What to Watch Out for with Estate Agent Contracts
As with any sector which serves the public, there are good estate agents and bad estate agents. Estate agents are, essentially salespeople keen to get your house on the market, which some people can feel uneasy with, particularly as their home is their largest asset.
WeBuyAnyHome conducted a study allowing those who have been through the house buying and selling process to voice their estate agent experience. 46% of those surveyed claimed all their encounters with estate agencies had been positive. However, worryingly, 14% felt they had been conned by an estate agent. A further 10% claimed they would never use a traditional estate agency again.
The remaining respondees voiced that their experiences with estate agents left them feeling uneasy or confused. Overall, a lack of transparency and communication is a common complaint of many customers.
Estate agent contracts: things to check
One of the most important exchanges between a client and an estate agent is the contract. 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
There are three different types of estate agency contracts in the property world when you sell a house. Each has its perks and pitfalls.
Sole selling rights
If you are tied in for a three-month period with an estate agent, during that time period they are the only company entitled to sell your home. You cannot put it up for sale with any other estate agent during the 12 weeks. Even if you find your own buyer you will have to pay your estate agent.
Sole agency contract agreement
This is the exact same agreement as sole selling rights. However, if you manage to find a ready willing and able purchaser yourself you don’t have to pay the estate agency.
Multi agency agreement
This is the most popular option for most people when it comes to selling their home. You can list your property with as many estate agencies as you like and will only ever pay commission to the company that sells your home successfully.
Hidden property figures
Traditional estate agents charge commission 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 rate so ensure you factor this figure into any final costings.
Whilst VAT is set in stone you can negotiate the commission percentage. Some individuals 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. It isn’t free for an estate agent to get your property on the market, so a tie-in period allows them to try and sell your property 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 and they are unacceptable. Tie-in period lengths can be negotiated down but do not opt for an estate agent where 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 WeBuyAnyHome today.