Many clients I meet on appraisals know that they may use one or more real estate agents. They also know that using more than one agent could cost them more on fees. What they might not have considered are the fine print of each type of agreement or the relative merits of using one, two, or several agents. Here is our brief guide for each;
Contracts of this type should read as follows –
“ You will be required to pay us a fee, in addition to any other agreed costs or charges, if at any time unconditional contracts for the sale of the property are exchanged:
• with a buyer presented by us during the period of our exclusive agency or
• with whom we have had ownership negotiations during this period, or
• with a buyer introduced by another agent during this period. "
The agent gets paid if they "present" a buyer during the term of their contract, or if you let another agent "present" a buyer during the original agent's contract period. The definition of "introduced" is very broad. This can cover negotiations with a buyer, visits, sending details, talking over the phone as well as all of these scenarios:
• A buyer knocking on your door after seeing a “for sale” sign.
• A buyer who consults with an agent, but then makes an offer through another agent.
• A buyer who receives your property details from an agent and then realizes he knows you.
• A buyer who consults an agent but suggests that you enter into a private transaction
Contracts must be for a fixed term (the average is 12-14 weeks). Please note that a contract almost always has a notice period at the end – add this to the length of your contract to determine the actual time you will be stuck with the chosen agent. This type of deal allows you to find a buyer for your home on your own without paying the real estate agent (a private sale). A (best avoided) 'exclusive selling rights' deal would mean the agent would get paid even if you found a private buyer.
One-to-one deals are the most common – most agents want an exclusive chance to sell your home. If the real estate agent is good, you shouldn't need another agent to help you sell. However, you might want to check how comprehensive an agent's marketing is before accepting a single agency – if they don't cover all the bases (or have overpriced your home to get company), you don't want to be locked into a month-and-month deal.
If you appoint two real estate agents to act together for you in the sale of the property, this is called "joint agency" or "single joint agency". A joint individual agency contract is where the relevant real estate agents share the commission when the property is sold. In practice, the agent who actually finds the buyer usually receives a higher allocation of the commission, but this percentage should be agreed at the start of the contract between the owner and the two agents.
Joint agency is often a useful way out of a single agency before the contract ends – if you tell your real estate agent that you are not satisfied and are considering terminating his contract ASAP, give him the option of being successful on a joint agency basis, they might be smart enough to see the benefits of a fee bracket rather than none of the all. This type of agency is also useful when you want to use two agents who offer different services (eg city agent and country agent if you live on the border of a city). Keep in mind that the majority of the public has a negative perception of properties with more than one agent ("I've seen this before – there must be something wrong"). If you are thinking of a joint agency, try to choose two agents who can communicate / work together happily.
More than one agent is appointed and there is no fixed contract term. You can add as many agents as you want, remove one at any time, and so on. However, only the agent who finds the buyer gets paid.
Often used when a property is not selling with an exclusive agent, this is an extreme measure to take as the total fees will be considerably higher and the property can become overexposed very quickly. Confusion and disputes can also arise if agents argue over who introduced a particular buyer – be sure to keep track of each agent's activity.
Realtor fees are due on completion and should have been charged when exchanging contracts. The invoice is sent to the lawyer acting for the owner, but the owner should also receive a copy to verify. Most deals are “no sell, no fees”, so you shouldn't pay anything if your home doesn't sell (however, see below for additional fees).
The charges should be clearly stated on the contract – if the charges are a percentage of the sale price, a maximum amount in pounds and pence should also be displayed.
Although estate agent fees are often expressed as a percentage of the sale price, keep in mind that they are also subject to VAT at the current rate (currently 20%).
Some real estate agents charge extra fees on top of the selling fee – we've recently seen this expressed as an "advertising fee" or "withdrawal fee" (a charge if your property doesn't sell or you take it down). to an agent). The upfront costs of producing brochures and professional photography are also relatively common with top market agents – it would always help to make sure you know the total of ALL fees you may owe before signing a contract.
Be careful if you accept a fixed fee from a real estate agent – the fees are usually agreed upon based on the asking price, so if your property sells for less, you risk overpaying the agent over a normal percentage (which is charged on the final sale price)
If you want to give your agent extra motivation to hit an optimal price, consider negotiating a tiered fee (e.g. 1% if they get less than £ 240,000, 1.2% if they hit between 240,000 £ and £ 250,000, 1.5% if it is over £ 250,000). Set levels carefully to reward exceptional service and penalize average score.
If you are changing real estate agents, make sure the old agent gives you a list of the names of the people they 'introduced' to your property. If either of these names buys the house (in practice within 6 months from the date of termination of the agent's contract), the former agent is entitled to his fees. Make sure you don't get into a scenario where you owe both agents a fee because you haven't done your homework.
Always ask real estate agents to confirm the terms of their contract in writing (you'd think this is standard practice, but you might be surprised!) And, if you end a contract with an agent, make sure that he also confirms it.
You can switch between exclusive agent to exclusive agent, exclusive agent to joint agent or any other permutation.
Don't back down in terms of marketing – if you're leaving an agent because they aren't effectively marketing your home, take a break and make sure the next one you choose can do better BEFORE you name them.