How do I choose an estate agent to sell my home - Part One
An introduction to things you should consider when choosing an agent to sell your home.
The Contract
The Contract that you sign could well be the most important factor in your choice of estate agent and yet, very few people realise how important until they are unhappy with their agent.
Have you noticed how estate agents generally, don’t reveal their Contracts publicly for scrutiny before you sign?
Let’s take a look at Contracts. Here’s what The Property Ombudsman has to say in their Code of Practice for Residential Estate Agents about signing them.
“You must give your client written confirmation of their instruction for you to act in the buying or selling of property on their behalf. You must by law give the client written details of your Terms of Business including your fees and charges before they are committed or have any liability towards you. You must sign and date your Terms of Business before they are given to your client. The client must be given sufficient time to read them before signing and agreeing to instruct you. The client should be given a copy, signed by both parties to retain.”
Here’s what they say about Fair Contracts.
“Your Terms of Business and your contract must be consistent with the provisions of Practice and comply with Part 2 of the Consumer Rights Act 2015.”
“Your Terms of Business should be written in plain and intelligible language. In particular you must use in your Terms of Business the specific definitions in the Estate Agents (Provision of Information) Regulations 1991. You must take particular care for example in defining and distinguishing between ‘sole agency’ and ‘sole selling rights’; and in describing a ‘ready, willing and able’ contract. You must use the relevant definitions in full, display them prominently and clearly explain the implications of the terms to your client, especially where multiple definitions are used”.
So what is a Sole Agency Agreement?
This is where the seller signs a Contract with one agent only to act in the disposal of their land or property, usually for a specified period. This means they are the only agent with the right to sell your home. If you then sell to a friend or family member who has not booked a viewing through the agent and you can prove you introduced the buyer, then you usually do not have to pay the agent. The agent may try to argue if you have a for sale board, that the buyer would not have known the property was for sale without it or that they had seen it advertised on Rightmove through the agent. So if you think you might want to sell to a friend or family member, tell the agent you are going to sell through before you sign your contract and/or provide the agent with the name of the person you may sell to so that they are excluded from the contract, should they come forward with an offer.
What are Sole Selling Rights?
Where an estate agent has the exclusive right to sell a property, often for a limited period.
The agent will be paid no matter who introduces the buyer, whether this is by another agent, the seller themselves or another. Check the wording. If you subsequently decided to part-exchange your property for a new build, you might still end up paying the agent you signed the contract with.
What is a Joint Sole Agency Contract?
Where you instruct two agents to work jointly on your behalf on a collaborative basis. They agree how the commission will be split or whether it is a ‘winner takes all’ agreement.
This would have to be done at the outset of a Contract with agreement from both Agencies. Fees are usually higher for these contracts. They are not really needed now we have the internet but came about in the days prior to it’s introduction and when agents covered different areas so they acted in collaboration with each other.
What is a Multi-Agency Contract?
Where a seller appoints more than one agency to act, with each agency acting independently of the others. Commission is paid to the agent who introduces a buyer. You can appoint as many agents as you like, although not many agents are willing to work on this basis as a lot of time, money and energy will be wasted by those that subsequently do not receive payment.
What sellers have to bear in mind here is that if you have already signed a Sole Agency Agreement, you can’t then just sign more as you would be in breach of your Sole Agency Agreement and liable to end up paying more than one fee. Again, you would need to have Agents agree to this type of Contract and again the fee is usually higher.
Offers for the property tend to come in at a lower level too as buyers perceive the seller as being desperate to sell.
Town and Country Planning Act
Stipulates that only one board is permissible to advertise a property for sale and if there is more than one agent acting, only the first board is the legally erected one.
This means that if you are selling with more than one agent you should only have one board erected and you may subsequently be requested to remove any further boards.
This was introduced to limit the numbers of boards on streets and why some areas have banned boards altogether.
What is a Ready, Willing and Able Purchaser?
A buyer who is able to exchange unconditional contracts for the purchase of a property.
This means if you put your house up for sale and the agent gets you a buyer and you decide not to move – for any reason – they will still charge their fee.
What does the Property Ombudsman have to say about Fees and Charges?
All fees and additional costs must be included in the estate agents Terms of Business. They must be fully explained, clearly and unambiguously stated in writing, along with an explanation of the specific circumstances in which those fees and costs will become due, before the client is committed to the contract.
Where the fee is a percentage, it must be quoted inclusive of VAT. The example amount should be based on the asking price. However, the estate agent must make it clear that, should the selling price be higher or lower than the asking price, your commission fee will be correspondingly higher or lower.
Where the estate agent charges a fixed fee they must state the actual amount payable inclusive of VAT in the contract and ensure that the client understands that the fee will not vary whatever the sale price.
Except for any previously agreed additional costs, commission fees will become due on exchange of contracts.
However, in reality, what happens is, the agent is usually paid by the sellers conveyancer/solicitor on completion of the sale when they are in receipt of the buyers monies.
What does the Property Ombudsman have to say about the Duration and Termination of Contracts?
Estate Agents Terms of Business must clearly state the minimum duration of their instruction, and how it can be terminated by either party. When a contract is signed by a client during a visit by the agent to their home, at their place of work, away from agents premises or online, then they must be given a right to cancel that contract within 14 calendar days after the day of signing. The client should be given a ‘Notice of Right to Cancel’. Where the client wishes the contract to begin before the end of the 14 day cancellation period the agent must obtain confirmation of that request in writing. Where the agent intends to recover costs incurred during this cancellation period, the agent must obtain the client’s agreement in writing to those specific costs before work commences.
If an agent intends to charge a client a fee or recover costs for terminating an instruction they must make this clear in their Terms of Business and specify the amount of the fee and additional costs and their purpose. Fees and costs should reasonably reflect the activity undertaken and not include a penalty charge.
This includes online agencies that do not have offices open to the public and work from home.
What other Business Terms are of interest?
Minimum Agency Periods or Tie-in periods
Some estate agents do not have a minimum agency period and others have 6, 8, 12, 16 and 20 weeks. I have even come across a 26 week period. Yes! 6 months.
Anything up to 12 weeks can be considered reasonable, however, if you are not happy with your agent, or they are not performing how you expected, you will want to terminate their contract.
If an agent is as good as they say they are, then they have no need to tie you into a long Contract. The length of that tie-in gives you a good indicator into how successful they really are.
Before signing, agree your tie-in period if you are not happy with what is being offered and make sure that if there is a withdrawal fee that you know how much it is and what is being covered.
Withdrawal Fees
This is a fee that will be charged irrespective of whether you agree the sale of your property or not and decide to take it off the market.
These clauses are sometimes used when you have agreed to some additional services like professional photography or an Energy Performance Certificate where there have been external charges incurred. You should be made aware of what those charges are in advance of signing the contract.
No Sale – No Fee Agreements
These clauses in agreements mean that if you change your mind about selling for any reason, you won’t have a bill to pay.
Additional Charges
Check for any additional charges and make sure you are happy with them.
Agents sometimes charge for photography and this can also be an up-front cost along with Energy Performance Certificates, videos, floorplans etc.
You can find a copy of our Contract on our website at www.jpharll/co.uk