An ‘Estate Agent’ is a company (or sometimes just an individual) that acts on behalf of a property owner when selling a their property in the UK.
Typically the property ‘seller’, aka ‘vendor, will ask the Estate Agent to market their property to their existing database of ‘prospects’ as well as any new prospects generated by virtue of the property coming on to the market.
The seller enters into either a ‘sole agency’ agreement, where exclusivity to market the property is granted to the agent for an agreed period, or a ‘multiple agency’ agreement where numerous agents can simultaneously attempt to sell the property.
No Sale No Fee
The Estate Agent charges a commission to the seller if and when the property successfully completes, that is to say the title officially changes hands.
If the property is not successfully sold then the agent earns no commission, irrespective of how much time, effort and money they have put into marketing the property.
How much commission does the estate agent earn?
This varies significantly on geographic area, the prevailing economic climate and how hard the seller has negotiated. Typically the range is from around 0. 5% to 3%.
However if a multiple agency agreement is entered into then this could be significantly higher as the agent carries all the costs of marketing but with a reduced chance of being the actual party that sells the property. They would therefore expect a larger incentive if they are successful – so expect 3% plus for multi agency.
What does an Estate Agent actually do?
This is a commonly asked question with the agents role having been described as money for old rope.
There may indeed be a number of agents that act unprofessionally or who do not appear to add very much value to the marketing process.
However the greater majority are professional and driven firms and individuals whose interest are aligned with their clients (property sellers) and who provide a much needed service?
In order to earn any money at all an Estate Agent must:
- carry out any number of property valuations in competition with other agents
- have and maintain an intimate knowledge of the local property market
- carry out a full marketing survey of the property including measured floor plans and photographs
- handle the initial marketing administration including the writing of marketing copy and ensuring its compliance with the law
- look after the arrangement of the EPC or Energy Performance Certificate
- carry out the assembly of all this information into the ‘Sales particulars’ – usually in hard copy and digital form
- arrange the promotion of the site through various marketing channels, such as online property portals like ‘Rightmove’, local papers and their existing prospect databases
- handle all incoming calls and enquiries regarding the property
- accompany potential buyers to the property on an ‘accompanied viewing’ and the handling of any questions the buyer may have.
- if an offer is made, the agent will handle or ‘negotiate’ the b est price on behalf of the vendor.
Once an offer has been accepted, does the agent get paid?
Many people assume that this is the point at which the estate agent ‘retires’ from the process and gets paid. The opposite is in fact the case, especially with good agents, and all parties are a long way from the finish line.
Once the offer has been accepted, agents will:
- put together a document known as the ‘Sales Particulars’ which is everything that the buyers and sellers solicitors need to know to commence the conveyancing process.
- be on hand to answer any questions the solicitors may have
- act as a negotiator on any post offer issues such as price reductions
- provide access for the buyers property surveyor
- maintain a pressure on the whole process, especially where a slow solicitor exists in the chain
- maintain as much visibility of the chain as possible to help pre-empt any problems.