A Guide to Estate Agents’ Contracts
A Guide to Estate Agents’ Contracts
Top Tips on Estate Agents’ Contracts
Estate Agents’ Contracts
Read the contract carefully. (Don’t treat it like you do a bunch of T’s & C’s on Amazon)! Does it include everything you thought you were getting?
If it’s not mentioned, assume it’s not included!
Different types of contract
Make sure you have the correct one.
Sole selling rights
If your contract gives the agent “sole selling rights” then think carefully before signing. The agent in the contract is the only one allowed to sell your home during the period stipulated. You will have to pay that estate agent, even if you find your own buyer. Avoid this type of contract unless it is for a short limited period and you are getting a very good deal regarding fees.
Sole agency contract
This is the same as sole selling rights but if you find your own buyer, you won’t have to pay anything to the estate agent.
Multi agency contract
You can use as many agents as you like and only pay commission to the one who sells your property. In theory, the more agents you have working for you, the more potential buyers you will reach and the higher the offers you may get – but you will pay higher fees. Using this approach depends on what type of property you have, and the state of the market. See our separate article how many agents
Ready, willing and able purchaser
Do not undertake this type of agreement. It commits you to paying the agent just for finding you a “ready, willing and able purchaser”, rather than for actually selling your property. This would mean you still have to pay the agent his fee, even if the sale falls through because you have had to pull out – such as if you lost your job. You should only use an agent who expects a fee as a result of exchange of contracts.
Contracts...just what should they include?
The estate agent is required by law to state what is included in the fee. For instance...
Marketing you property on internet portals until it sells. There are several portals, Rightmove and Zoopla are the two biggest. Which ones will he be using?
Preparing the property details, including the photos. (Photos may include an aerial drone shot, or will this be an extra)?
A floor plan.
A for sale board. (if you don’t mind having one)
An energy performance certificate (this is mandatory but is he paying for it)?
Newspaper advertising (for how long)?
The potential fee should be expressed as an amount, based on the asking price. The actual fee will be calculated on the selling price, so there may be a difference of course. Make sure you know if VAT is included or is it going to be added on!
If all you have is the % commission they will charge, work out the potential amount so you have a very good idea of just what you are going to be charged.
Contract Time Limits (and penalties)
Check the contract for financial penalties for ending the contract early (withdrawal fees). Ask for these to be removed.
Check your sole agency tie in period (usually 12 weeks) and required notice period (usually 4 weeks but try and push him for just 2 weeks). Make sure your contract gives you the flexibility to terminate, using the notice period, without incurring a penalty.
Make sure the agreement does have a time limit. If the contract is open-ended and you part company with your agent for whatever reason, he could claim commission when your home is eventually sold by another agent, if he believes he first introduced you to the buyer. Be very clear that there will be no continuing liability once your term has expired.
When do you pay the agent?
Unless you made the mistake of signing a “ready, willing and able purchaser” contract with the estate agent, then fees normally become due when contracts are exchanged and you have been paid.
Insist on a “No Sale No Fee” contract and never pay your estate agent anything before you have the money in the bank,
Ignore contracts at your peril. Appointing a sole agent and then selling via another agent will mean you will incur to two sets of fees.
Don’t allow photos to be taken or particulars to be created until you have signed the contract. Keep your copy safe!
Make sure you have not been signed up to any in-house services such as conveyancing.
Don’t be afraid to ask questions or even seek independent advice about anything that is unclear. Review and if necessary, have the contract amended before you sign it.
Remember that they want your business and this is just a business arrangement. Challenge anything you don’t like and never pay more than you need to.
A Guide To The Process of Buying/Selling a Home/House/Flat