Can I get out of an estate agent contract?
What is the process if you want to change estate agents or you decide not to sell? Are there any risks or penalty charges?
The main types of agency agreement:
- Sole selling rights: You are obliged to pay agency fees, even if you find your own buyer. You are not allowed to instruct a different estate agent during the term of the agreement.
- Sole agency: You may not instruct another estate agent, but you can find your own buyer without incurring commission fees.
- Joint agency: This is where you sign an agreement with two agents at the same time, with the agreement of both agencies. The agents may agree to share the commission from your sale regardless of which agent actually finds the buyer.
- Multiple agency: A multiple agency agreement allows you to list your property with multiple agencies at the same time. The agent that actually finds the buyer will earn the commission. The commission will be higher than with other types of agreement.
Agency contracts vary
The ease with which you can get out of an estate agent contract will depend entirely on the small print.
Under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, estate agents are legally required to include a 14-day cooling-off period. After the 14 days expire, contacts will typically;y impose various fees if you pull out of the agreement.
So, how might you be penalised in the following scenarios?
I no longer want to sell
Usually, you will not be charged an agency fee if you decide not to sell and you want to take your home off the market. However, with some agreements, you may have to pay the agent's advertising and marketing costs.
You may also be charged a commission if your estate agent had introduced you to a buyer who subsequently decides they want to buy your property but are unable to because you have taken it off the market. The buyer’s offer would have to have been made within the original contract period.
I want to change estate agents
If you lose faith in your estate agent and want to try another one, you may face cancellation fees or marketing costs.
Another consideration will be the exclusivity clause if you have instructed the agent on a sole-agency basis. Although sole-selling rights agreements are usually entered into for a lower commission than multiple-agency agreements, you are not allowed to appoint another agent during the contract period.
Were you to instruct a different agent before the original contract period has expired, you would be expected to pay the original agent a commission in the event of a sale. You would also have to pay the new agent a commission – thus doubling the fees.
If you believe that your current agent is not performing then you should bring this to their attention in writing. If the agent still fails to hold up their end of the agreement, there may be grounds to get out of the contract. However, you should seek legal advise first.
I have found a buyer myself
Depending on the type of agreement you have signed, if there is an exclusivity clause you will probably still have to pay a commission to the agent.
If you can demonstrate that your buyer was not introduced to you by your agent, you might not have to pay a commission, but this will depend on the terms of your agreement.
What about online agents?
The internet has spawned various new estate agency offerings. Some are straight forward advertising portals, others offer most of the traditional high street services, albeit from a central location.
Many online agents do not work on a no sale no fee basis. Online agency fees are typically lower than high street agency fees, but you may have to pay these fees upfront. Some online agents have started offering no sale, no fee options.
With the advent of new model estate agencies, contracts are becoming increasingly diverse.
Read the agreement carefully before you sign
This is key to avoiding any nasty surprises, should you decide you want to get out of the agreement with your estate agent.
Ask the agent the following questions before signing anything:
- Is the contract an open-ended agreement?
- Is there a period of time following the end of your contract in which you may still have to pay a fee for selling to a buyer the agent introduced you to?
- Are there any extra fees that are not included in the commission?
- What is the penalty for ending the contract early?
- Is there an exclusivity clause?
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