What to check before signing an estate agent contract

Selling your home is a stressful process, and being tied with the wrong estate agent is the last thing you need. Here is what to look out for before you sign the contract.

Couple signing estate agent contract

Related Articles:

Can I get out of an estate agent contract?

Should I use the estate agent's recommended solicitor?

Types of agency contract:

These will generally fall into the following main categories:

  • Sole selling rights: This is where you instruct one agent to handle the sale of your property. You will not b e able to instruct another estate agent during the period of the contract.
  • Sole agency: Similar to a sole selling rights contract insofar as you cannot instruct another estate agent. However, if you find your own buyer you won’t incur any commission fees.
  • Joint agency: This is where you sign up to two agents at the same time, with the agreement of both agencies. They may agree to share the commission from your sale regardless of which agent sells the property.
  • Multiple agency: This is where you instruct as many agencies as you like to market your home. Whichever agency ends up selling the property will earn the commission. Commissions are usually higher (typically around 2.5 – 3%) to offset the reduced likelihood of any individual securing the sale.

Whichever contract you choose, you need to read and understand what you are signing.

Don't take the agent’s commission at face value

In order to make the commission look a little more palatable, agents will often quote the VAT exclusive fee, instead of telling you the gross (inclusive of VAT) percentage i.e. what you actually end up paying.

You will need to check and factor in the VAT if applicable.

Can I negotiate the commission?

Absolutely, in fact the agent will be expecting it. Even what seems like a small drop in percentage could save you thousands.

One strategy would be to agree a ‘ratchet commission. This is where you incentivise the agent to get the best possible price for your property by offering a higher percentage commission if they achieve or exceed a specified amount.

For example:

  • Sale price up to £250,000 – commission agreed at 1%
  • Sale price at or above £250,000 – commission agreed at 1.5%

The key to this strategy is making sure that the higher price is set at a level where the agent really has to work hard to achieve it.

Remember that the agent wants your business, so do not be shy about negotiating.

Do some agents work on a fixed fee?

Some agents may be prepared to handle the sale for a fixed fee rather than a percentage commission.

Online agents like Purple Bricks and Yopa offer will work of a percentage commission or a fixed fee. You can even choose whether to pay a higher amount to include no sale no fee, or a lesser amount where you pay whether the house is sold.

A fixed fee arrangement means that you will know the exact amount the estate agent will charge you once you sell your house. However there is no incentive to get the highest possible price.

Again, you should be able to negotiate. Again, to incentivise the agent, you could agree to a higher fixed fee if your home gets a higher price.

Remember to check whether or not the fixed rate includes VAT.

See also: Should I use an online estate agent - what are the risks?

How long are you tied in to the contract for?

If the estate agent stipulates a tie-in period (most do), this can vary from four weeks to three months or even longer.

Naturally the agent will want to tie you in for as long as possible. The contract period itself should be negotiable however.

Make sure you are conformable with this period as you will not be able to change agents during the contract (assuming you have a sole selling or sole agency agreement).

You need to be sure that there are no unreasonably punitive clauses if you decide to take your property off the market.

Some contracts are rolling where you will need to serve notice to get out of the contract. Check how much notice you need to give.

If you are not happy, negotiate until you are or go elsewhere.

Are there any hidden fees?

Marketing costs should be included in the commission fee, but it is worth making sure. Look closely for any penalties incurred for terminating the contract early, and if you are not happy with any extras you find, negotiate this with the agent.

What about the EPC?

To market a property for sale in England or Wales, you will need to have applied for an EPC before any marketing of the property can take place.

EPC’s typically cost around £100. Many agents will throw these in with the floorplan at no cost, however you may be expected to pay for this if you take your property off the market.

See also: Do I have to have an EPC before selling my home?

Watch out for'future liability'?

This can occur when you have left your original estate agent and signed up with another agent who goes on to sell your house, only for the original agent to claim that they were the ones who introduced the buyer to you.

The original agent can then demand commission, leaving you with two agency bills instead of one. This can happen weeks or months after your original contract ended.

If there is a future liability clause in your contract, ask for it to be removed.

Other red flags

  • Ready, willing and able purchaser: This clause in a contract means you will have to pay the agent for finding you a buyer, even if you cannot go through with the sale for some reason. Most experts would advise against this.
  • Handwritten changes on the contract: This can be a way of bolting on hidden fees or penalties for terminating the contract.
  • Being signed up to in-house services: This could be provision of your energy performance certificate, or using the agent’s preferred conveyancer. The latter may not be your best option.
  • Professional photos: Good photos of your property should be included in the commission, so being expected to pay extra should not be necessary.
  • Floorplan – The floorplan should also be included and is carried out at the same time as the photos
  • For sale sign – usually found nailed to the from =t wall these should be included. The agent should certainly not charge for this – it is free advertising for them and they would rather you have one than not.

Always remember that, until you sign, you are free to negotiate, or simply go elsewhere.

Gaynor Haliday, Legal researcher

About the author

Gaynor Haliday is an experienced legal researcher and published author. She has had numerous articles published in the press and is a legal industry commentator.

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