Why Are Estate Agents So Expensive?

Why Are Estate Agents So Expensive?
If you have looked at selling your property recently, one question that probably popped into mind is why are estate agents so expensive?

It’s a fair question to ask, with the rate that house prices have risen over the last few decades, can the amounts estate agents charge really be justified?

Especially when you consider that only 9% of house hunters now start their property search at a high street estate.

The way we find and buy properties is changing and traditional estate agents are becoming less important in the process, yet their fees remain relatively high. 

So, let’s attempt to answer the question ‘why are estate agents so expensive?’.

How Much Do Estate Agents Charge In The UK?

A typical high street estate agent in the UK will charge between 0.75% and 3% commission on the price at which your property sells.

That means, on a house that sells for the nationwide average of £224,400, you would pay anything between £1,683 and £6,732 PLUS VAT in commission to the estate agent.

So, all in, you are looking at paying almost £2,000 in fees to sell your house as an absolute minimum.

And, that’s before you have factored in solicitor fees, removal costs, stamp duty on your onward purchase, and everything else that comes with moving house.

That’s an extremely high amount.

What Do You Get For Your Money?

The exact breakdown of what you get for the money you pay to an estate agent will vary depending on which estate agent you go with. However, the fairly standard elements are as follows:

Free Valuation

This isn’t technically part of the fee, since you can get a free valuation with no obligation from almost all estate agents. However, they have to cover their time and costs of providing free valuations somehow, so, you can be sure that these are at least partly factored into the fees they charge.

Professional Photographs

We say ‘professional’ although we have seen plenty of property listings that lack professional photography, however, for the most part, the photographs taken by estate agents are well thought out and fit for purpose.

Property Descriptions

This is one area we feel estate agents tend to just go through the motions. While property descriptions need to be factual, there’s nothing to say they need to be dull and flat in their tone.

Anyone can simply measure a room and state what it is and the dimensions, throwing in the occasional buzzword such as ‘cosy’ or ‘characterful’. The skill should come in crafting a message that makes people want to view the property.

Floorplans

Most estate agents now offer floorplans as standard. For them, it’s simply a case of feeding a few measurements into a software and dragging a few lines around. It’s not a particularly difficult or high-skilled task.

Listings On Property Portals

Property Listing On Rightmove

Because so many house hunters now start their property search online via portals such as Rightmove and Zoopla, most estate agents will create a listing for you on the most popular portals as part of their fee.

This is great because the most popular portals only allow estate agents to create listings, so, you need an estate agent to get on them. Again though, it’s not a difficult or highly-skilled task.

Arrangement Of Viewings

Once your property listing is live, people interested in viewing it will call your estate agent.

The agent will, therefore, need to field these calls and arrange suitable viewing times with you. It’s not a highly-skilled task but can be time-consuming, although, estate agents could easily use online appointment booking systems to automate the process.

Hosted Viewings

Most traditional high street estate agents will insist on conducting house viewings on your behalf. The majority simply don’t like you to have direct contact with potential buyers.

That is of course until someone wants an evening or weekend appointment they can’t make, then suddenly that requirement is dropped and you’ll be asked to conduct your own viewings.

That’s not necessarily a bad thing, as we demonstrated here.

Viewing Follow-Up

Once a potential buyer has been shown around your property, the estate agent will usually contact them for feedback.

Again, this is a process that could easily be automated to save time and money, but it usually isn’t.

Offer Negotiation

Should you be lucky enough to receive an offer, your estate agent will be on hand to help negotiate with the potential buyer for you.

They should be able to advise what a fair offer is and how to respond to any offers you receive.

Sales Progression

Some would say this is where a good estate agent is worth their weight in gold. More than a third of house sales in a chain fall through and so having a skilled sales progression specialist on your side really can make the difference.

We wouldn’t disagree that an estate agent with a good reputation for sales progression is worth paying extra for. The problem is, there are so few around.

Most will just go through the motions and you are simply paying for a middleman to relay messages between yourself, the buyer, and your respective solicitors.

As you can see, many of these tasks would be classed as low-skilled (such as arranging viewings and conducting follow-ups) – anyone could do these even without training.

Some of the tasks should be at least semi-skilled but are rarely carried out properly (such as writing good descriptions).

A few of the tasks are highly-skilled and are what you are actually paying your money for (such as valuations and sales progression). It’s debatable whether estate agents carry out these tasks well enough to justify the fees they charge.

In essence, you are paying for their skill in valuing your property, taking photographs, negotiating offers, and progressing the sale. Most of the rest could either be done yourself or could be automated away.

Why Are Estate Agents So Expensive?

We aren’t estate agents so we can’t really answer that question for sure. However, from what we have seen, there is a certain amount of arrogance in the industry.

Check out this conversation we had on Skype recently. The person we are speaking to runs a service for homeowners to help them find the best estate agent to sell their property with.

This conversation started after we had replied a post the gentleman made about how fixed-fee estate agency was dead. We felt the article was outdated and didn’t understand the real frustrations of consumers in the modern age.

Twitter Conversation Shows Why Estate Agents Charge So Much

(Note: He has since closed his business so we have blurred his name and photo to protect his privacy)

The conversation above is the entire conversation, he declined to comment again once we have pointed out why his thought process was flawed.

‘If you are wondering why are estate agents so expensive?’ this conversation might help to answer the question. It’s simply because estate agents still believe that they DESERVE it.

That’s despite the fact that house prices have risen so much due to other factors, that’s despite the fact that house hunting is now done almost entirely online – few people enter an estate agents office without already knowing which properties they want to view.

Sure, many will argue that their sales progression skills are what earns them their fee, yet, in our experience, most estate agents do very little to help with sales progression. In fact, many become part of the problem rather than the solution!

We’ve no doubt there are traditional high street estate agents out there that do such a good job that they fully deserve their fee. But, they are becoming harder and harder to find, most are simply in it for the money.

What Are The Alternatives?

If you have asked the question ‘why are estate agents so expensive?’ and, like us, have decided that the high fees simple cannot be justified based on the service you receive, you’ll be wondering what the alternatives are.

Well, the first obvious one is to try and sell your property without an estate agent. It can be done, but it’s not easy.

For starters, you won’t be able to get your home listed on portals such as Rightmove and Zoopla where most buyers start their search. You’ll also need to do absolutely everything else yourself, which may end up with you losing a sale or selling your home under-value.

Therefore, we don’t really recommend the route of private house sales.

Instead, we recommend you compare online estate agents to find one that will give you the full service you need at a much fairer price than a traditional high street estate agent.

High Street Estate Agent Fees Vs Online Estate Agent Fees

We’ve obviously spent a lot of time in this article examining the fees and services estate agents offer and we’ve come to the conclusion they are over-priced considering the service they actually provide.

So, are online estate agents really any better than their traditional counterparts?

Well, when you compare high street estate agent fees Vs online estate agent fees there is one very obvious benefit to an online agent. They are considerably cheaper.

Even the best online estate agents usually only charge around £700-£800. That’s a fixed-fee so it doesn’t matter if your property is valued at £100k or £500k, you still pay the same. That seems fair to us.

If you’re thinking that seems too good to be true, check out our post that asks the question – how do online estate agents make money?

Many now also offer no sale, no fee prices that are still significantly below those charged by high street agents. Plus, they are more tech-savvy so things like managing bookings or making changes to your property listing, can all be done online.

In fact, there are a number of benefits of online estate agents that we suggest you check out if you want to find a cheaper alternative to underwhelming high street estate agents.

Or, if you want to forgo using an estate agent altogether, check out our guide on how to sell your property without an estate agent.

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