Consumers are being advised that they should pay estate agents no more than 1% plus VAT for a sole agency contract.
A newsletter from the HomeOwners Alliance yesterday said that for higher value properties – those over £500,000 – agents could accept even lower fees.
Sellers are told: “Do not be shy about negotiating fees – most agents are prepared to be flexible.”
It goes on to stress: “It isn’t very British to haggle, but in a market where sellers are in short supply you will probably find agents surprisingly willing to cut their fees to get properties on their books.
“If you are going for sole agency you should aim for a fee of 1% – or even less for high value properties.”
The newsletter claims: “Estate agents often ask for 1.5% up to 2.5% (plus VAT) for being sole agent, since they know that most sellers won’t try to haggle.”
The advice tells would-be vendors that agents charge anywhere between 0.75% and 3% plus VAT. It quotes a survey by Which? that found the national average in 2011 was 1.8% plus VAT, while in 2014, HOA’s own research suggested 1.5% for a sole agency contract.
In 2015, research by myhomemove came up with 1.3% plus VAT.
The HOA – which is one-third owned by conveyancing business ULS Technology – also warns its readers that “fees are often quoted excluding VAT”.
It adds that “more expensive estate agents are not necessarily better” and that small estate agents “are often more flexible on negotiating commission downwards than large chains”.
It tells its readers: “If you achieve 1% plus VAT you can be pleased with yourself.”
The advice also tells vendors that “online estate agents may be a cheaper option”, and can cost as little as £100.
The Property Ombudsman’s code tells agents that they must advise sellers of their fees, including VAT, in writing before they are taken on. Where agents quote fees in advertisements, the sums must include VAT.