Research by the HomeOwners Alliance found that only 2% of estate agents openly mention their fees on their website and 82% make no mention of fees at all.
This isn’t just smaller firms, no major regional or national estate agents make any reference to their rates or terms and conditions on their websites.
And even if a seller asks they will not always get an answer as the research also found that a third of estate agents refuse to give their fees out over the phone to sellers and two thirds of insist on doing an in-home valuation before even discussing fees. However, most independent estate agents are upfront about the fees they charge.
Estate agent fees range from under 1% to 2.5% plus VAT for a sole agency contract but estate agents often fail to state whether VAT is included in their fee, despite a legal obligation to do so.
The report highlights some of the unfair practices it uncovered including hidden fees such as £99 registration fee, a marketing incentive fee of £200, and hefty non-refundable deposits of up to £500 if the seller withdraws from the sale.
There were also examples of agents claiming they had the right to charge commission beyond the term of the contract with the seller, fees being charged upon exchange even if the sale falls through at completion, lengthy sole agency lock-ins of nearly half a year, compared to some agents that require no more than two weeks written notice and some charging fees to both seller and buyer.
Paula Higgins, chief executive of the HomeOwners Alliance, said that as estate agents are handling the biggest transactions in most people lives, they should be able to give a clear upfront answer on what their fees are and how much a sale will cost.
‘Estate agents are far too secretive about the fees they charge, and too often include blatantly unfair terms and conditions in their contracts. The result is that home owners routinely pay thousands of pounds more in fees than they need to, and too often end up in disputes with their agents, adding massively to the cost and stress of moving home,’ she explained.
‘Estate agents do deals every day, putting them at a massive negotiating advantage to home sellers, who often have limited experience and don’t know what they should expect or what to watch out for. If estate agents were serious about cleaning up their industry, they would be more open and transparent, ensuring a more level playing field between themselves and their customers,’ she added.
One agency that is upfront is Emoov, which is a fixed cost agency. Chief executive officer Russell Quirk said that the firm is proud to promote its fees and terms and conditions on its website.
‘Vendors know exactly how much we cost and what they are getting for their money. We agree with the HomeOwners Alliance recommendation for home sellers to negotiate fees and contract terms. However, we feel that estate agency practice won’t change unless the commission only model becomes a thing of the past,’ he pointed out.
‘We believe that the no sale, no fee is damaging the reputation of the estate agency industry and promoting a wasteful approach where ‘successful sellers’ are the losers. In a system where only successful sellers are charged, one out of four people are paying for four out of four people’s marketing costs. Home sellers could be charged significantly lower fees if estate agents adopted a fixed cost approach. We are not saying that the entire fee needs to be paid up front. Part of it could be paid on completion, but that fee should be fixed and transparent so home sellers are clear on the costs,’ he added.
eMoov offers a flexible fee structure of £395 up front or £199 up front with £399 on completion, and no sole agency tie ins. According to eMoov’s own research, high street estate agents charge up to £774 an hour to sell a property, the highest hourly fees of all professionals providing consumer services, and more than three times the fee that top doctors charge.
