Estate agent contract: What to look out for
We explore what an estate agent contract is, including the things you need to make sure you keep an eye out for...
When wanting to sell your property, there’s more to the process than just finding an estate agent and letting them do all the work. You’ll need to prepare your house for viewings, provide accurate information, find yourself a good solicitor and, in some cases, you’ll need to conduct the viewings yourself.
And what happens if you’re not happy with the service provided by your estate agent? How do you know what their roles and responsibilities will be throughout the process?
Three words – estate agent contract.
But what is an estate agent contract? How do you know what all the confusing terms mean? Can you sell your property without an estate agent contract or without an estate agent completely?
All valid questions, all ones which we’re going to answer for you today.
We’re going to help you get to grips with what an estate agent contract is and give you some tips on the things you will need to be wary of…
What is an estate agent contract?
An estate agent contract is a signed agreement between you and your chosen agent, detailing the terms and conditions of selling.
An estate agent contract is regulated by law according to The Estate Agents Act 1979 and The Estate Agents (Provision of Information) Regulations 1991, with the regulations stating what information an estate agent should give about the sales agency agreement before the contract is signed.
So what information should an estate agent contract explain?
What the estate agent will do – basically the estate agent will outline the jobs you can expect them to carry out from marketing the property to find a buyer. If it doesn’t state that they will conduct viewings, then you will need to pay extra for this, and this will be detailed in the ‘other expenses’ section
What the vendor (or seller) will do – this is what is expected from you. This will include jobs like providing accurate information, allowing viewings and paying agreed estate agent fees
The estate agent fees – including how the fees are calculated and, if it’s paid after the sale, the percentage of the sale price expected
Details of other expenses – including information about costs of increased marketing, a ‘for sale’ sign, an EPC and the estate agent conducting the viewings for you
How the estate agent contract can be terminated – there will be details here about whether or not there’s a tie-in period. Not sure what this is? Keep your eyes peeled for our next section…
The circumstances where the seller will be liable for the estate agent fees/commission
When the fees will be payable – some estate agents may ask for this upfront, others may ask for it on exchange or completion
An explanation of some of the key terms – there’s some complicated language in an estate agent contract and it’s crucial you understand it all. If you’re wanting to get clued up now instead of having to read a long contract to find answers, then our next section will help you out!
Details about which Property Redress Scheme the estate agent is a member of – a Property Redress Scheme is a system which allows customers to escalate a complaint they have against an estate agent. The main purpose is to settle unresolved complaints from customers who have suffered a loss as a result of the actions of the estate agent. The Property Redress Schemes are used as an alternative to going through court and the customer complaining must have exhausted the estate agent’s internal complaints process before contacting the scheme. Examples of Property Redress Schemes are ‘The Property Ombudsman’ or the ‘Property Redress Scheme’
By law there also has to be a 14-day cooling-off period if the estate agent contract was signed anywhere other than the estate agent’s premises – a cooling-off period is an amount of time in which the client has the right to cancel without any consequence
Declare any personal interest in transactions, and information about other services they can provide and state that all offers will be promptly forwarded to the seller
Estate agent contract terms
An estate agent contract will contain many different complicated terms, which are likely to leave you scratching your head.
As we mentioned earlier, there should be a section within the contract to explain what these terms mean, but in case you’re wanting to get prepared, we’re here to ‘jargon bust’ the estate agent contract terms for you:
Sole agency agreement
This is the most common type of estate agent contract. The sole agency agreement means the agent you’re signing the contract with is the only agent who can sell your property during the term of your agreement but, if you find yourself a buyer, won’t have to pay the agent fees. The typical estate agent fee for this type of contract is around 1-2%
This agreement means you can sell with as many estate agents as you like but only the agent who sells your property will be entitled to the commission. To use this type of agreement, you will normally have to pay a higher estate agent fee of around 2-3.5% of the sale price
Joint sole agency agreement
This agreement allows you to use several agents to advertise the property for sale but even if only one of them introduces the buyer, then the commission will still be divided between them all
Sole selling rights
Although it sounds similar, sole selling rights are not the same as sole agency agreements. Like with a sole agency agreement, only one agent can sell your property during the agreed period. The difference is with sole selling rights, even if you find the buyer yourself, you are still expected to pay the estate agent's commission fee
A tie-in period is the minimum amount of time you need to give the estate agent to market your property before you can end the agreement. Not all agents will request a tie-in period and some may ask for up to 16 weeks. Alongside a tie-in period, there may also be a notice period, which means you have to give the estate agent a certain amount of time in writing before you can end the agreement
Ready, willing and able purchaser
This is one thing you will want to look out for and AVOID! This clause means that the estate agent is entitled to their fee if they find you a buyer, even if you have to withdraw from the sale or if the sale doesn’t go through
Some estate agents will ask for a fixed fee, rather than a percentage of the sale price as their fees. This can often work out cheaper, but generally, the agent will ask for this fee upfront, meaning you pay the same no matter how fast the property sells and no matter the price. In fact, paying upfront means you pay the fee even if your house doesn’t sell. This is common amongst online estate agents, as many don’t offer a no sale no fee policy like you expect from high street estate agents
What do I need to look out for?
When entering into an estate agent contract, no matter how many times you’ve done it before, it’s important to know what you need to look out for. If you don’t read the fine print, you could end up stuck in a tricky situation, with no way around it.
We’re here to stop that from happening to you!
We’ve made a list of things you need to keep an eye out for when getting ready to sign your estate agent contract:
The ready, willing and able purchaser - We’ve just mentioned this one so it may be clear why we’re saying to look out for this. No one wants to pay a fee just for the estate agent to find someone who could buy your property, especially if the sale doesn’t end up going through. Keep your eye out for this clause to avoid paying your estate agent for essentially just doing their job
What are the commission rates? Be sure to check they’re in line with what has been discussed with your estate agent
Is VAT included? Often estate agents will quote their fees in the estate agent contract leaving out VAT, meaning you will end up paying an extra 20% compared to what you originally thought
Have you been signed up for an in-house service? Make sure you haven’t unknowingly been signed up for an in-house service, for example, conveyancing, house repayments advice, or an EPC, as this may incur a further cost and you won’t be able to opt out of it if it’s written into the estate agent contract
Is there a cancellation fee? It’s a good idea to check whether or not you will have to pay a fee if you switch to another agent or to take your property off the market completely
Are there any extra fees? For example, some agents will charge you extra for improved marketing or to conduct viewings for you so make sure you read the fine print!
What type of contract are you entering into? It’s always good to be clued up on the type of estate agent contract you’re entering into, so you know what to expect. Also, if you’re entering a sole agency agreement, the agent can still approach you to claim commission for your property selling if they introduced a buyer, even if they no longer market your property and it’s months or years later
What's the tie-in period and written notice period? If you’re not happy with the stated time period, don't be afraid to try to negotiate it with your estate agent before signing any contract
Can I sell my house without an estate agent?
If you’re wanting to avoid an estate agent contract, you’ll be glad to know you don’t need an estate agent in order to sell your property. Not only that, but you also have multiple different options available to you when selling without an estate agent!
Now we’ve got you wondering what the options are allowing you to sell your property without an estate agent or estate agent contract. Well…
Selling a house privately means that you will be selling your house yourself, without the help of an estate agent. Whilst you will be saving yourself from signing a confusing estate agent contract and paying estate agent fees, you will have to conduct the whole property sale yourself.
Allows you to sell your house in your own time. However, you will have to pretty much do everything for yourself throughout the process, except the conveyancing. You will not be able to call on the expertise of an estate agent, which you may need in a tricky market.
Selling privately can be very time-consuming and a lot more difficult than it originally sounds, so this isn’t going to be an option which will appeal to everyone.
Sell through auction
Selling a house through an auction allows you to avoid signing an estate agent contract and is a way of selling your house quickly. At the auction, as soon as a deal is reached, the buyer must put down a deposit and contracts are exchanged. The buyer then has 28 days to complete.
Selling a house through auction means you will have a few open days to allow potential buyers to look around, meaning there are minimal property viewings, compared to the 'traditional' estate agent route, and you’re also less likely to get time wasters.
However, when selling a house through an auction, although you won’t need to pay estate agent fees, you will still have other fees to pay, for example, marketing fees, auctioneer’s fees, room hire, etc. There’s also no guarantee you will get a good price for your property, as people at auction tend to want a ‘bargain’.
Also, at auction, you have to complete it within 28 days of the auction, meaning you can feel very rushed. Although contracts are exchanged at auction, the buyer could still pull out, meaning the sale of your property isn’t guaranteed.
Sell to a part exchange scheme
Selling your property through a part exchange scheme means you use the value of your property as a ‘part payment’ towards the cost of a new build property. The developer of the new build will arrange for a few local estate agents to value your property, which is what you will ‘use’ towards your new build.
Selling through a part exchange allows you to avoid an estate agent contract and fees and will mean you have no chain, whilst getting a new build property in exchange.
However, not every property qualifies for a part exchange scheme, as the property you’re wanting to sell can’t be more than 65-70% of the value of the new build. You will also get less than the market value for your property, as the independent valuations are always significantly below the market value, and it’s never made clear exactly how the amount has been calculated.
Sell to a ‘quick house sale’ company
Selling your property to a quick house sale company will allow you to avoid an estate agent contract and estate agent fees. In fact, some quick house sale companies will cover your legal fees too, meaning you don’t have a penny to pay whilst selling your property.
You will get slightly below the market value for your property, but there will be no chain and the cash offer will be a guaranteed sale, meaning you don’t need to worry about a buyer backing out.
Finding a good quick house sale company is important, as you want someone who is trustworthy, with years of experience and lots of good reviews.
Now, where can you find one of them, you ask?
Here at The Property Buying Company, we’re a cash buyer of houses with over 50 years of combined experience and multiple good reviews on Trustpilot. With us, you won’t have to enter into a confusing estate agent contract or have to pay any fees, as we cover them all for you!
We will give you a genuine cash offer for your property, which although may be slightly below the market value, allows you to sell your property without a chain and the timescales can be worked around you - we're happy to go as fast or slow as you need!
Ready to avoid an estate agent contract and sell your property?
Give us a call or fill in our online form to receive a no-obligation cash offer for your property, which we could have in your bank in as little as 7 days (or whenever suits you)!