A good estate agent is beneficial when you want to sell your house.
Many of them – and bad estate agents – will expect you to sign a sole agency agreement.
Read on to learn more about them and what to watch out for if you sign one.
What is a sole agency agreement?
A sole agency agreement means that only one estate agent has the right to sell a property.
This is usually for a period stated in the contract – usually between 4 to 12 weeks. The homeowner cannot use another estate agent to sell their property during this time.
Some estate agents charge a lower commission rate if the homeowner signs a sole agency agreement.
Sole agency agreement vs sole selling rights
A sole agency agreement is more flexible than sole selling rights.
The latter means that only the other party can sell the property. And if the seller privately finds another buyer, they will still have to pay a commission.
By contrast, sole agency agreements sometimes allow sellers to find buyers themselves and not owe a commission.
(However, sellers should check the terms of sole agency agreements as they can differ).
How common are sole agency agreements?
Sole agency agreements are the most common type of estate agency contract in the UK.
If it allows you to negotiate a better commission rate. Then, it could be helpful for the seller, especially if you’re not being locked in for too long.
You can see some of the alternatives to this agreement in the section below.
Alternatives to a sole agency agreement
Multi-agency agreement
This is the most common alternative to a sole agency agreement.
It is when a homeowner instructs several estate agents to sell their property simultaneously. Whoever completes the sale gets the commission.
It can be a great strategy to motivate estate agents to speed up the house-selling time.
Joint agency agreement
This involves two agencies working together and sharing the commission when a sale is completed.
Online estate agencies
Online estate agents often charge a flat rate rather than a commission. It tends to be less expensive.
Can you get out of a sole agency agreement?
Often, yes. It depends on the terms of your contract. You should look through it with a trained solicitor if you feel uncertain.
Most sole agency agreements have a ‘cooling-off’ period, often fourteen days.
It means that during this initial time, you can cancel the contract without any penalties.
You typically pay a penalty to cancel a sole agency agreement after the cooling-off period.
This could be hundreds or even thousands of pounds. But check the terms of your contract to be sure. You should put your intent to cancel the agreement in writing.
Ensure you carefully read the terms of a sole agency agreement before signing it.
