for selling your home can add up to a considerable sum.

Therefore, while the fee isn’t the most important factor in selecting an estate agent, it is worth negotiating to get the best possible deal. Read more on this article to know how to do it.

Table of Contents

Is it possible to haggle estate agent fees?

The answer is yes: it is possible to negotiate estate agent fees. However, performance matters more than price. You should always choose an agent based on their performance data, rather than the fee you pay. A good high street estate agent will be able to justify their fee.

So, make sure to compare performance when selecting an agent.

1. Find your starting figure

How much are estate agent fees likely to be? Before you invite an agent to value your property, ask them what their standard commission rate is, and if there’s scope for negotiation.

Have a look at our article on estate agents’ fees to get an idea of how they compare. Don’t forget to check whether the quoted rate includes VAT, which adds 20%. The Property Ombudsman code of conduct states that fees should be quoted inclusive of VAT, but this isn’t always the practice case.

On average, estate agent fees in London are usually higher than elsewhere in the UK. The lowest rate you’ll likely find for a sole-agency sale is around 1.5% VAT.

Make sure you ask if there are any other charges which aren’t included in the basic fee. A reputable estate agent should be upfront about these.

Generally, the basic fee will cover the following: listing the property (in the agent’s window, website and on property portals);

  • Taking photos and drawing up floor plans;
  • Producing a brochure;
  • Installing a ‘For sale’ board;
  • carrying out accompanied viewings;
  • negotiating with potential buyers, solicitors, surveyors etc to progress the sale. If you need an

Energy Performance Certificate (EPC), will cost extra, so you may want to arrange it yourself rather than get the estate agent to do it.

Negotiate with estate agents!
You should always choose an agent based on their performance data, rather than the fee you pay.

2. Start a discussion

Connect with the agent either during the appraisal or afterwards. After they have seen your property in person, they’ll have a better grasp of the intended market and how easy it could be to sell.

If the agent is enthusiastic and believes the sale should be straightforward, they may be open to negotiating the commission rate, but this is not always the case.

Obtain valuations from around three local estate agents: this will also provide you with leverage when negotiating, as you can make the various companies compete with each other to see if they will match an offer.

If an agent is not willing to reduce their fee completely, you could propose a sliding scale, where they get the full commission if they manage to make a sale above a certain threshold.

Engage with the agent either before or after the valuation. Once they have viewed your property, they will be able to assess the target market and understand how straightforward it may be to sell.

3. Consider exclusivity periods

Most agents will want to bind you to an exclusivity or tie-in period: this is a period in which the agent has the sole right to sell your property. If you find a buyer during this period – even if the agent had nothing to do with it – then you will still owe the agent a fee.

Generally, exclusivity periods last 12 weeks, and agents are more likely to be open to negotiation if they are selling a prime property.

If you can’t reduce the exclusivity period, think about what will occur at the end.

Could the agent reduce the fee, maybe in exchange for a lower asking price which would make the house easier to sell? Or could you bring in another agent while still keeping the fee the same?

After the agent has done the work to list your home, they won’t want to lose the listing so you will have more leverage.

4. What about fixed fees and online estate agents?

Fixed fees are the most typical with online estate agents, and unlike with high street agencies, negotiation is usually not an option. The cost may appear attractive, but note that you will usually have to pay upfront – regardless of how long it takes to sell your house, or if it sells at all.

In a future article, we will look at the advantages and disadvantages of using an online estate agent.

Determine how much negotiating leverage you have
The higher the price of your home, the easier it will be to haggle for a lower rate.

Determine how much negotiating leverage you have

The housing market of 2023 has seen a significant drop compared to recent years. Interest rates are at a high, meaning buyers are hesitant to take out new home loans while sellers are not keen to let go of their low rates.

This has caused a decrease in the number of buyers and sellers, thus resulting in real estate agents competing for a much smaller pool of potential customers. They may be more likely to negotiate on commission fees.

Factors that determine the quoted rate and how much negotiating power you have include the value of your home:

  1. Its desirability, and the local real estate market.
  2. The higher the price of your home, the easier it will be to haggle for a lower rate. Properties that are luxury or highly marketable can also get agents to reduce their rates.
  3. If you are in a hot market where properties are selling quickly, agents may be more open to a lower rate. This is because less time and effort means more money for them.
  4. In the off-season or markets with a low inventory, it can be difficult to find new listings. Agents may be inclined to reduce their fees to bring in business, as they need work and their demand is low.

Know the average commission rate in your area

Real estate commissions differ from state to state, city to city, and neighbourhood to neighbourhood. To have a good starting point for your negotiations, it is essential to know what is usual in the area where your property is located. This will ensure that both parties make reasonable requests.

Shop around for the best possible value

There are numerous real estate agents and brokerages to pick from, each with its unique qualities. Some are inflexible when it comes to pricing, while others are willing to modify their fees and services to meet your particular needs.

On the other hand, discount brokers and agent matching services have built-in commission savings, without the need for negotiations (although there may be some trade-offs in terms of service quality). It is important to do your research to find the right agent or service for you.

We suggest interviewing at least two or three options to find the best match – in terms of cost and customer service.

What Are Fixed Fees And Online Estate Agents?
If you want to go the extra mile, you can pay for a pre-listing inspection. This will reveal any issues that could slow down or stop negotiations.

Offer to invest in things that make your house easier to sell

Agree to make any necessary pre-listing repairs and improvements, such as painting, landscaping, and cleaning the carpets. You may be able to negotiate a lower rate with your agent if you’re willing to put in some of your own money.

If you want to go the extra mile, you can pay for a pre-listing inspection. This will reveal any issues that could slow down or stop negotiations.

Consider how you can create value for the agent

Selling a house can be complex. Real estate agents have to dedicate a significant amount of their time to the process.

They also usually incur up-front costs, such as professional photographs and marketing fees.

When haggling over fees, look out for ways to reduce those out-of-pocket expenses or add something of value to sweeten the deal.

Maybe you don’t need open houses or 3D tours, or you know a professional photographer who can take care of the listing shots.

Be aware that the agent is aiming to sell your house quickly and for the best possible price. If you try to save money by foregoing essential services that could make it harder for them to do their job, they might not be keen to work with you.

Offer a full buyer’s agent fee

Offering a competitive buyer’s agent commission is key to getting your home sold quickly and at the best price.

Skimping on the buyer’s agent commission is not the way to go. Around 90% of buyers use agents. If you offer a low commission, these agents may choose other properties over yours or even steer their clients away from your house, which is illegal but still happens.

By offering a low buyer’s agent commission, you will reduce the number of potential buyers for your home and also make your agents less willing to lower their rate as they would take on more risk that the house takes longer to sell or doesn’t sell at all.

So, unless you or your agent already have a buyer lined up, it is best to offer a competitive buyer’s agent commission.

Is It Possible To Haggle Estate Agent Fees
As a one-time customer, you only offer the agent one paycheck opportunity, so your bargaining power is limited.

5. Consider working with an up-and-comer

Newer agents may be more inclined to reduce their rates, given their broker allows it, to increase their sales figures and build their reputation.

Top agents who have gained a lot of experience are aware of their value and tend to be in high demand. This makes them less likely to compromise on price compared to novice agents looking to make a name for themselves.

6. Offer to sell and buy with the same agent

As a one-time customer, you only offer the agent one paycheck opportunity, so your bargaining power is limited. But if you agree to buy and sell with the same agent, they will get two paychecks.

This means they don’t have to invest extra resources for the second transaction and could lower their rate. The agent will earn less commission for the house sale, but more money overall.

7. Let your agent represent you (the seller) and the buyer

When one agent represents both the seller and the buyer, it is called a dual agency. The total commission rate is usually lower because the agent collects both fees.

This usually happens if you find your buyer or if an unrepresented buyer contacts the agent or the brokerage about your listing.

Dual agency decreases the total cost of the transaction, which can benefit all parties. However, it can also create risks and conflicts of interest for the buyer and seller, which is why it is illegal in 8 US states.

Be prepared to walk away!
Any negotiation aims to reach a compromise that is advantageous to all parties involved.

8. Be prepared to walk away

Any negotiation aims to reach a compromise that is advantageous to all parties involved. However, if the other person is unable or unwilling to give you what you need to make the deal worthwhile, you should be prepared to walk away.

Before you state something as a deal breaker, make sure that you are ready to take action. If the other person finds out that you are bluffing, they may push for more than you originally wanted and you may not get the outcome you desire.

Challenges to negotiating a lower commission

Realtor fees can often be negotiated, but this isn’t always the case. Many brokerages enforce commission structures, particularly for newer agents, so individual agents may not be able to lower their rates, even when they would like to.

When trying to negotiate a lower commission, there are a few hurdles sellers may face.

  • Homes with a sale price below $500,000 can be harder to negotiate lower fees for.
  • Additionally, slower real estate markets can make agents less willing to reduce their commission.
  • Homes that require more work to sell can also take longer and require more effort from agents.

What should I expect to pay an estate agent?

Estate agents will usually charge a percentage of the selling price of your home. This fee can range from 0.75% to 3.0%, plus VAT.

According to our research, the current average fee for a sole agency contract is 1.18%. Including VAT, this equates to a fee of 1.42%. So, for a house with an average UK selling price of £264,000, you would be looking at a fee of £3,748.80.

Make sure to check that the fee includes all other services, so you don’t get any unexpected charges later on.

Property Saviour can negotiate a better deal for you

Don’t want to go through the trouble of dealing with these things? We’ll buy your house for cash! Let us take care of everything for you.

To find out how Property Saviour is revolutionizing the way to buy your property, get in touch with us today.

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