What to Check Before Signing an Estate Agent Contract

Being locked into a contract with the wrong agent could mean hidden costs, lower offers and poor sale prospects. Asking a few key questions can help identify the best estate agent for your move, help you find a buyer sooner and get the best asking price:

Talking to the estate agent

1. What will you charge?

High street estate agents usually charge a percentage fee (commission) based on the property's selling price.

Fees can vary between 0.75% and 3.5%, depending on the contract type. In England and Wales, the average high street agency fee is approximately 1.2%+ VAT for a sole agency agreement on a no sale, no fee basis.

Once the agent has quoted a commission - confirm whether VAT is included in the figure.

As a general rule, avoid any high street estate agents that ask you to pay fees upfront. Standard practice is no sale, no fee.

Online agents tend to work on a lower-cost model, but the fees are usually payable upfront. You could save money using an online agent but if your property doesn’t sell, you could end up paying agency fees regardless.

Can I negotiate the commission?

Absolutely - the agent will be expecting it. Even a small reduction in commission percentage could save you thousands.

One strategy might be to agree to 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.

Will the agent 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 for 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?

There are various types of agency agreement:

Each type of contract has its pros and cons. The main types of estate agency contract are:

Sole-agency

The most commonly entered into an agency agreement, sole-agency means you won’t have to pay the estate agent unless they find a buyer and the sale completes.

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.

Sole-selling rights

This is a condition of a sole-agency agreement whereby you still pay the agent’s commission if you find your own buyer.

Multi-agency

This involves using multiple agents but only paying commission to the one who sells your home. This method may reach more potential buyers but incurs higher fees.

See also:

Should I use multiple agents to sell my home? The pros and cons

2. How long will I be tied into the contract?

The length of 'tie-in periods' varies between estate agents. As a general rule, you should not be tied in for more than 12 weeks.

You should also check your contract to ensure there are no early withdrawal fees. This means if you experience problems with your estate agent, you'll be able to end your contract without incurring penalties.

3. Will I have to pay anything if I pull out?

Some contracts include a 'future liability' clause which could result in two sets of fees.

Under a future liability clause if, for example, you end your contract with agent A, and instead sell through agent B, agent A may claim that they're entitled to their commission because they introduced the buyer.

To identify whether this clause forms part of the agreement, check how your contract defines an 'introduction’. Ideally, you should not have to accept this clause.

4. Will there be any additional costs?

By law, the estate agent should tell you exactly what is included in their fees. For sale boards, professional photos, floorplans and accompanied viewings, for example, should all be included, but it pays to check.

Most properties will require an Energy Performance Certificate (EPC) before they can be put on the market.

Some agents will charge extra for the EPC - others will throw one in for free. Ask the estate agent how much they charge to provide an EPC. It may be cheaper to apply for one yourself.

(At the time of writing EPC’s are readily available through national online providers for £40-50.)

Read more:

Does my home need an EPC before it can be sold?

5. How will we communicate?

Selling your home can be stressful, so you'll want an agent that will be available to answer your queries.

Ask the prospective agent if they prefer communicating via email or phone? Do they have strict office hours or can they be contacted outside of the normal 9-5?

Navigating the sale of a home through to completion is all about communication. Poor communication is a major cause of stress and delays. It can even lead to a sale falling through. The agent will broker communication between you and potential buyers until you accept an offer.

Once you accept an offer, the agent will be a linchpin between you, your solicitor, the buyer, the lender and any number of other parties that must be kept updated in the run-up to the exchange of contracts.

Gauging the agent’s approach to communication upfront is a good predictor of how they will communicate throughout the process.

If problems with your agent do occur, there are ways in which you can resolve disputes if the agent is a member of a grievance body, such as ‘The Property Ombudsman’.

Pursuing a complaint will be time-consuming, however, and results are not guaranteed. It would be preferable to ensure you have chosen the right agent in the first place.

6. Where will you advertise my home?

Almost all property searches begin on online property portals. Your estate agent should list your home on all the major property sites, such as Rightmove, Zoopla and OnTheMarket.

Your estate agent should show that they have relevant local knowledge to market your property in the most effective way for your area. Don't be afraid to ask your agent what they think is the best way to market your home.

7. How long will the process take?

The estate agent can't give you a definite answer to this question. However, they should be able to provide an estimate based on how long it takes to sell similar properties in the area. Ask to see specific examples of recently sold comparable properties.

You might also want to ask how often they achieve their sellers' asking price. If they rarely achieve the asking price, maybe you should take their valuation of your home with a pinch of salt? A reputable estate agent should be willing to share this information with you.

Red flags to watch out for:

  • Ready, willing and able clause: This clause 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 for in-house services: This could be the provision of your EPC 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, you should not have to pay extra.
  • Floorplan – The floorplan service 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.

Conclusion

Your relationship with your estate agent will last many months. You are working towards the same ends and your interests should be aligned.

It is critical that you both like and trust your agent throughout the process. Don’t be scared to ask questions before you instruct, as the agent you ultimately choose to go with could make or break your sale.

Related Articles:

Can I get out of an estate agent contract?

Should I use the estate agent's recommended solicitor?

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Gaynor Haliday, Legal researcher

Author:
Gaynor Haliday, Legal researcher