Estate agent fees explained: VAT, minimum fees and contract charges

1. Convert the quote to a VAT-inclusive amount

If the quote says 1% plus VAT at the standard 20% rate, the inclusive percentage is 1.2%. At a £300,000 sale price, that means £3,000 commission plus £600 VAT: £3,600. Do not add VAT again to an explicitly VAT-inclusive quote. Check the agent’s VAT status and written total.

Compare fees using the expected completion price, rather than the initial asking price. Ask whether photography, floor plans, listings, viewings and negotiation are included or charged separately.

2. Test the minimum fee at realistic prices

A minimum can override a percentage calculation. For a 1% plus VAT quote with a £2,500 minimum plus VAT, a £200,000 sale produces a £2,000 percentage fee before VAT. The minimum instead makes the payable fee £3,000 including VAT.

In this example, the percentage exceeds the minimum only above £250,000. At £300,000, the fee becomes £3,600. Check whether the minimum itself includes VAT: the same advertised number can describe different totals.

3. Compare payment triggers, not just price

An upfront fee can remain payable when the property does not sell. A completion-based fee and an upfront listing package therefore place different risks on the seller. Ask what is refundable, when payment is due, and whether deferred payment brings finance or other conditions.

Sole selling rights can mean a fee is due even if you find the buyer yourself. Sole agency has different terms; do not treat the two labels as equivalent. Ready, willing and able purchaser clauses can create obligations even where completion does not follow. Have the agent explain the actual wording.

4. Check the cost of changing plans

Record the tie-in period, notice period, withdrawal charges and any liability for buyers introduced during the earlier instruction. A new instruction does not necessarily remove obligations to the first agent. Clarify potential overlapping fees in writing before changing agents.

Recommendations for conveyancers or other services may involve referral payments. GOV.UK says you must be told about referral fees. Compare the recommended service on price and suitability, and ask what you can choose independently.

• Is the entire quote inclusive of VAT?
• Which extras and minimum fees can apply?
• Is payment due upfront, on exchange, on completion or another trigger?
• What if I find my own buyer or the sale falls through?
• What are the tie-in, notice and withdrawal terms?
• Could an introduced buyer create a later fee liability?

5. Fit the fee into the whole selling budget

The agency fee is only one line in the budget. Conveyancing, mortgage redemption charges, certificates and moving costs may be separate. Use the selling-cost calculator for a broader estimate, and replace assumptions with your actual quotes.

Two agents quoting different fees may offer different work. Compare the total, payment risk and service scope together. The calculations above establish the arithmetic; they do not predict which agent will achieve the best sale price or quickest completion.