When looking for properties online or with agents, you will see them advertised as estate agent fees included, sometimes stating that the fees are to be paid for by the buyer, sometimes the seller. Whilst at the end of the day, the price of what you will pay to own the property doesn’t change, who is responsible for paying the estate agent can alter how much mortgage you can borrow so it is important to be aware of this. It’s how it’s broken down in the purchase contract in accordance with the agents mandate to sell the property that counts and this is where the bank actually look to see what the property price is. More and more lenders will only lend on the property purchase price so if the estate agent fees are to be paid for by the buyer on top of the property price then this will mean you can borrow less mortgage.
Both examples below are based on a property advertised for 100 000 Euros
estate agent fees included.
Example 1: Estate agent fees at the charge of the buyer
Property purchase price: 95 000 Euros
Estate agent fees: 5 000 Euros
Mortgage: 85% of 95 000 Euros = 80750 Euros
you would need to find the estate agent fees, so 5 000 Euros in addition to the purchase costs and your deposit
Example 2: Estate agent fees at the charge of the seller
Property purchase price: 100 000 Euros
Mortgage: 85% of 100 000 Euros = 85 000 Euros
You can see that the second example allows you to borrow more, thus limiting the amount you have to put down.
At the end of the day the 5 000 Euros estate agent fees are still paid by you in a way as the price is the same, 100 000 Euros, but it’s the way that the banks look at the specifics of the contracts that impacts the borrowing.
Do ask the agent before you visit a property otherwise you will need to review your price bracket to allow some extra left over to pay the estate agent fees.