Estate agents charge more than lawyers
High street estate agents charge more per hour than lawyers, private doctors and personal trainers, new figures reveal.
In some cases, traditional estate agents are charging an eye-watering £774 an hour for their services.
That figure is based on a high street agent taking just five hours to sell a property and charging commission of 1.6% on the average 2013 selling price, which was £242,000.
While the sky-high figures have been put together by low-cost online agent eMoov.co.uk as an effective marketing opportunity, its assertion that the numbers are mindboggling seem fair – especially when they frequently climb much higher.
For example, some well-known high street agents charge commission of 2.5% of the sale price. So based on five hours of selling time, that would be well over £1,000 an hour.
And where property prices exceed £1 million - a common occurrence in London and other parts of the South East – the hourly fee can be anything up to £5,000.
Rising house prices are nudging fees higher, points out Paula Higgins, chief executive of consumer group HomeOwners Alliance.
“The sharp rise in house prices means absolute fees (which have stayed steady in percentage terms) have risen dramatically, even though the amount of work hasn’t,” she told Moneywise.
“Anyone thinking of selling their home must do their research to understand the fees quoted and haggle – this could save you thousands of pounds. Aim for 1% + VAT.”
"Typical high street estate agents are charging vendors extortionate fees for a service that is relatively straightforward," said Russell Quirk, founder of eMoov.co.uk.
Online agents are able to significantly undercut the cost of high street agents with most charging between £300 and £600.
Of course, the process of selling a home involves more than just uploading photos to a property website and landing a buyer.
There could be a chain of buyers to deal with, not to mention the lawyers or if anything goes wrong. These are all things high street agents are used to helping with so there are pros and cons to going down the low-cost online route.
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Invented by a Frenchman in 1954 and ironically introduced in the UK on 1 April 1973, VAT is an indirect tax levied on the value added in the production of goods and services, from primary production to final consumption and is paid by the buyer. Its levying is complex, with a number of exemptions and exclusions. For example, in the UK, VAT is payable on chocolate-covered biscuits, but not on chocolate-covered cakes and the non-VAT status of McVitie’s Jaffa Cakes was challenged in a UK court case to determine whether Jaffa Cake was a cake or a biscuit. The judge ruled that the Jaffa Cake is a cake, McVitie’s won the case and VAT is not paid on Jaffa Cakes in the UK.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.
A property chain is a line of buyers and sellers (the “links”) who are all simultaneously involved in linked property transactions. When one transaction falls through – for instance, someone can’t get a mortgage or simply withdraws their property from sale, the entire chain breaks and all the transactions are held up or even fail entirely.