Real estate agency fees and other costs

AuthorConsumers, Health, Agriculture and Food Executive Agency (European Commission), Deloitte consortium, IPSOS, London Economics
Pages155-187
155
7. Real estate agency fees and other costs
An important study question refers to fees and other costs charged to consumers by real
estate agents and other professionals during real estate transactions. Chapter 7 addresses
this question by investigating:
Fees paid to real estate agents (Section 7.1);
Information provided about real estate agency fees (Section 7.2);
Other fees and charges for real estate transactions (Section 7.3); an d
Time spent by consumers dealing with real estate agents (Secti on 7.4).
Box 5: Summary of findings Real estate agency fees and other costs
The arrangements for real estate fee-paying vary widely across the countries i n
scope, but on average across the EU these fees are paid by the consumers. The most
common are the administrati ve fees as well as those related to the con tract. Buyers
paid on average over 3 % of the sale price, whereas tenants most frequently paid a
function of the monthly rent, with occasionally fees being paid as a lump-sum of over
6% of yearly fees for tenants, 9% for landlords.
Information on real estate agent fees and costs is not easily conveyed. A quarter of
surveyed consumers considered it rather di fficult to obtain informati on on the real
estate agent fees, and a further 14% found it very difficult to obtain. This is
remarkable i n light that for one in five of the respondents who hired a real estate
agent to find them a property to rent or buy the size of th e fees was relevant in the
decision of the selected real estate agent.
Other applicable fees for conveyancing transactions included legal advice, land
register, mortgages, stamp taxes and insurance. Hidden costs identified by
consumers covered VAT, bank fees, additional certificates or disbursements. In
rentals these included the deposit, a registration tax or a stamp tax.
Time elapsed between consumers and agents’ first contact and the actual transaction
taking place varied from one to three months for buying processes, but ranged
between one month for landlords, and up to two weeks for tenants.
156
7.1 Fees paid to real estate agents
This section refers to fees paid to real estate agents and is structured around the following
topics:
Party bearing the costs of fees;
The amount of fees paid to real estate agents;
The types of fees charged by the real estate agent.
Results are based on data collected through the input provided by national experts and the
consumer survey.
Party bearing the costs of fees
When considering the party bearing the costs of fees during the conveyancing process
(buyer/seller) or during the renting process (ten ant/landlord), across the EU, Norway and
Iceland, the following general scenarios are observed:
In some countries, it is usually the party who hired the real estate agent that bears
the cost of f ees (for example in Bulgaria, Croatia, Estonia, Hungary, Lit huania,
Sweden, Slovenia, Iceland);
In other countries, it is more usual that both parties share the fees (for example in
Austria, Greece, Italy);
In France, the party bearing the cost of fees is determined by the contract;
According to the study findings, in some countries the seller usually bears the cost
of fees (for example in Belgium, Cyprus, Denmark, Spain, Finland, Ireland,
Luxembourg, Malta, Portugal, Slovakia, the UK, Norway) while the b uyer usually
bears the costs in the Czech Republic, the Netherlands and Polan d;
The consumer survey shows that, across the EU28, 42% of consumers who had bought or
rented a property marketed by a real estate agent replied that all fees charged by the real
estate agent had been paid by them, and 31% answered that all fees had been paid by the
seller or landlord. The remaining 27% answered that both they and the seller or landlord
had been charged fees by the real estate agent of the seller or landlord. Figure 40 presents
the individual country results; the proporti on of consumers who had bought or rented a
property and paid fees to the real estate agent of the seller or landlord varied between
28% in Denmark and 92% in Bulgaria.
A similar question was also asked to landlords and sell ers: 39% reported having paid all
fees themselves, 30% had shared the fees with the buyer/tenant and 31% had not paid
fees (i.e. all fees were paid by the buyer/tenant).
157
Figure 40: Party in charge of paying the fees charged by the real estate agent of the
seller/landlord
Question: Q9. Who was in charge of paying the fees charged by the real estate agent of the seller/landlord?
Base: Respondents who bought/rented a property marketed by a real estate agent (EU28: n=7,102)
Source: Main Task 2 Consumer survey
Amount of fees paid to real estate agents178
This section presents an analysi s of the amount of fees paid to real estate agents both
during the conveyancing and the renting/letting process. When analysing the amount of
fees paid by consumers to the real estate agent, this study attempted to investigate
whether there exists a p ossible correlation between the amount of fees (expressed as a
percentage of the purchase price) borne by consumers and the spectrum of se rvices
provided by the real estate agent. This exercise was performed based on data collected
through the country fiches. In particular, the list of professionals involved in the different
steps of the conveyancing and the renting/letting process (as indicated in Section 3.1) was
considered.
Firstly, for the conveyancing process, the 13 countri es displaying a value of fees higher
than the 30-country average value were identified. This group of coun tries includes, the
Czech Republic, Denmark, Estonia, Finland, France, Germany, Hungary, Italy, Malta,
Portugal, Slovakia, Sloveni a, and Spain. In the majority of the 13 countries, it was noted
that the real estate agent does not generally provide services t hat go beyond the
usual range of services delivered by the professional. Even in Denmark and Finland,
where real estate agents provide additional services as compared to other countries due
to the Nordic tradition of conveyancing, a substantially higher average amount of fees
compared to other countries was not identified.
Similarly, no correlation could be established for the renting process. In this case, fees
generally correspond to 1-month rent across the countries in scope and only a few
exceptions (which are detailed in this section) were identified.
Overall, the data did not reveal a strong correlation between the amount of fees
paid by consumers to the r eal estate agent and the range of services offered by
the real estate professional (as outlined in Section 3.3.1). This holds true both for the
conveyancing and the renting/letting process.
When considering the di fferent types of fees, the most common type of fees charged by
the real estate agent of the seller or landlord were administrative fees (64%), followed by
fees for d rawing up the sale or lease agreement (45% ); the av erage amount for all fees
charged to the buyer or tenant by the real estate agent of the seller or landlord was equal
to €3,000 for buyers and €450 for tenants. It should be noted that consumers buying a
178 When considering the amount of fees paid by consumers to real estate agents, it is important to recall that
the scope of real estate agents’ activities differs across the countries in scope by the study.
38
58
35 29 33
58 57
42
28 37 42 34
47 42 43 42 46 42 35 25
49
28 31
15
32 24 25 21 17 18 14 18 20
54
31
51 55 48
21 20
33
44 35 29 37
23 27 26 27 20 22 28
33
9
22 17
32 815 14 13 16 11 14
24 18
911 14 16 19 21 23 25 28 28 29 29 30 31 32 32 33 36 36 42 42 50 52 53 60 61 61 67 68 72 72 39
62
20
0%
20%
40%
60%
80%
100%
BG
AT
RO
IT
EL
FR
DE
PL
SI
EU13
EE
HR
LV
EU28
EU15
CZ
ES
UK
SK
LT
LU
IE
NL
MT
CY
PT
BE
SE
HU
FI
DK
IS
NO
All fees paid by you You both paid fees All fees paid by seller/landlord Don't know (Iceland only)

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