Estate Agents – Information for Sellers
There is no doubt that selling your property through an estate agent saves you time and hassle in the long run but getting your head around the various paperwork and terms can still cause significant stress.
The main pro to selling through an agent is that it offers you the ability to make the most of their expert knowledge and experience as well as their marketing skills. Estate agents make a full time job of selling property and therefore build up a wealth of knowledge of the buying and selling process that can prove to be priceless to you. They can help relieve you of the stress of marketing, conducting viewings and negotiating with potential buyers, as well as offering advice on conveyancing and financial matters.
The various contracts and terms involved when instructing an estate agent to act on your behalf can be a minefield. Here we aim to help you navigate your way through the small print and jargon.
The majority of agents will advise that they charge a percentage of the sale price as their commission. Remember – this figure does not generally include VAT, you will be expected to pay the final percentage with VAT on top so it is imperative that you take this into account when calculating the fee.
You do not automatically have to agree to the percentage, in fact we would highly recommend that you try to negotiate. You are the customer and the agent will want your business, so what is the harm in trying? Lowering the percentage, even marginally, could equate to a saving of thousands so it is worth it. Taking it a step further you may even want to consider negotiating a scale based on the sale price that they manage to get for the property or how quickly it sells (eg: 1% for reaching asking price, 1.25% if above asking price or if sold within a specified time frame etc).
There are a number of different types of contract and you need to ensure that you are aware of which you are signing up to.
- Sole Agency - By signing a sole agency contract you are giving the agent full responsibility of selling your property. Check the small print – if you were to find a buyer privately the terms will possibly state that you are still required to pay the commission.
- Joint Agency - A joint agency contract means that you are instructing two or more agents to sell the property and share the commission regardless of which agent makes the sale.
- Multiple Agency - As with the joint agency contracts you are saying that you are instructing more than one agent. However in this instance you are instructing them separately and therefore the commission will go to the agency that makes the sale. This type of contract will generally mean that you pay higher fees.
Other types you may come across, that do not come recommended, are:
- Sole Selling Rights – As per Sole Agency, however be aware that this contract means the agent would expect payment of their full commission if you found a buyer yourself.
- Ready, willing and able purchaser – This means that the agent will charge commission for finding you a buyer who has made a suitable offer, even if you decide not to sell to them.
Tie In Period
The majority of contracts will include a tie in period, tending to be anything between 4 – 12 weeks. On occasion people do find that they are unhappy with their chosen agent, resulting in them wanting to terminate the contract. Therefore, before signing the contract, check the terms of the tie in period to see what costs could be incurred if terminating before the end. Remember you can negotiate the length of the period so discuss this with the agent before signing anything.
Following on from the above potential additional fee for contract termination, check the contract for any other fees additional to the agreed commission rate. Some agents may try to charge an additional marketing fee.
You need to be aware of the term ‘continued liability’ and check the small print thoroughly for all details regarding this.
Simply put – You go on a sole agency contract with an estate agent but further down the line decide that you would like to change, or perhaps are unhappy with their service, so you follow the terms of the contract regarding a notice period and complete it as required. You then select a new agent and your house goes on the market with them. A while later you accept an offer and the sale goes through – brilliant! Until the first agent gets in touch and asks you for their commission that is….
An estate agent could argue that they ‘introduced’ the buyer before you cancelled the contract and went to another agent. Thus resulting in you potentially having to pay two lots of agent fees. Depending on the terms within the contract, your obligation to pay the original agent a finders’ fee could be months after you terminate the contract.
What it comes down to is how the agent defines an ‘introduction’. If they just walked into the agent’s office and got handed a brochure for example it would be extremely unfair to deem this as an introduction, similarly if the buyer happened to be on the original agents’ mailing list and received an email that included details of your property. However, the buyer may well have viewed your property, or had one arranged initially, through the first agent.
When changing agents we would recommend discussing the terms of your first contract with the new agent and explaining that you really do not expect to have to pay two ‘finder’s fees’. We would also recommend that you ask the original agent for a list of people that showed interest in, viewed or had made plans to view your house. You can then pass this information on to the new agent and discuss what will happen if someone on the list was to go on and purchase your property - It could be that the agents negotiate and agree to split the fee.
Hopefully this article has given you a few things to think about and look for, but the main things to take away from this are:
CHECK THE SMALL PRINT
QUESTION ANYTHING THAT YOU DO NOT UNDERSTAND
YOU ARE FREE TO NEGOTIATE/REQUEST AMENDMENTS TO THE CONTRACT TERMS
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