The average estate agency fee has fallen to almost exactly 1% excluding VAT – and is likely to fall further, despite mounting costs for agents.
Peter Knight, of the Property Academy, said that moving off the high street and/or going ‘hybrid’ would not be a solution for most agents because of their marketing and staffing costs.
In the 2017 Home Moving Trends Survey carried out for this month’s EA Masters event, 5,838 home sellers were asked about fees.
Knight said: “In simple terms, you can break things down into three thirds.
“One third pay more than 1%. One third pay less than 1%. And one third pay 1%. The average fee is now, as near as damn it, 1%.
“And as if this isn’t concerning enough there’s a worrying trend – the fees are going even lower.
“Those currently selling are paying less in percentage terms than those who have sold within the last 12 months.
“This confirms data Stephen Hayter of My Home Move shared with me that estate agent fees fall between 0.1% and 0.15% every 12 months.
“On that basis, in the first quarter of 2019, the average fee could be as low as 0.75%.”
The study of home movers showed that relatively few (30%) were selling for over £1m, and most (60%) were selling for £250,000 or less.
Knight said: “This is the tenth year we’ve surveyed people who are currently selling a property and we’ve seen a marked reduction in the average fee.
“In 2011, 76% of sellers were paying in excess of 1%, whereas today it’s just 31%.
Knight said the continuing reduction in fees cannot continue – “unless the industry is prepared to experience even greater levels of change than those of the last few years”.
He said the main costs of staff and marketing are going up, not down: “So, while a small saving can be achieved by leaving the high street and working from a conventional office, or from home, or going ‘hybrid’, this isn’t enough to compensate for the reduction in fees.”