Key Terms That You Need To Understand In Your Estate Agency Contract So You Don’t Get Fooled!
There is such a wide range in the fees charged by different estate agents and when this is the main point of difference it is understandable that some homeowners will simply choose the cheapest option - read this article to find out why this could be the worst thing to do.
Let's be honest; we all know estate agents get a bad rap. In reality, this is a hangover from decades ago that we, and other exceptional agents in the UK, have worked hard to overcome. We believe estate agents are integral to homeowners looking to move, the linchpin to your sale.
Of course, there are ways to sell your property without involving an estate agent, but we firmly believe there are better ways for you to move. With no one to guide, advise or work on your behalf to find a buyer, negotiate an offer or progress the legal transaction through to completion, you are leaving yourself open to selling for less money than your home is worth or, in the worst case scenario, not being able to sell at all.
Not all estate agents are made equal, and you need to be sure that you know what you're signing up for when you instruct an agent to sell your home for you.
From the outset, the most obvious point of difference between agents is their percentage fee. But how much thought is given to the other terms of the estate agents' contract? Could something be lurking in the small print you need to know about?
It's often not until something goes wrong that these terms rear their ugly heads, and as the homeowner, you can feel trapped and hood-winked by the contract you signed and the agent that gave you it. This article aims to shed some light on those pesky contract terms so you can fully understand what you are signing and ensure that you choose an agent who is on your side.
There are many different terms used within estate agency contracts that you might never have come across before, such as:
- Sole Agency - This means that you agree to only use one agent to market your home for sale. Reasonably obvious when you think about it, but you might not know that if you were to sign two of these contracts with two separate agents, you could have to pay the full fee to both of them when your house sells.
- Fixed term - if there is a fixed term noted on the agreement, you will be unable to market your property with any other agent, irrespective of whether they are doing a good job or not.
- Sole selling rights - a contract term that is not bad, as such, but is often misunderstood. This means that the agent will be due a fee if the property is sold within the contracted time. This sounds reasonable; if they sell the property, they get paid. But, this specific term means they will charge a fee if the property sells, not necessarily if they sell it. You could decide to sell your home to your best friend or a family member, and the agent will still be able to charge their fee.
- Withdrawal fees - a pre-agreed amount charged if you withdraw the property from the agent. This is not a bad thing per se, but it is something that you need to be aware of before embarking on marketing your property for sale. Estate agents have considerable upfront costs when bringing a property to the market for sale. Not to mention the time invested in marketing and preparations, photography, floorplans, videos, advertising, social media promotions and the ongoing costs of property portal platforms and database management. If you withdraw the property from the market before they have a chance to find a buyer, then this cost is an expense and cannot be recovered. The costs are front-loaded, and fees are paid at the end, so it makes sense that some of these costs must be recovered if you withdraw the property or change your mind. The key here is that you are aware of the fees involved in withdrawing the property at the outset so that you can make informed decisions about the marketing of your home.
- A joint agency, or possibly a multi-agency - These terms refer to the property being able to be marketed using more than one agent at the same time. It is essential to understand that if you choose to use more than one agency and have two or more agents working on sole agency contracts to sell your home, you could become liable to pay all of them a full fee. Having a joint or multi-agency contract, the terms, which can be negotiated and variable, will protect you from having to pay multiple fees, which could become very expensive.
None of these terms are particularly onerous and shouldn't cause you any alarm. You just need to understand the terms and conditions that you are agreeing to at the outset to avoid issues further down the line.
We believe in complete transparency in our terms and conditions, with no tricks hidden in the small print. If you would like to learn more about how we can help you sell your home, give us a call today.