Scottish home sellers pay out Â£156 million in the great commisery sleepwalk
Home owners in Scotland paid estate agents a staggering Â£156.7 million in commission for selling property over the last year.
The average fee charged in the region soared by 4% to an average £2,633, increasing as prices rose, according to official Land Registry statistics.
The study comes as estate agency Purplebricks labelled the fees “commisery” and offered householders a choice of avoiding the unnecessarily high charges demanded by traditional agents.
Across the UK High Street estate agents have broken through the £4 billion a year barrier in earnings from commission fees on house sales thanks to soaring property values while the nationwide average fee charged on selling home is £4,055 including VAT.
In areas with high property prices such as London the amount paid has almost topped an average £11,000. In Glasgow it is £2,164 while in Edinburgh where prices are double it is a typical £4326.
The figures follow the launch of Purplebricks’ new ad campaign to raise awareness of how much commission householders have been paying to traditional estate agents when moving home, and how they can avoid it.
Property expert and TV presenter Amanda Lamb who is backing the campaign, explains: “This campaign will open people’s eyes to commisery – the misery you feel when you’ve forked out thousands on commission and haven’t got anything more for your money.
“Research shows that 95% of people don’t realise exactly what they are paying in commission, until the bill hits* and this needs to change. It is virtual money because it isn’t paid up front and in some ways the amount is hidden until the last moment. Factoring in VAT is something people forget to do as well, so what starts as a low percentage on paper adds up into a considerable sum in commission paid.
“Purplebricks want people to feel smart, like the thousands of people who already instruct them to sell their home and avoid paying these expensive and unnecessary charges.”
The money pocketed by traditional agents has skyrocketed as house prices have risen. In the 12 months to September 2016 the total value of houses sold in Scotland, where the average property price is £143,131, was £8.704 billion.
Across the UK property sales amounted to £227 billion on which high street agents earned £4.089 billion, the equivalent of £4,055 per sale.
In 2015 the average commission earned from each sale was £3,761 while in 2014 it was £3,449 – as house prices have gone up, so has the amount of commission paid, up 15% in two years.
While the level of service is similar across the country, the amount earned by agents differs according to the local housing market.
Traditional agents’ charges can be as high as 2.5% but a typical fee is 1.8% (1.5% plus 20% VAT). Purplebricks believes in a fairer way to sell and charges a flat fixed rate of £849, or £1199 in London and surrounding areas for its estate agency service.
Michael Bruce, CEO, Purplebricks said: “People too often engage an estate agent without realising or thinking about whether there is a better alternative. The service they receive is the same whether the house is valued at £100k or £1m, therefore the fee paid for securing the sale should be the same.”