The property market may be a difficult place to do business but consumers still have options. Estate agents are hired by home owners to sell their property at the best possible price. As such, REA Mortgage Services believes consumers have a right to negotiate the commission levels and advertising fees for estate agents' services in advance.
The first step is to interview several estate agents in your area based on recommendations. Ask each estate agent what they believe the house is worth and ask them to back that up with recent sales they have made in that neighbourhood.
Once an agent is selected, negotiate a fee. Agents usually charge 1.5 to 2 per cent of the house's sale price. REA advises that the agent should be paid for the quality of his or her service. If the agent gets a higher than expected sale price then the fee should reflect that accomplishment.
"To be honest you could easily place an ad in the paper and sell your house. You are choosing to use an estate agent because you expect him to achieve a higher price for your house," says REA.
If the agent estimates the market value of the house as £150,000 (€190,461) then the professional fee may be structured as follows: if a sale price of up to £150,000 is achieved it provides an estate agent commission of 1.5 per cent of the sale price plus VAT. An amount up to £160,000 may generate 4 per cent on the sale price above £150,000 (£2,250 or 1.66 per cent of the sale price). If it sells the house for £180,000 it would receive a commission of 6 per cent of the sale price above £160,000 (£3,850 or 2.14 per cent of the sale price).
It is very important that before you negotiate a commission based on performance that you have a good idea of the market value of your house, stresses REA.
Many estate agents charge clients advertising or marketing fees. These ads help sell the client's property but also provide advertising, at the homeowner's expense, for the estate agent. The agent receives volume discounts from newspapers and magazines but it's uncertain if these discounts are passed on to clients.
REA suggests customers get the estate agent to confirm in writing that discounts received from any media purchase, are passed on to the client. If the house is not sold no marketing expenses should be borne by the homeowner.
REA Mortgage Service's booklet, How to choose an estate agent when selling your house, provides a sample "selling agency terms of business contract" that customers may use to negotiate with their estate agent. The brochure and contract are available free of charge from REA at tel: 676 1595, fax: 662 7102, e-mail: mortgage@rea.ie