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Why do estate agents charge such high commission?

by on July 2, 2020 in Business, Latest News, Lead Article, News you can use, Nuggets

Why do estate agents charge such high commission?

More so now than ever, selling a property is a process wrought with overwhelming options and tough choices.

If you’re looking to part with a property, one of the most important decisions you’ll have to make is also one of the first: do you side with an online or high street estate agent?

In addition to offering vastly different levels of support throughout your property market journey, both charge in dramatically different ways for their services. While online estate agents typically charge an upfront fee for their baseline package (with optional support at an additional cost), their high street counterparts tend to operate on a commission-based system, potentially charging their clients over 3% of a property’s final sale price plus VAT.


This is especially concerning to those with particularly high-value properties and can add multiple thousands onto the cost of selling a house. After conveyancing fees, EPC (Energy Performance Certificate) costs, moving fees and more, it can feel unfair to lose out on even more of your property’s final sale price. Let’s explore why estate agents charge such high commission for their services.

First of all, it’s important to remember that your estate agent doesn’t keep the entire commission for themselves. A portion, if not a majority of the agent’s commission will go to the agency that employs them. There are hefty costs involved with running any business; your contribution is keeping the agency running in addition to paying your specific agent’s wages.


Thankfully, the UK actually has one of the lowest average commission rates in the world (roughly 1.5% in the UK compared to 5% in the USA), but thousands of pounds is still a large sum of money, and because of this, people are increasingly moving to alternative methods of selling their homes.

Residential property buyers like LDN Properties offer quick house sale solutions for prospective sellers who are turned away by the fees, hassle and time commitment associated with the typical estate agent process. It’s definitely worth considering property buying companies as a quicker and easier home-selling method completely free of commission or hidden fees.


Selling a house is something most people only go through a handful of times throughout their entire lives. It’s a complicated, multi-stage process, and the support provided by a traditional estate agent can be invaluable.

Valuing and marketing your home; arranging and conducting viewings; helping with negotiations; conducting background checks of potential buyers; and assisting with the legal requirements of selling a home make up some of your estate agent’s major responsibilities.


That’s not all: there are countless other instances where estate agents prove their worth such as overseeing the completion of all necessary paperwork and taking professional-looking photos of your property.

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By providing such an all-encompassing service and guiding you through a whole industry you’re likely only vaguely familiar with, estate agents can justify charging thousands in commission.

The National Association of Estate Agents provides an online search tool for you to make contact with a selection of estate agents in your area.


Any good estate agent is armed with an intimate knowledge of their entire area of operation; they’re experts in the local property market and will leverage that expertise to market your property’s most desirable features. A high-quality estate agent may charge a higher commission, but their knowledge and experience will likely lead to a higher final sale price and therefore more money for you overall.

Plus, high street estate agents usually have access to an extensive database of existing local buyers, giving them a head-start on non-local online estate agents (who, as mentioned, tend to charge upfront instead of via commission).


Not only can high rates of commission be a sign of skill and experience on the part of your estate agent, but they also act as an incentive for the agent to work, negotiate and fight as hard as possible for you. By sacrificing a higher percentage of your property’s final sale price, you’re far more likely to receive an estate agent who’s hard-working, motivated and will go the extra mile for your property.

Cheaper might be appealing, but when it comes to the property market, investing a little more in a hard-working professional can pay off in the long-run.

“No sale, no fee”, a standard guarantee of many high street estate agents, ensures that you won’t incur any costs should your property fail to sell.


While this is undoubtedly a reassurance for you as a seller, it’s a risk for your estate agent who could dedicate hours of work to selling your property and receive no payment by the end of it. An estate agent’s commission may seem high, but when you consider the inherent risk involved with dedicating time towards a client, it makes far more sense. High rates of commission are how estate agency can remain a viable profession despite the lack of guaranteed income.

For inexperienced or first-time sellers, it can be more than worth paying for a dedicated estate agent.

A successful house sale is full of marketing, negotiation, paperwork and all manner of complex legal jargon; a good estate agent can guide you through the entire process while avoiding all the common (and not-so common) pitfalls.

The situation gets somewhat less clear for sellers with significant amounts of personal experience and/or higher-value properties.

Sellers who are confident in their ability to market their own property, conduct viewings, contact conveyancers and more will find less use for a dedicated estate agent and may want to consider alternatives like online estate agencies.


Likewise, people looking to sell a high-value property may struggle to justify paying commission. An estate agent doesn’t work twice as hard to sell a £600,000 house as compared to a £300,000 house, but with commission, they’ll charge twice as much.

High rates of commission are a worldwide standard for high street estate agents, but with several alternatives out there, it’s worth looking at your specific situation, experience and confidence to determine whether it’s worth the cost for you and your house.


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