If you are considering enlisting the services of an estate agent to sell or buy property, it is important to understand that there are different types of contract with each having its benefits as well as drawbacks. Therefore, you must be sure to make the right decision.
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Here are some of the common estate agent contractual agreements:
- Sole selling rights – A sole selling rights contract usually has serious implications hence you must think about it carefully before signing. That is, it allows the estate agent alone to sell your home during the contract period. Therefore, if you find a buyer on your own you will still be under obligation to pay the agent.
- Ready, willing and able purchaser – With this kind of contract, you will be required to pay the estate agent for finding the buyer even if you rescind the decision to sell the property.
- Multi agency – This contract lets you use multiple agents to sell your property but you will only pay a commission to the agent that will sell the property. This is one of the best ways to sell your house fast when you need a quick house sale. The advantage of this contract is that there are more agent working to sell your property hence they are likely to reach more potential buyers. Furthermore, you are likely to sell the property for a higher price. The downside of this contract is that you will also pay high fees. It is advisable that you consider the type of property you wish to sell as well as the state of the market before opting for this contract.
- Sole agency – This is the same as sole selling. However, the difference is that when you find a buyer on your own then you will not have to pay the estate agency anything especially if the contract is not open ended otherwise the agent might claim a commission long after the contract became void.
The other important aspect of estate agent contracts that you need to know and look out for is future liability. That is, you must understand the extent to which you are bound to the contract so that the estate agent does not make claims years after the contract expired.
Take your time to read and understand if there is any continuing liability that you might be signing for that goes beyond the contract period. Here is a checklist of the things you must be on the lookout for before signing your estate agent contract:
- Commission rates – Bearing in mind that the estate agent is out to make business, it is critical that you review all the commission rates to ensure they are in line with the agreements from your discussion with the agent. In most cases, this will be a percentage of the agreed final price.
- VAT – You need to check and confirm whether the VAT is included in the fee or not. Establishing this early saves you the agony of having to receive less money from your sale or even feeling cheated. Remember, the estate agent is under obligation to furnish you with accurate information.
- Review the type of contract – Choose the type of contract that you would like to enter into carefully. Generally, you will do well to resist a sole selling rights contract so that you do not have to pay the agent when in fact you found a buyer through your own efforts.
- Look out for additional charges – It is important to discuss with the agent about any additional charges or withdrawal fees that may not be included in the contract. In addition, the commission should only be payable upon completion.
- Contract with handwriting changes – Some estate agents may give room for additional changes such as additional marketing charges or withdrawal fees to be made by hand. You should not agree to sign such contracts as serious changes may be made behind your back to signify your commitment thus putting you in trouble.
- Check that you have not been signed to in-house services – You need to ensure that you are not signed up for in-house services like conveyancing and energy performance certificates among others that you have not talked about and agreed. Ensure that these are not handwritten on the contract.
- Review the tie-in period – You need to check the tie-in period and negotiate if it is not ideal for you. Most importantly, ensure that the introducer commitment period is not extended. Open ended sole agency contracts for example may mean that the agent may claim commission if they introduced a buyer even when the offer is made months later.
Estate agent contracts are legally binding documents that must be taken seriously hence the need to carefully read through and understand the implications before signing. The contracts are generally very long and include everything but the kitchen sink, so it’s essential you read every part of it carefully to ensure it covers what you need.