Avoiding the Estate Agents fee if you sell privately
FSBO.org exists to promote the concept and growing acceptance of Private Property Sales in the UK. We try to publish up-to-date information to the private individual considering the private sale route. We would ALWAYS advise considering a Private sale unless there are strong arguments otherwise.
FSBO has never been ‘anti-Agent’ but rather has questioned their adherence to a percentage fee which is now out of all proportion to the service provided simply because of house price inflation. Others have not been so accommodating and are appalled by the ’sharp’ practices of some agents.
As reported previously, the matter of Estate Agents asking for a commission to be paid either after they have ceased to market the property or a sale made by another party during their period of marketing continues to rumble on through the courts with no real resolution. The recent Foxtons case (see entry last month) case held out some hope for the public but not surprisingly the Agents are fighting back to try to get a fee even if they were uninvolved in the actual sale. The NAEA themselves have commented that “it simply needs a change to the small print”.
The NAEA has previously urged members to return to the ’sole seller’ and ‘ready and willing purchaser’ terms judged by Which? to be unfair, prejudicial to the public and open to fraud in the case of the latter. They also called for a clause to ban marketing on internet private sale sites. Hardly a caring attitude likely to advance their public standing!
What does this mean for the seller? Answer - Be very careful in any dealings with an agent. If you must sign up with one, read their agreements line-by-line in their office if they won’t let you take the agreement home to look at. (This is reportedly not at all uncommon - why are they so afraid?) Don’t be afraid to cross out phrases like ‘ready and willing purchaser’, ’sole seller’ or ban on internet advertising. Only accept ‘Sole Agent’ and inform them that you are also marketing your property yourself and therefore will ONLY be liable to a commission if they introduce the sale.
Remember they want your business not the other way round. If the first Agent won’t accept the deletions, shop around. The next one will. (Other sources have commented that Agents who are members of chains are least likely to be flexible so a local Agent might be the solution.)
Most importantly, if you are sacking an Agent or just ceasing marketing through them to move on to another agent or a private sale, you need to cancel the agreement properly by giving notice and getting a list of people they have introduced to the property.
Why is this important? Very simply the easiest way for an agent to get their fee even if they didn’t do the work is to claim that they may have introduced the buyer in some way. It is even reported that one major countrywide Estate Agency has a full department looking at all completions nationally and comparing the addresses to properties they have previously handled to see if they can make a retrospective claim! Scary!
Formally ending the Agents Agreement.
It is most important to make sure you get proper ‘closure’ with an Agent before moving on to a different method of marketing. Check the agency agreement for the tie-in period (You should really have done this upfront of course!) then send (better still, hand-deliver) a termination letter with the matter of ‘introductions’ clearly highlighted.
Here is a suggested text:
Dear X,
Termination of Agency Agreement
As per our agreements we hereby inform you that we no longer wish to market our property (address) through yourselves and we wish to cancel our agreement.
We therefore instruct you that with effect from (allowed cancellation date.) in accordance with the agreed notice period you should cease to market the property.
As we may be instructing another agent and to protect our mutual interests and prevent disputes, we require that you prepare a list of people you have introduced to our property during the period of your marketing so that there is no dispute as to who may have introduced a subsequent buyer and therefore who may receive a fee.
The list should contain the names of people you have introduced to our property (add address) and the date your introduced them. This information is required in written form by (cancellation date as above). No personal data is required, merely sufficient to unambiguously identify an eventual buyer.
If you do not supply this information by the due date or should any names be omitted you shall waive your right to claim any fees in relation to people you believe you may have introduced to the property but who do not appear in the list.
NOTE. If you decide to use this form of words remember it is only a suggestion and has not had legal ‘vetting’ as yet. It does however, clearly lay out the ‘rules’ and demonstrates that you will not simply give in to a later demand out of the blue for a fee on a dubious “but we did introduce them first” claim.