What Are Estate Agents Hiding in Contracts?
Selling a house is a complicated process. Add to this a lengthy contract full of legal terminology and property jargon and you can feel out of your depth. Contracts cost time and money so reading them thoroughly is important. You are a customer, so don’t forget to demand clarity from your estate agent should you not understand anything in your contract. Equally, you are fully within your right to contest anything you disagree with.
It is no secret that many people have been caught out by their estate agent’s contract. Below we highlight some of the contract pitfalls to be mindful of before you sign on the dotted line.
What type of contract is it?
There are four different types of contract but not all agents offer each. You can shop around various local agents depending on the best type of contract for you. Each has its pros and cons and each will suit a different type of seller and their circumstances.
Ready, willing able purchaser
We suggest avoiding this type of contract unless you are 100% certain you want to sell and the agent is perfect for your needs. You will be obliged to pay the agent for finding a buyer even if you do not choose to sell.
Sole selling rights
You will only be allowed to sell your home via this estate agent for a set period of time which will be stated in the contract. Furthermore, even if you find your own buyer, you will still be expected to pay.
Very similar to a sole selling rights contract but, if you find your own buyer, you won’t have to pay a penny. However, this contract can be iffy if open-ended. Some estate agents have claimed commission years down the line after a property has sold with another agent, claiming the buyer was originally introduced to the property by the original agent.
Many people prefer this type of contract. You can list your home for sale with as many agents as you want but will only be expected to pay commission to the agent which achieves the sale. Fees are sometimes higher but on the flip side, a higher number of potential buyers will see your home, which could result in an offer above the asking price.
Has your estate agent included VAT?
Your contract should outline the percentage commission your agent will charge when they secure a property sale for you. If they charge a fixed-rate commission, make sure you enquire as to whether this fee includes VAT. Some agents don’t include VAT up front, which can result in a hefty extra charge on top of the commission you were quoted.
If the commission is based on the final sale price of your home don’t always settle for the percentage they provide you. It’s not set in stone and you can negotiate. After all, they want your business. You could set an agreement with your estate agent where you pay X% commission if they achieve the asking price and Y% if they exceed the asking price. This can also encourage agents to secure a fast house sale for you.
Some high street agents operate on a no sale no fee basis. This means you won’t have to pay a penny if a sale does not occur. However, make sure to read any small print in your contract that relates to this as some may try and cover costs for the time spent even if you do not sell.
Contractual tie-in periods
Sometimes you won’t secure a sale with the first agency you use. If you are dissatisfied with the service or feel another estate agent would be a better fit you can move on. However, if you’re contractually tied-in for a period of time you may not have any choice but to wait it out.
Tie-in periods can vary, from two weeks to 20 weeks. You also may need to give a notice period on longer periods. Check this out carefully in your contract. This practice is normal and tie-in periods are not a bad thing. However, you will want to see flexibility surrounding your tie-in period detailed in your contract. Will you be charged if you want to terminate your contract? Do you have to give a notice period or are you free to go? Are you eligible to terminate after a certain amount of time? Never sign a contract if you’re unhappy with a tie-in clause and try to negotiate with your estate agent. If not, find an agent that is more accommodating.
Selling your home, especially when you’re buying another, is expensive. There have been too many times where estate agents haven’t been forthcoming with their fees in their contracts. You will want a clear breakdown of what everything costs beyond the commission. Be weary of extra charges for:
- Contract termination
- Legal fees
Any additional charges should be discussed with you and detailed clearly in your contract. Question anything you aren’t happy with. If your estate agent cannot provide a solution take your custom elsewhere. After all, you should be clear on what you’re paying.
What should I look out for before signing a contract?
Review any contract carefully. Get family or friends who have sold properties before to cast their eye over the document and flag anything they see as a concern. Be mindful of the points raised above and never sign any contract that you are not comfortable with.
Review the entire contract but be particularly aware of:
- Contract type
- Cooling off period
- Tie in period
If you want to avoid using an estate agent altogether, why not get in touch with SOLD.CO.UK today? We are an online estate agent offering a fast and free way to sell your home that is completely transparent and flexible to your requirements. You can book a free valuation online or simply get in touch via 0800 566 8490 if you’d prefer to speak to one of our expert team.