by Mark Johnston
Are estate agents fees excessive?
Recent research shows that the number of properties sold in the UK is running at less than half the peak level recorded in 2007.
Estate agents are responsible for selling most peoples largest and in some cases only asset.
All agents do charge competitive fees; therefore if one agent is significantly over valuing your property the chances are they are doing it to get the instruction.
It is advisable to choose an estate agency that is a member of the Ombudsman for Estate Agents (OEA) scheme as if things go wrong they can help purse the agent for compensation.
Members of the National Association of Estate Agents (NAEA) and those who are registered with the Royal Institution of Chartered Surveyors (RICS) also have strict codes of practice.
There are a number of factors that will influence how much a seller pays for an agent’s service, for instance, whether they appoint a sole agent or spread it among several agencies.
Estate agency fees are probably the murkiest part of what most people already regard as a shifty business.
A survey conducted by the Royal Bank of Scotland (RBS) in March this year found that agency fees had increased by 69 per cent in the last 10 years, this interestingly coincides with a 64 per cent increase in house prices.
However, it seems that agents operating costs have not increased during the same period, in fact due to the wide use of website portals as marketing media operating costs have fallen.
Surprisingly the National Association of Estate Agents (NAEA) does not collate any data on agency fees. Which?, the consumers help magazine, has researched the market in March 2011 and they found that there are huge variations in fees. These start from 0.75 per cent to 2.5 per cent of a properties selling price. The national average fee therefore came out at around 1.8 per cent.
Many property experts believe that higher fees do not usually mean any increase in an agents desire or ability to sell a property as most estate agents work for company’s who pay a basic salary plus a small bonus.
Some other experts feel that estate agents who charge a fee of 1 per cent or above have unnecessary costs or they are making huge profit margins.
The thing to remember is that these fees are negotiable, especially if the agency wants or in some cases needs the business.
Most agencies are honest and use standard industry agreements. However, Christopher Hamer, the property ombudsman, who adjudicates on complaints against estate agents, warns people who are about to sell their home to “read their contracts carefully before signing on the doted line with an agent”.
In conclusion the future path of estate agents is in the hands of vendors and they will decide whether they are willing to pay over the odds for the unclear benefits of a glossy and reassuringly expensive agent.
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