Many homeowners want to know if the fees they pay to their real estate agent are reasonable and if real estate agents are not being overpaid for their services. 'My house was sold above the asking price within a few weeks and the real estate agent hardly had to do his best for it. Why do I have to pay him so much for that?' Mijnverkoopmakelaar.nl compared more than 100 broker quotes and shared the data with Makelaar in Amsterdam.
Brokerage fees run high quickly
The fee or brokerage commission that a broker charges his client is on average 1.38% of the sales price. With a transaction price of €350,000, that quickly yields a bill of €4,800. The amount will only increase as long as house prices continue to rise.
The highest brokerage rate the association encountered in the survey was 2.12%, the lowest 0.5%. Only a quarter of the offers involved a fixed fee, which ranged from €1,500 to a maximum of €7,000 for the sale of a home.
Be critical and negotiate
Because fees are free, real estate agents compete with each other on that point, and the amount of the brokerage fee is negotiable. Everyone can also ask critical questions about the level of start-up costs and agree on any bonus commission.
Realtor in Amsterdam therefore advises people who want to sell their home not to sign off on a sales order after the first conversation, but to first talk to two to three real estate agents and ask for no-obligation quotes.
Beware of bonus agreements
It is also common for a broker to propose a bonus commission if the property fetches more than previously estimated. Bonus arrangements of 10% of the additional revenue are common, often combined with a relatively low and therefore attractive-seeming base commission. As a result, the bill can be high.
An example: if, after a process of bidding and outbidding with other buyers, the eventual buyer is willing to pay €30,000 on top of the estimated sale proceeds of €320,000, the seller must remit €3,000 of that in bonus for his broker. That amount is in addition to the basic commission of €3,200 (in this example, 1% of the previously estimated price). This increases the final brokerage bill to €6,200, compared to €4,830 at a regular brokerage fee of 1.38%.
Realtor in Amsterdam therefore advises you to be critical of such bonus agreements and preferably ignore them. We don’t think they fit in an overheated housing market, where most homes for sale are selling almost effortlessly and prices keep rising. Sales figures of comparable homes in the neighborhood can be obtained by anyone from the Land Registry and provide guidance in estimating a realistic return on one’s home.
Especially in overheated regions and price ranges, the bidding process often starts after the first viewings. According to brokerage organization NVM, at the end of last year houses were sold on average within a month and in 42% of the cases it was above the asking price. There was not much to choose from; on average, buyers could choose from less than three homes for sale.
In addition to the brokerage fee, about 80% of brokers charge so-called start-up costs for measuring the property, taking photos, floor plans and a sales brochure up to placing the property on Funda.
These fees average €550 and must be paid shortly after the sale order is signed. In some cases, these costs are subsequently deducted from the brokerage fee. Extras such as advertisements and open house days always require additional payment.
- Look not only at the amount of the brokerage, but also whether there is a bonus arrangement if the house fetches more than was estimated. Also critically compare the start-up fees charged by different real estate agents.
- Find out exactly what the broker does for brokerage and start-up fees. This is by no means always clearly stated in the quotation. Ask for clarity on this in advance.
- Check that the final amount is listed including VAT. It should be, but is not always the case.