Many clients I meet at valuations know that they can use one or multiple real estate agents. They also know that using more than one agent could cost them more in fees. What they may not have considered is the fine print of each type of agreement or the relative merits of using one, two or many agents. Here’s our brief guide to each;

single agency

Contracts of this type must say the following:

‘You will be responsible for paying us remuneration, in addition to any other agreed costs or charges, if at any time, the unconditional contracts for the sale of the property are exchanged:

•with a buyer introduced by us during the period of our exclusive agency or
•with whom we had negotiations over the property during that period, or
•with a buyer introduced by another agent during that period.’

The agent is paid if he “introduces” a buyer during the contract period, or allows another agent to “introduce” a buyer within the original agent’s contract period. The definition of “introduced” is very broad. It can cover negotiations with a buyer, visits, sending details, conversations on the phone and all these scenarios:

•A buyer knocking on your door seeing a “for sale” board.
•A buyer who sees through one agent but then makes an offer through another agent.
•A buyer who is given details of his property by an agent and then realizes that he knows him.
•A buyer who sees through an agent but suggests they make a private deal

Contracts must have a set period of time (the average is 12-14 weeks). Keep in mind that a contract almost always has a notice period at the end – add this to the contract’s stated length to calculate the actual amount of time you’ll be tied up with your chosen agent. This type of arrangement allows you to find a buyer for your home yourself without paying the real estate agent (a private sale). An “exclusive rights of sale” agreement (best avoided) would mean that the agent would be paid even if he found a private buyer.

Single agencies are the most common deals – most agents want an exclusive opportunity to sell their home. If the real estate agent is good, you shouldn’t need another agent to help with the sale. However, you may want to check how thorough an agent’s marketing is before agreeing to a sole agency: if they don’t cover all the bases (or have overpriced your house to get the business), you don’t want to be locked into a contract. of months and months.

Joint Agency

If you appoint two real estate agents to act together on your behalf in the sale of the property, this is known as ‘joint agency’ or ‘joint sole agency’. A joint sole agency contract is where the real estate agents involved share the commission when the property is sold. In practice, the agent who actually finds the buyer usually gets a higher share of the commission, but this percentage share must be agreed upon at the beginning of the contract between the owner and both agents.

Joint agency is often a useful way to get out of a single agency before the end of the contract: if you tell your real estate agent that you are not satisfied and that you are considering terminating your contract as soon as possible, then give him the option of being retained in a joint agency, they might be smart enough to see the merits of a share of a fee rather than nothing. This type of agency is also useful when you want to use two agents that offer different services (for example, a city agent and a country agent if you live on the border of a city). Keep in mind that most of the public has a negative perception of properties with more than one agent (“I’ve seen it before, there must be something wrong with it”). If you are considering a joint agency, try to choose two agents who can happily communicate/work together.

Multiple Agency

More than one agent is appointed and there is no fixed contract period. You can add as many agents as you like, remove one at any time, and so on. However, only the agent who actually finds the buyer gets paid.

Often used when a property is not being sold with a single 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 a record of each agent’s activity.

General Rates

Estate agent fees are due upon completion and should have been invoiced at the exchange of contracts. The bill is sent to the attorney acting on behalf of the owner, but the owner should also receive a copy to verify. Most deals are on a “no sale, no charge” basis, so you don’t have to pay anything if your home doesn’t sell (however, see additional fees below).

Fees must be clearly stated in the contract: if the fee is a percentage of the sale price, a maximum amount in pounds and pence must also be shown.

Although estate agent fees are often expressed as a direct percentage of the sale price, remember that they are also subject to VAT at the prevailing rate (currently 20%).

Some real estate agents charge additional fees on top of the listing fee; recently we’ve seen them expressed as “advertising fees” or “withdrawal fees” (a charge if your property doesn’t sell or is taken away from an agent). Start-up costs for professional photography and brochure production are also relatively common with top market agents; It would always pay to make sure you know the total of ALL the fees you may be responsible for before signing a contract.

Be careful if you accept a fixed fee from an estate agent – ​​the fee is usually agreed based on the asking price, so if your property is selling for less, you are likely overpaying the agent compared to a brokerage fee. normal percentage (charged on the final sale price)

If you want to give your agent extra motivation to hit a top price, consider negotiating a tiered fee (for example, 1% if you get less than £240,000, 1.2% if you get between £240,000 and £250,000, 1 .5% if you get more than £240,000). 250,000). Set the levels carefully to reward excellent service and penalize an average result.

Additional Tips

If you change real estate agents, make sure the previous agent gives you a list of the names of the people who “introduced” your property. If one of those names continues to buy the house (practically within 6 months from the date the agent’s contract ends), the former agent is entitled to their fee. Make sure you don’t get into a scenario where you owe both agents fees because you didn’t do your homework.

Always ask estate agents to confirm the terms of your contract in writing (you’d think this would be common practice, but you might be surprised!) and if you end a contract with an agent, make sure they confirm that too.

It can go from one agent to another, from one agent to joint agents, or any other permutation.

Don’t back down in terms of marketing: If you’re leaving an agent because they’re not marketing your home effectively, take a breath and make sure the next one you pick can do better BEFORE you name them.