It might not be what you want to hear, but selling a house requires paying fees in some capacity. You can breathe easy knowing the amount you’ll receive from the sale will likely far outweigh anything you need to contribute, but that doesn’t mean you should forget about fees that you would need to pay, when you calculate how much you’ll get for your home. So, what do you need to pay, and how much will it amount to? This guide provides an overview of the typical fees a seller may encounter when selling a house.
Estate agent fees, often up to 3.5% of the property’s sale price
In the process of selling a house, one of the highest costs you’ll encounter is the estate agent fees . Estate agents play a prominent role in the property selling process. Their role is multifaceted and includes tasks like marketing your property, conducting viewings, negotiating with potential buyers and dealing with some paperwork involved in the sale.
Typically, their fee is calculated as a percentage of the final selling price of your property. The percentage can vary depending on several factors but generally costs anywhere between 0.75% to 3.5%. Factors influencing the exact percentage include the estimated value of your property, the level of service provided by the estate agent and the degree of competition among estate agents in your locality.
To illustrate, suppose your house sells for £300,000, and your estate agent charges a fee of 1.5%. In this case, you’ll owe them a sum of £4,500. However, if the agent’s fee were 3.5%, this would escalate to £10,500, a substantial difference demonstrating why it’s crucial to understand and negotiate these fees.
More importantly, estate agent fees are often negotiable. Don’t be shy about discussing this with your agent, particularly if you believe the proposed rate is excessive. Some agents may be willing to offer a reduced rate if you are selling and buying a property through them, or they may be more flexible in quieter periods or in areas with a lot of competition. It’s also worth asking about what exactly their fee covers. Some agents may charge extra for advertising costs, professional photography or premium listings on property websites.
Finally, ensure that the agreement with your estate agent is clear and transparent. Make sure that you understand the terms and conditions and that the fee structure is explicitly laid out.
There are different types of estate agent contracts – sole agency, joint agency and multiple agency. Each has implications for the fees you’ll pay. It’s also worth understanding when you’ll need to pay the fees, as some agents require payment upfront, while others will take their fee from the proceeds of the sale.
Of course, there’s also the option of selling your house directly without an estate agent. Here at Property Rescue, we buy your home fast, and there’s no need to involve an estate agent or pay any fees.
To help you figure out what estate agent fees you would pay on your property, you first need to know what your property is worth. Here is an awesome instant, free property valuation tool that will tell you what your home is worth today.
Conveyancing fees, typically between £500 to £1,500
Conveyancing is the term used to describe the legal process involved in transferring property ownership from one person to another. This is a complex procedure that requires expertise and knowledge of property law. As such, you’ll need the services of a conveyancer or solicitor to ensure everything is carried out correctly and in accordance with the law. The service isn’t without cost, and you will be required to pay a fee for it.
Conveyancing fees can vary quite significantly, typically falling between £500 and £1,500. The variance in cost depends on a number of factors, including the complexity of the transaction, the value of the property being sold and the level of service provided by the conveyancer or solicitor.
Conveyancing fees cover a wide range of tasks that your solicitor or conveyancer will undertake on your behalf. These include, but are not limited to:
- Drafting and reviewing the contract for sale
- Conducting searches with the Land Registry to ensure the property’s legal title
- Managing the exchange of contracts
- Overseeing the completion process, which includes the final exchange of funds and the transfer of legal ownership.
On top of the base conveyancing fee, there may be additional costs known as disbursements. These are expenses your solicitor or conveyancer has to pay out on your behalf during the conveyancing process. Disbursements can include fees for searches, Land Registry fees, bank transfer fees and potentially leasehold fees if the property is leasehold rather than freehold. While these costs are typically smaller than the main conveyancing fee, they can add up, so it’s important to factor them into your budget.
It’s also worth noting that some conveyancers or solicitors may offer a ‘no sale, no fee’ guarantee. If the sale falls through for any reason, you won’t have to pay the legal fee, although you may still be liable for any disbursements that have been paid out.
When choosing a solicitor or conveyancer, it’s important to get a detailed breakdown of their fees and what services they include. Make sure you understand all the costs involved and ask about any potential additional charges that may arise during the process.
While it might be tempting to go with the cheapest quote, remember that conveyancing is a complex legal process, and it’s important to choose a provider who is experienced and reliable to ensure a smooth transaction.
Energy Performance Certificate (EPC), between £60 and £120
An Energy Performance Certificate (EPC) is a key document that provides the energy efficiency of a property. It uses a scale from A, indicating the highest level of efficiency, to G, the least efficient. It’s a legal requirement to have an up-to-date EPC that can be presented to potential buyers when you sell your home.
Obtaining an EPC costs between £60 and £120, with the exact price varying depending on factors such as the size of your property and its location. The assessment involves an accredited energy assessor visiting your home to gather key information, such as the age and construction of the property, the heating system in place and insulation details.
One crucial thing to remember is that an EPC is valid for ten years from the date of issue. If you’ve had an EPC produced for your property within the last ten years, and there have been no significant changes to the building that might affect its energy performance, you won’t need to acquire a new one when you sell.
Beyond the legal requirement, an EPC can also be valuable for sellers. A higher EPC rating makes a property more attractive to potential buyers, as it suggests lower energy bills and a smaller environmental footprint. In this sense, understanding your EPC and making any possible improvements could help enhance the marketability of your property.
Home report fees (for Scotland), £500-£700
If you’re selling a property in Scotland, it’s mandatory to provide a Home Report. This comprehensive document includes a detailed survey of the property, an energy report similar to an EPC, and a property questionnaire, offering vital information to prospective buyers about the property’s condition and energy efficiency.
The cost of a Home Report is typically between £500 and £700, although this can fluctuate depending on the size and value of your property. Additionally, the report must be made available to potential buyers upon request. It’s worth noting that the Home Report can be a valuable selling tool, as it provides transparency and reassurance to buyers and may speed up the selling process by addressing any concerns upfront.
Removal costs, £400-£1,000 for a three-bed house
Removal costs are often overlooked but can add up quickly. These fees cover the cost of physically moving your belongings from your old home to your new one.
The price will depend on the volume of items you have, the distance you’re moving and whether you choose to hire professional movers or do it yourself. For a three-bedroom house, professional removal services can cost between £400 and £1,000.
Mortgage exit or early repayment fees
If you have a mortgage on your property, there may be additional costs associated with selling your house before the mortgage term ends. These costs are commonly known as mortgage exit fees or early repayment charges (ERC).
Mortgage exit fees are charged by your lender to cover the administrative costs of closing your mortgage account. This might include tasks like preparing your final statement or releasing your title deeds. The cost can vary significantly between different lenders, but you can generally expect to pay anywhere from £0 to £300.
Early repayment charges, on the other hand, apply if you repay your fixed mortgage early. These charges are typically a percentage of the outstanding mortgage amount and can be quite substantial, particularly if you’re in the early years of a fixed or discounted-rate mortgage. The exact percentage will be set out in your mortgage agreement, but it’s often around 1% to 5% of the outstanding mortgage balance.
For example, if you have £100,000 left to repay on your mortgage and your lender charges a 3% early repayment fee, you would have to pay £3,000. However, some lenders offer ‘overpayment allowances’ which let you pay off a certain amount of your mortgage each year without facing these charges. It’s always worth checking the terms of your mortgage agreement to understand these potential costs.
While these fees can add to the cost of selling your property, they also provide a good opportunity to review your finances and potentially save money in the long run. For instance, you might decide to remortgage to a deal with lower interest rates or more favourable terms on your next home. Always seek advice from a financial advisor or mortgage broker to help you make the best decision for your circumstances.
Capital gains tax
Last but not least, you may be liable to pay Capital Gains Tax (CGT) if your property has increased in value since you purchased it and it’s not your primary residence. This tax applies to the profit you make from selling assets, including property.
Your primary residence is generally exempt from CGT. However, if you’re selling a second home or rental property, you may have to pay this tax. The rate for CGT is 18% for basic-rate taxpayers and 28% for higher and additional-rate taxpayers on property gains.
The exact amount you’ll pay depends on various factors, including your income, the amount you’ve gained from the sale and your personal circumstances. For detailed advice, it’s best to consult a tax professional or financial advisor.
Understanding seller fees
Selling a house in the UK involves several costs, from the estate agent and conveyancing fees to potential capital gains tax. By understanding these costs, you can budget accurately and navigate the selling process more effectively.
With careful planning and a clear understanding of the costs involved, you can ensure a smoother selling journey and potentially save yourself some money along the way.
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