As with any sector serving the public, there are good and bad estate agents.
Estate agents are essentially salespeople keen to get your house on the market.
Some people can feel uneasy about this, particularly as their home is their largest asset.
However, unless you want to sell your house without an estate agent, you must deal with them.
This is why understanding estate agent contracts is essential.
We Buy Any Home’s study
We Buy Any Home conducted a study allowing those who have experienced house-buying and selling to voice their estate agent experiences.
46% of those surveyed claimed all their encounters with estate agencies had been positive.
However, worryingly, 14% felt an estate agent had lied to them. A further 10% claimed they would never use a traditional estate agency again.
The remaining respondents voiced that their experiences with estate agents left them uneasy or confused.
A lack of transparency and communication within an estate agent on contracts is a common complaint among many customers.
Estate agent contracts: things to check
The contract is one of the most critical exchanges between a client and an estate agent.
The rule of thumb is: if you don’t understand the contract, don’t sign it.
Contracts are complex, and you should always remember that you are the customer. Do not be afraid to challenge any clauses you do not agree with.
Types of real estate agent agreement
When selling a house, there are three different types of estate agency contracts. Each has its perks and pitfalls.
Sole selling rights
If you are tied in with an estate agent for three months, they are the only company entitled to sell your home during that time period.
You cannot put it up for sale with any other estate agent during the 12 weeks. Even if you find your buyer, you must pay your estate agent.
Sole agency contract agreement
This is the same agreement as sole selling rights.
However, if you find a ready, willing and able purchaser, you don’t have to pay the estate agency.
Multi-agency agreement
This is the most popular option for most people when selling their home.
You can list your property with as many estate agencies as you like, but you will only pay a commission to the company that sells your home successfully.
Hidden property figures
Traditional estate agents charge commissions when you sell your house so that they can make a profit and run a business.
Most will detail the commission percentage in your cost breakdown and any accompanying paperwork.
When you receive your bill from your estate agent, do not take the figure at face value. Do your own maths and see if it all adds up.
Your agent may choose not to include VAT in their upfront commission rates, so ensure you factor this into any final costs.
Whilst VAT is set in stone, you can negotiate the commission percentage.
Some strike a deal with their estate agent that they will base their commission upon the service they receive.
For example, offering 1.5% if they went above and beyond and secured a high sale price, or 1% if the service is middle of the road.
Estate agent tie-in periods
Tie-in periods are not unreasonable in the property world.
An estate agent cannot easily get your property on the market, so a tie-in period allows them to try to sell it without you bailing after two weeks.
Typically, tie-in periods do not exceed 12 weeks, and notice periods are often around 14 days.
Some estate agents insist upon ridiculously lengthy tie-in periods, which are unacceptable.
Tie-in period lengths can be negotiated down, but do not opt for an estate agent with whom you could become stuck.
Reviewing your contract
Before you take the plunge and sign on the dotted line, make sure you have completed the following steps:
- You’re 100% clear on what commission you’re being charged
- Check if VAT is included in the fee
- Ensure you are happy with the type of contract
- Ensure you are aware of all fees and charges
- Do not sign contracts with hand-written changes
- Make sure you agree to everything in the contact
- Negotiate anything you are uncomfortable with
Alternatively, if you’d like your home sold in as little as seven days, request a cash offer from We Buy Any Home today.
