A good estate agent is worth paying for, but watch out for common tricks and red flags
Selling your home is likely to be your most expensive financial transaction, and possibly your most stressful one, too. Choosing the best estate agent to help can avoid extra burdens.
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Estate agents rank among the least trusted professions, said The Money Edit.
“But love them or hate them,” the financial website said, “a decent property professional can help present and promote your home and hopefully secure the best price for your property.”
Here is what to consider when choosing an estate agent.
High street vs. online agents
High street estate agents are the traditional option. They know the area and will “provide a market appraisal of the possible sale price of a property, create a listing with pictures and floorplans, and then help with viewings, offers and negotiations before seeing the property through to exchange and completion”, The Money Edit explained.
Online estate agents are a more recent alternative. They are run via websites and call centres, Which? said, and offer “a more basic service” than you might find through a high street agent. “As a result, they charge lower fees.”
If you use an online-only estate agent, you’ll have to “do most of the work”, added Which?. That includes taking photos of your home, creating an advert, hosting viewings, and communicating and negotiating with potential buyers.
If that sounds all a bit too much, some online agents have evolved into hybrid agencies, “employing ‘local property experts’ to handle buyer enquiries, accompany viewings, and negotiate offers”, Which? said.
Look beyond fees
The average estate agent fee – if using a high street agent that charges commission – is 1.42% including VAT, according to the HomeOwners Alliance. “So on a £275,000 house this would mean estate agent fees of around £3,900.”
But don’t make a decision based on fee alone, the campaign group warned, as “top performing agents that achieve the asking price can be well worth their commission”.
For example, if a property is listed for £300,000 and the agent achieves this asking price at a commission of 1.42%, you will pay them approximately £4,250.
But, if another agent charges a lower fee or even no fee at all and achieves 98% of the asking price, this has cost you £6,000 in a lower achieved sale price.
Sole, joint or multiple agencies?
There are three types of estate agent contracts, and each can affect how much you pay a property professional to sell your home.
Under a sole agent agreemeent, you give just one agent the chance to sell your home within an agreed-upon amount of time, said Movewise. A sole agent agreement is usually the cheapest option, explained the property sale website, as the agent is not competing with others. But it “could mean reaching fewer potential buyers, and consequently waiting longer for a sale”.
Fees tend to be higher if you use more than one agent, known as a multiple agency agreement, and the commission is shared in a joint contract.
An advantage of using more than one estate agent is that the firms will be competing with each other to secure the commission, added Movewise, “but multi-agent fees are typically about double what a sole agent would charge”.
The HomeOwners Alliance warned about the length of the contract, highlighting that the most popular terms are four or 12 weeks. “Any more than this is unnecessary,” it said, “so if it’s longer than this in the contract then negotiate.”
Make sure an agent knows the market and your property
It’s vital that you choose an estate agent you trust and are happy to work with, said MoveIQ.
“Look for someone who is experienced, enthusiastic, and helpful,” the property website said, and “don’t be afraid to ask them questions about the current local market conditions. Find out the details and selling prices they’ve achieved for similar properties to yours.”
Search for an agent that is experienced in selling properties like yours, advised Which?. Look in the local newspaper and online and ask friends, family and neighbours for recommendations, “but also drive or walk around your area to see which agents are marketing other flats and houses in your neighbourhood”.
Online tools such as GetAgent or the HomeOwners Alliance’s Best Estate Agent Finder can also help you compare local agents by their fees and sale price achieved.
Which? recommends shortlisting three potential estate agents and inviting each to provide a property valuation. Getting a good selling price will be top of your list, Which? said, but don’t automatically go with the agent that offers you the highest valuation. Check what services they offer and how they plan to market your home.
Watch out for estate agent tricks
Some estate agents may deliberately over-value your home just to get you on their books, said Unbiased. “You may then wait in vain for offers, only to have to lower your price,” the website said, “by which time your property has been on the market for some time, which in itself can put off buyers”.
Another trick of the trade, warned the HomeOwners Alliance, is for the agent to suggest they can do more to advertise your property – at additional cost to you.
“Think hard about this estate agent tactic,” the campaign group warned. “Why haven’t they done everything they can to market your property already? Is the extra money refundable if you still don’t get an offer?”
Agents may also claim to have lots of buyers on their books, added the HomeOwners Alliance, but most now start their property search online on portals like Rightmove and Zoopla, so “if someone is actively looking to buy a house, as long as your property is on the portals, most buyers will see it regardless of which agent has signed you up”.
Estate agents work for the seller, as that is who pays them, but there are tricks for buyers to watch out for such as “phantom offers”, which the Daily Express warns an agent could use to increase what a buyer is offering.
This practice is against agency codes of conduct, but if you need clarification on whether an offer actually exists, “challenge them and ask them to give written proof of the offer,” said The Property Buying Company.
Another issue is conditional selling, where a buyer is told they can only make an offer if they use an agent’s in-house mortgage broker. This breaks the Property Ombudsman’s Code of Practice and is banned under the Estate Agents Act 1979, “yet the practice is rife”, said The Times.
“Don’t distrust your estate agent,” said Unbiased, “but don’t place absolute faith in them either.”
Marc Shoffman is an award-winning freelance journalist, specialising in business, property and personal finance. He has a master’s degree in financial journalism from City University and has previously written for FT Adviser, This Is Money, the Mail on Sunday and MoneyWeek. This article is based on information first published on The Week’s sister site, The Money Edit.
