it should be understood, that the Estate Agent does not ever handle
your money for the sale of your house as the money passes from Bank
account to Bank account. All Legal matters are handled by your solicitors.
Estate Agents can perform the whole selling process from the beginning
to the end for you. If, however, you do not just want to sit back
and let the Agent handle everything, you should make this clear
from the outset. In order to maintain a good working relationship
with your Estate Agent, it is important that you decide on how much
you want to participate, and let the Agent know about it.
Suggest an Asking Price
The first thing an Estate Agent will do is to suggest an asking
price. As mentioned above, you should not take their suggestion
at face value but get your own idea of how much your property is
worth. Factors that play a role when setting the asking price are
the time frame in which you want to sell your house and the strength
of the property market.
Take your Agent's suggestion into account, but do not rely solely
Presentation and Advertising
This is one of the key functions of an Estate Agent. Your Agent
will take pictures of your house and compile a list of property
details to put into a standard format for presentation. Make sure
to tell your Agent about all the plus points of the property which
he might not notice in one visit. Furthermore, confirm that you
can check the presentation materials and property description before
they are posted on listings and websites.
The form the advertisements take vary from Agent to Agent, but most
will list your property across the Internet. And most have a website
with property listings. A good Estate Agent will make sure that
the advert reaches the target audience. And remember, Location,
Location, Location. As most buyers now start their search for a
home online it is more important than ever to ensure that your chosen
estate agent advertises widely on the web. Quality photos sell your
If you want your Agent to arrange and perform the viewings, make
this clear from the outset, otherwise you might incur additional
charges. On the other hand, you might prefer to show potential buyers
around your house yourself in order to point out all its advantages.
Most Estate Agents are fairly flexible when it comes to this.
Estate Agents are professionals in negotiation. Yet the same problem
arises as with property valuations: an Agent's motivations might
compromise his performance. He might be more concerned about securing
a quick sale and advise you to accept the first offer that comes
along. Or he might be so keen on pushing up the price as high as
possible that he scares away potential buyers with his negotiation
We generally recommend you to have a fairly good idea of how much
you want to (and can reasonably) get for your house, and to stick
to it. If your house really does not sell, you can still make adjustments
at a later date.
If you are a hard-nosed haggler who has already beaten down Tunisian
cloth vendors and used-car dealers, you might prefer to take care
of the negotiations yourself. There is nothing keeping you from
it - just let your Estate Agent know!
Typically, an Estate Agent will charge you between 2 and 1.5 per
cent of the sales price as a commission, but their fees are usually
negotiable. ( we charge 0.75% ) One thing to keep in mind is that
your Agent might make a lot of profit if you are selling a mansion,
but a one-bedroom flat in a shabby building in outer Sheffield won't
pay for his children's education. Consider this before you try to
push him below 1.5 per cent.
It is not recommended simply to go for the Estate Agent with the
lowest fee. Read the small print of the contract and make sure the
amount and quality of advertising is sufficient! An Agent's commission
is usually based on whether there is one or more Estate Agency instructed
with the sale. If the Estate Agent is the sole agency, which means
they have the exclusive right to sell your home for about six to
eight weeks, the commission will probably be lower than if you have
a joint sole agency (you instruct two Agents to work together on
your behalf and share the commission) or a multiple agency agreement,
in which case several different Estate Agents compete to sell your
house and do not share the agreed commission.
Some common sense advice: before you sign the contract, read the
small print and negotiate any contentious terms. You should make
sure the time frame for the agreement is set properly; it does not
usually exceed 3 months, after which you are free to switch Agents
if you are dissatisfied. However, if you have a sole agency agreement,
we recommend you push the term down a bit to approximately 6 weeks.
Agreements and Charges
agents get paid and by whom?
Estate agents act solely for you the vendor of the property who
pays them but they may also work hard liaising with your purchaser
so that the sale is drawn to a satisfactory conclusion. Their fees
become due at exchange of contracts, but their invoices are generally
paid upon your authorization, by your solicitor at completion.
Agency agreements are separated into three main categories:
This agreement is the most common - it is to be recommended in most
cases because it is the cheapest option for the vendor and the agent
has the incentive to market the property without competition for
a given time. Most estate agents will offer you commission rates
for this agreement at around 1.5% of the final sale price, i.e.
£1500.00 (plus Vat) for a sale price of £100,000. In
a sole agency agreement agents will often request that they have
a set minimum period in which to sell your property without fear
of competition. In fact this minimum time limit is not legally binding,
but in fairness it would be reasonable to adhere to this and selling
through another agent within this period would be bad practice and
possibly extremely costly for you as a multiple agency fee would
then be applicable.
sole agency: This next step up from a sole agency agreement will
cost you more. It means that normally two agents work together to
sell your property (not in competition with each other). You can
expect them to split the commission you pay either 50/50 or 60/40
in favor of the actual agency who introduced the buyer. Marketing
your property like this may be recommended if you want different
agencies to complement each other by exposing your home to slightly
different audiences. Typical rates for this type of agreement would
be in the region of 2.0% or a little more (plus Vat).
3) Multiple Agency: The most expensive way to employ agents to act
for you. You can instruct as many agents as you like to sell your
home, but this is an unusual tactic. Most would be purchasers will
research the market introducing themselves to several agencies at
a time. Generally they will find your property whether one or all
of the agencies send details of it to them. This 'shot-gun' approach
of exposing your home to the market could even back-fire on you
as purchasers can interpret such marketing as a sign of desperation!
Commission is payable to the successful agent only and could be
expected to be in the region of 3.0% (plus Vat) of the sale price.
NB If more than one agent markets your property they must all agree
to the same guide price.
get a mortgage?
Getting a mortgage in
today's harsh economic climate remains a struggle for many, says
Melanie Bien, director of independent mortgage broker Private Finance.
One of the biggest consequences
of the financial crisis is that it is now much tougher to get a
Anyone who has applied
for a home loan in the past couple of years will have found that
lenders have much tighter affordability criteria, with many applicants
rejected even though they have never had a problem getting credit
It is not just first-time
buyers who are struggling but those who already have a relationship
with a lender are finding that things have changed.
According to the Financial
Ombudsman Service’s latest annual report, there has been an increase
in the number of borrowers who have been refused permission by their
lender to ‘port’ their mortgage, or take it with them when they
to the Ombudsman that, in response to tougher lending conditions,
their lender’s change in affordability criteria meant they no longer
met the requirements through no fault of their own.
is key as lenders move away from strict income multiples in favour
of a broader assessment of what a borrower can afford when calculating
how much they are willing to lend.
Taking outgoings into
account as well as income, lenders rightly argue that this is a
more responsible way of calculating how much a borrower should borrow.
But are lenders taking
affordability too far? When it comes to homeowners wanting to port
their mortgage, it seems incredibly unfair that they may not be
able to because their lender has tightened its affordability criteria.
The lender may be within
its rights to do so but is this treating customers fairly?
Those who are refused
permission to port have two choices: stay put, trapped in their
home, or pay thousands of pounds in early redemption charges to
get out of the mortgage.
Other sections of the
population have been heavily penalised by tighter affordability
criteria. The self-employed, in particular, are finding it tougher
to get mortgages as so-called 'self-certification' loans – which
do not require the borrower to prove their income – have disappeared.
It is not impossible
to get a mortgage if you are self-employed but you must prove your
income, with lenders wanting two to three years of accounts. Those
who have less than this may be able to find a sympathetic lender
but the majority will have to defer their purchase for longer.
What is worrying is that
affordability could become even tighter once the Financial Services
Authority introduces new proposals on how homebuyers should be assessed
for a mortgage.
The Council of Mortgage
Lenders has warned that 2.2 million existing homeowners would be
unable to get mortgages if the rules were introduced in their current
form, the latest version of which will be unveiled later this month.
The main areas of concern
are that the FSA proposes that lenders calculate affordability over
a 25-year mortgage term, even if the actual term is longer, while
ability to repay should be on a full repayment basis even if some
or all of the loan is interest-only.
The problem with the
FSA’s proposals is that they are too much too late. The FSA wants
to clampdown on the explosion in credit seen in the run-up to the
But the clampdown has
already happened, with lenders tightening criteria and demonstrating
far less of an appetite to lend. The result has been a dramatic
decline in the level of lending, and these proposals, if implemented,
would make that situation far worse.
Although the FSA should
aim to stamp out unacceptable lending practices, this should not
be at the expense of making it impossible for the creditworthy to
get a mortgage.
When it comes to mortgages,
one size really doesn’t fit all.
So what next for borrowers
trying to get a mortgage? Seek advice from an independent mortgage
broker; check your credit file before making a mortgage application
to ensure it's correct; pay down any debt on credit cards or overdrafts
if you can afford to do so; and pull together as big a deposit as