Buying & Selling Your Home: Part two

We are in a buyer's market, with more homes on sale than people wanting to buy. So sellers in most parts of the country are having to settle for offers of between 5 per cent and 10 per cent below asking prices, and having to wait longer than usual to find a buyer because of the wider choice available.

Aside from the delay and anxiety, sellers also have to pay heavily for the services of solicitors and, in particular, estate agents.

Research by the University of Greenwich and the Woolwich building society shows a home priced at £200,000 costs an average of £3,360 to sell; if the property is worth £500,000 the cost soars to £7,481; and if it is £1m the seller pays £13,374.

Estate agents' fees form more than 80 per cent of these charges, so the biggest scope for saving money lies with avoiding an agent completely or bargaining hard to reduce their commission.

Unlike surveyors, lawyers or any other profession involved in property transactions, agents' fee are unrelated to the actual costs or to the amount of work involved in a sale.

The latest research by property websites suggest 62 per cent of house-buyers now start the search for a home online. In response to that, many sellers now use low-cost property websites - some charging under £100 - that allow them to post detailed descriptions of homes on sale, numerous photographs, and e-mail forms for setting up viewings.

There are disadvantages to this direct selling: you have to handle your own viewings and bargain directly with a buyer without the help of an agent. You should also ensure your chosen website is built to show up on internet search engines such as Google, to maximise likely viewers. But many sellers who try this route are ecstatic about its simplicity and virtues - and its savings.

If you use a traditional estate agent, the advice from the Consumers' Association is to bargain hard to reduce fees, and play one agent against another to get the best deal.

Whichever route you choose, it is all change in a year's time. From January 2007 sellers must provide a Home Information Pack before putting their property on sale. It will contain documents which until now have been commissioned by buyers - for example the survey, local council "search" information about nearby building work, and legal deeds.

Most agents oppose the packs, claiming the average £500 cost will deter casual sellers, and suggesting that the time it takes to compile them will slow the market.

But the Government says a third of sales now fall through after sellers have accepted offers because buyers find out about problems and pull out. By getting sellers to create these reports up front, problems can be remedied sooner, making the eventual sale quicker for both parties.

CHOOSING AN AGENT

Before selecting an estate agent, you should get valuations and advice from at least four agents.

* Scrutinise similar homes on sale nearby to ensure an agent does not over-value your property.

* Check what neighbours paid (on www.mouseprice.com or similar sites).

* Ensure agents do (or do not) accompany viewings, whichever you prefer.

* Ask agents how long they took to sell similar homes.

* Request details of recent clients and ask them how agents performed.

* Check that there are no extra fees for advertising or website promotion.

* Reject "tie-in" contracts that forbid you dropping an agent or switching.

HIGH FEES AND LOW-COST ALTERNATIVES

* For sole agents (where only one has exclusive selling rights) fees are usually 1.5 per cent to 2 per cent.

* For joint agency (where two have shared selling rights) you pay 2-3 per cent.

* In rare cases of multiple (three or more) agents the fee is 2.5-4 per cent.

* Some agents routinely expect sellers to pay one-off fees for ads, glossy brochures or promotions.

* Online agencies offer a cheap alternative, charging £49 to £400 to advertise a home directly on a website. If you are willing to handle some aspects of the sale yourself there are vast savings to be made if you use the likes of www.propertybroker.co.uk, www.houseladder.co.uk, www.propertyforme.co.uk and www.homesonsale.co.uk.

* There are also specialist websites, such as www.periodproperty.co.uk.

AGENTS WITH STANDARDS

Almost anyone can set up as an agent irrespective of experience or qualifications, so you should choose one of the 35 per cent in the voluntary Ombudsman for Estate Agents ( www.oea.co.uk for members). It offers compensation of up to £50,000 for poor service. Agents in the Royal Institution of Chartered Surveyors ( www.rics.org.uk) will have had solid training. About 10,000 are in the National Association of Estate Agents ( www.naea.co.uk) which wants more power to licence and regulate agents but currently has only a complaints system.

HOW SCOTLAND DOES IT

In Scotland, solicitors sell homes as well as handling conveyancing - they charge estate agents' fees, too - so the same rules apply for selection and negotiation on costs. However, sale prices are advertised as either being "fixed" or "offers over". Fixed-price sellers will accept the first offer for that price or something near it, as elsewhere in the UK. But "offers over" means the price quoted is the lowest the seller will accept - in reality, sellers and agents of these properties hope they will attract "blind" bidding from competing buyers, or even a "pre-emptive bid" up to 30 per cent over the asking price which may tempt the seller to reject all other offers at an early stage.

As in England and Wales, reform is in the air, with attempts to introduce single surveys to prevent wasteful duplication by rival buyers.

Conventional agents or the web? A tale of two sales

Neil Murdoch, a carer for adults with learning difficulties, shopped around with four estate agents before putting his three-bedroom, four-storey period townhouse in Conwy, North Wales, on sale for £229,950. He based his final choice of two agents on their valuations and marketing strategies.

"I visited their offices and studied brochures and websites. They each gave similar valuations but because the internet is so important for selling I chose one agent, Carter Jonas, which advertises on www.primelocation.com, and another, Beresford Adams, which advertises on www.rightmove.co.uk," says Murdoch.

Mortgage broker Arabella Milne sold her home in Streatham, south London, for £363,000 privately via www.propertybroker.co.uk. Her total cost was just £175, saving £7,500 in traditional estate agency fees.

"I was an estate agent myself so I was aware of what a sale could cost. It took from December to May to find a buyer on the internet but by then there were three rival bidders and the house was sold for £8,000 above the asking price," she says.

Complaints?

* Poor service from estate agents can be reported to the Trading Standards office ( www.tradingstandards.gov.uk; www.detini.gov.uk).

* Complaints about conveyancing solicitors should be sent to the Office for the Supervision of Solicitors, Victoria Court, 8 Dormer Place, Leamington Spa, CV32 5AE.

* The Office of Fair Trading ( www.oft.gov.uk) has limited powers to probe estate agents who may have broken the few laws governing the industry.