The small print


If you agree to sell your home using the services of an Estate Agent, you will be asked to sign a contract of instruction.  This is a legally binding document, which explains the relationship between you and the agent.  But not all contracts are the same, so this article will give you an insider’s view of what to watch out for…  and what NOT to sign!

What kind of contract is it?

In Estate Agency, there are two kinds of basic contract.  A ‘sole agency’ agreement is straightforward.  It means your agent is the only estate agent authorised to act on your behalf.  The vital thing about this is it does not stop you from advertising or selling your home privately…  because doing so does not mean appointing another estate agent.  So, if your next-door-neighbour sees your ‘for sale’ sign, and knocks on your door because your house would be perfect for the aged mother-in-law, then you won’t owe the agent a penny.  If you know you have someone who may be interested before you appoint an agent, it’s a great idea to tell the agent their name, just in case they call the agent when they see the sign board go up.  Then you may not have to pay if they buy, even if the agent helps things along for you.

Beware, though, of ‘sole selling rights’ agreements.  This means what it says –the Estate Agent is the only one allowed to sell your property, under any circumstances.  If someone approaches you privately and buys your home, even your own brother or sister, the Estate Agent will still be entitled to their fee.  Although Estate Agents are obliged to explain this, in fact the kind of agency that offers a sole selling rights contract is not the kind of agency to point out this crucial difference.

The ONLY justifiable reason for a sole selling rights contract is if an agent is promoting your home in such a way that buyers will approach you directly.  Unless this is the case – and it very rarely is – then on no account sign a sole selling rights agreement.  If an agent offers you a sole selling rights contract, ask them why they think they should be paid even if they have nothing to do with finding a buyer… and then show them the door!

What is the term?

The ‘term’ of a contract – any contract – is the length of time for which it will run.  Because agents don’t charge up-front fees, agency agreements often ask for a commitment of several weeks to sell your home.  Most of an estate agent’s work to find a buyer is done in the first few days: creating details, uploading information to web sites, writing advertisements, and contacting prospective buyers.

If the agent has done their job, and has set a realistic asking price, your best chance of finding a buyer is in the first few weeks, because the agent has their whole database of buyers to target.  After a while, though, all the existing house-hunters have seen the details and had the chance to view, and the agent is hoping for new buyers to come along.

In times past, it was reasonable to give agents a fair chance to do their job, and a minimum contract period was reasonable. Photos on film took time and money to develop. Print costs for details were high. Newspaper adverts were essential. It was expensive to take on a new property, so the agent needed time to try and sell each house. Now, though, digital cameras and cheap, in-house printing means those direct costs are mostly a thing of the past.

There is a very strong argument to say that no agent ought ever to tie clients in to a minimum term. After all, if you’re happy with the service you are getting from the agent, you won’t want to change – so the only reason an agent would tie you to their services is in the event that you are unhappy with them and want to choose a different one! If in doubt, refuse to sign a contract with a minimum tie-in period, and insist that the tie-in is written out of the contract.

Even so, it’s still commonplace for agents to ask for an exclusive tie-in for at least 8 weeks, which is not too onerous. Anything more needs a really good explanation…  if your home is very large or unusual, it may be justifiable to ask for 12 weeks.  But no more.  Agents asking for contracts of 16 or even 24 weeks are saying they have no confidence in their ability to sell at the price they have given you.  If you are locked in, you’ll have little choice but the cut the price if it doesn’t sell quickly.  This gives agents a bad incentive to exaggerate the sale price just to win your business, knowing they can cut that price to a more realistic level later on because you have nowhere else to go. Again, if an agent asks for a contract of over 12 weeks, ask them to close the door on the way out!

Oh, one more tip: find out about the notice period.  Most agents require two weeks notice in writing if you want to end the contract. This is fair enough, because it allows the agent time to chase any leads they might already have established with potential buyers.  Beware of unscrupulous agents who say they can’t accept notice within their initial term.  That’s just not true, and its not ethical…  it makes an 8 week contract into a 10 week contract.  If you are on an 8 week term with a 2 week notice period, you can cancel after 6 weeks and the contract expires after the 8th week.

What is the ‘commissionable event’?

This is the action which means the Agent has fulfilled their part of the deal, and so is entitled to charge a fee.  For most agents, the commissionable event is the exchange of contracts, which is the legal commitment for buyer and seller to go through with the sale.  Some agents, though, will charge a fee for finding a buyer ‘ready, willing and able’ to buy.  In this case, you might receive an unconditional cash offer at the asking price, but decide you have changed your mind and don’t want to sell.  The agent would still be entitled to send you a bill.  There are arguments for both kinds of agreement, but be aware of what you are signing up to.

Joint Agency or Multiple Agency Agreements

Agents work on a ‘no-sale, no fee’ basis, so if you ask several agents to sell your home at the same time, several things will happen.  First, your final fee will go up – possibly even double.  Second, each agent will be less willing to promote your home, because there is a chance that a different agent will find you a better buyer.  Third, the house-hunters will see your home is with several agents, and get the impression that you are desperate to sell.  Multiple listing is almost always a good idea.  The one possible exception is if you can get two – and no more than two – agents to collaborate, perhaps splitting the fee, so that both agents are encouraged to work for a sale.

Changing agents without paying two fees!

It is very unusual to be charged twice, so long as you have given proper notice to the first agent, and have thoroughly checked the terms of each agent’s contract. Ask your original agent to provide the new agent with a list of the introductions the first agent made.  The agency which made the introduction – which now means having ‘introduced the sale’ through the first negotiations, rather than simply showing someone round your house – is entitled to the fee. If a person on the original agent’s list of introductions later buys your home, that first agent probably has a case to send you a bill – even if you want the new agent to look after the sale. It’s probably the best advice to deal with whichever agent actually ‘introduced the sale’, so as to avoid any complications

Do bear in mind, though, that the new agent will have no incentive to sell to the first agent’s introduction, and may even be obstructive.  Be aware, also, that if both agents are involved in the transaction, both might be entitled to a fee. This is particularly true if you have signed a sole selling rights agreement with the second agent…  another reason never to sign that kind of contract!

Things not to do!!

Very few people attempt to ‘get round’ a contract… and it never works.  You could end up in court.  Things not to do:  Don’t try and sell privately to someone the agent has introduced.  The agent will find out, and you’ll owe them the fee.  Don’t think that by not signing any contract, you’ll have a get-out from a fee.  In law, if you behave as if you have appointed the agent – give them keys, allow viewings, etc – it will be considered you have accepted the agreement even without a signature.  Don’t fail to give written notice if you are changing agents, or the first agent will be entitled to continue marketing your home.   Remember that an agreement is a two-sided affair.  The agent is working on trust, and you will get better service from them if you are honest with each other.

Summary – points to remember

Understand clearly, before you begin your valuation meeting with an agent, just how agency contracts can vary.  Sole selling rights contracts should simply not be acceptable.  Neither should contracts that commit you to a long term of instruction.  After all, if you are satisfied that the agent has given a good level of service, you don’t have to change agents even if your home hasn’t sold straight away.

Know when you will become liable for commission, and how much it will be, and make sure that you have no ‘hidden extras’ to pay for.  Avoid instructing lots of different agents, and if you feel you need to instruct two agents, at least make sure they can both work constructively in your best interests at all time.  Remember, too, that you have obligations under the contract, which includes doing things properly, and in writing, if you change agents.

The greater mutual trust you can build with the agent, the more chance you have of a successful and trouble-free sale.



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