Should I use multiple agents to sell my home? The pros and cons
You can sell your home through a sole, joint or multi-agent agreement. What are the cost implications of each and which option will lead to a faster sale?
Types of estate agency agreement:
A sole agency agreement is when you enter into an exclusive contract with a single estate agent to sell your home. During the contract period, you will be tied in with your chosen agent.
Contract periods typically vary between two and five months. Three months is the standard default marketing period, but you can negotiate. There may also be a notice period.
Estate agents typically charge a commission of between 1% and 2% (plus VAT) of the final selling price for sole-agency.
With a multiple-agency agreement (also known as multi-agency), you can use as many agents as you like to market your property at the same time. The contract period and commission level could differ between agents. You could even enter into contracts with additional agents at any stage.
Fees are only paid to the agent that ultimately finds the buyer.
Fees for multiple-agency are typically 2.5% to 3.5% (plus VAT). The higher fee is justified on the basis that any single agent has a reduced chance of clinching the deal.
Joint sole agency agreement
Something of a hybrid between sole and multi-agency, joint-sole-agency is when two or more agents agree to market your property simultaneously. The agents and split the commission in the event of a sale, regardless of which agent ultimately found the buyer.
Fees for joint-sole-agency are typically 2% to 2.5% (plus VAT).
As with any legal contract, you should read the terms and conditions carefully. Estate agent sharp practice is not as common as some might suggest. However, it is still possible to be caught out by certain potential clauses which are usually negotiable if you pick them up:
Sole selling rights
You won’t usually have to pay any commission to the agent if you find your own buyer during the contract period.
However, some sole agency agreements include a ‘sole selling rights’ clause. Under this clause, you would have to pay the agent’s commission if you accept an offer from any buyer, whether the agent introduced the buyer or not.
On the face of it, this clause may seem unfair. Estate agents might argue that they will have still done all the work and should be entitled to their fee. Some sole selling rights clauses allow for a 50% fee to be paid to the agent if you find your own buyer.
You can usually negotiate this clause away if you raise it with the agent.
Although uncommon, some agents include a 'future liability' clause that could result in you paying commission twice.
Under this clause, if you terminate your agreement with agent A and subsequently sell through agent B, agent A may claim that they originally introduced the buyer and are entitled to their fee. In this scenario, you might end up paying commission to both agent A and agent B.
The word ‘introduced’ is fuzzy in legal terms. Agent A might claim they introduced the buyer if they did no more than provide the prospective purchaser with a set of particulars.
This clause could apply even if the agreed marketing period has elapsed with agent A.
Ready, willing and able
No sale, no fee is the industry standard in estate agency. With most no sale no fee agreements, if your sale does not complete, you don't pay any agent fees.
However, some no sale no fee agreements include a ‘ready, willing and able’ clause. Under this clause, you would have to pay the agents fee, or a percentage of it, if they introduce a buyer who is ready willing and able to proceed, even if you decide to withdraw from the sale.
Which type of agreement is better?
With multiple-agency, you will, on average, end up paying 1.5% plus VAT more in fees than you would with a sole-agency agreement. On a property sold for £300,000, this equates to an extra £5,400 at a time of a lot of other expense.
Advocates of multi-agency argue that this additional cost is justified for the following reasons:
Your property will be seen by more buyers
Whichever agent you choose, your property will end up being advertised on the major property portals, such as Rightmove, Zoopla and OnTheMarket. Most buyers start their property search on the portals.
Proponents of multiple-agency point out that agents will have their own databases of potential buyers. They argue that agents will be calling their contacts before the particulars are even printed. Agents may well waste no time in calling their applicants, but in reality, these applicants are usually registered with all agents in the area.
Some agents are better at marketing
The standard of marketing between agents varies considerably. Some agents upload scores of high definition images, virtual house tours and detailed floor plans to the portals. Others provide fewer photos of lower quality and floor plans without total square footage.
If you choose multiple agents, there is a better chance that one of them will present your property to a higher standard.
However, you can easily check how a potential sole-agent presents a property before you instruct.
Competition leads to higher offers
The theory has it that multiple agents locked in competition with each other will extract higher offers from buyers.
In a sellers' market, multiple agents can play buyers off against each other - but so can a sole agent. If a property is particularly sought after, a sole agent can use various techniques, such as sealed bids and open houses, to drive up demand.
In a buyers' market, having multiple agents fighting over a seller can be off-putting.
So how many estate agents should I use?
A cursory glance at the portals reveals that properties are often still listed with multiple agents. Developers and investors, in particular, like to sell through multiple agents. Do they know something that private sellers don't?
The main reason that some property professionals use multiple agents is that they are regular clients and have access to preferential rates. As ongoing customers, they can take advantage of the (debatable) benefits of multi-agency without the cost.
Potential buyers can find it both irritating and confusing when they see the same property advertised with many agents.
Perhaps one of the biggest negatives to multiple-agency is it looks desperate - especially when there are numerous for sale boards outside the property.
If a buyer senses you are desperate (or perhaps that there is something wrong with the property) they will be inclined to make a lower offer.
Most sellers would ultimately be better off instructing an agent on a sole-agency basis.
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