Guide to use Estate Agents
Most of us who buy or sell a house will use an estate agent. Estate agents arrange the sale of property. They advise and guide on price, negotiate between sellers and buyers and handle the advertising of a property.
Many offer additional services such as arranging mortgages, surveys and conveyancing. It is important to remember that you are not bound to use any of these services, and it is recommend you shop around to find the most competitive deal.
Usually, estate agents work for the sellers of properties. Sellers are the clients. They pay the fees and the agent tends to put their interests first. But agents must treat buyers fairly. If a buyer pays an estate agent to find a house, the buyer is the client.
Selling a property
You can sell property yourself, but most people use an estate agent who can guide them accordingly. You should shop around for an agent. Ask for recommendations from friends and relatives who have recently bought or sold property. Choose an agent who sells your type of property and offers a contract that suits you.
You could use an estate agent who is a member of the Ombudsman for Estate Agents (OEA) Scheme. You can usually find a least one OEA member in your area. Scheme members follow a code of practice which means that, if things go wrong, the OEA will help you sort things out.
- Personal interest
Remember that estate agents may be in a position to benefit personally from the sale of a property. You must be told promptly, and in writing, if your estate agent, or a relative or business partner of the estate agent, wants to buy your property or properties.
- The contract
When you use an estate agent to help you sell a property or properties, you have to sign a legally binding contract. Before you sign, read the contract carefully and make sure you understand it. Find out whether you have the right to cancel the contract and whether you will have to pay any penalties for doing so. Check how long the contract is intended to run. You should allow a reasonable length of time for the agent to market your property and find potential buyers. Beware of contracts that tie you to an estate agent for a very long time. You may come across some unfamiliar terms in a contract. Make sure you understand what you are agreeing to. The terms ‘sole agency’, ‘sole selling rights’ and ‘ready, willing and able purchaser’ must be explained in writing if they are used in your contract. Or ask them to guide you. Here is a brief explanation to these terms
- Sole agency
The estate agent is the only agent with the right to sell your properties. If you find a buyer yourself, you don’t have to pay the estate agent’s commission although you may still have to pay for advertising, or a ‘For Sale’ board. If you change from one agent to another, there may be a period when you have to pay both agents fees.
- Sole selling rights
The estate agent is the only person with the right to sell your property. It is different from sole agency: if you find a buyer yourself, you still have to pay the estate agent.
- Multiple agency
You can ask several estate agents to act for you on a multiple-agency basis. Only the estate agent who sells the property will be entitled to a commission. The rate of commission is likely to be higher than for a sole agency or sole selling rights contract. A few estate agents offer a ‘joint sole agency’ contract where two agents agree to share one commission, although the total fee may be higher. If you appoint more than one estate agent to sell your property under a sole agency or a sole selling rights contract, each agent has the right to claim their fee when the property is sold.
Before you sign a contract, the estate agent must give you written details of how much you will be charged and when payments will be due. The agent must state the exact amount you will be charged or, if this is not possible, the way the cost will be worked out and an estimate of the final amount.
You pay a percentage of the selling price of your property as a commission. Some estate agents charge a low percentage plus an additional charge for advertising and ‘For Sale’ boards. In that case, the estate agent should tell you exactly how much the additional charge will be. If this isn’t possible, you should be given an estimate of the charge and a breakdown of how it will be worked out.
Other agents charge a higher percentage of the selling price but this includes all costs.
Occasionally, an estate agent may charge a fixed fee rather than a percentage. However, if you have many properties for sale the estate agent will guide you on the fee to be paid.
It should be clear from the estate agent’s terms and conditions when you will have to pay. Fees are usually due when contracts are exchanged, but you don’t pay until the sale is completed.
- Property particulars
The estate agent (or agents) you have chosen will visit your home to take details such as the number and size of rooms. This helps the agent prepare a description of the property (known as property particulars) before advertising it.
There are strict rules covering the way property can be described. It is against the law for an estate agent to make false or misleading statements in the property particulars. Therefore, you will have to guide them accordingly.
- Other services
If an estate agent intends to offer services to the buyer and will receive a commission or an introduction fee, the agent must give you written details. If the buyer decides to take up the offer, you must also be told in writing. This applies even if the agent offers services through someone else.
- Receiving offers
Potential buyers come and look at your property. If they want to buy it, they make an offer through the estate agent. Estate agents must tell you promptly and in writing about all offers they receive. If there are some you do not want to be told about, such as those below a certain amount, you must tell the estate agent in writing. You don’t have to accept the highest or the first offer. Unless you say otherwise, the agent should keep you informed of new offers as they come in even if you are considering selling to a particular buyer or have already accepted an offer.
Even after you accept an offer, both you and the buyer can renegotiate the price and/or conditions of sale, or pull out without penalty, up until contracts are exchanged or accepted.
Using an estate agent – if things go wrong
If your estate agent belongs to the Ombudsman for Estate Agents (OEA) they will help sort the problem out. Or the National Association of Estate Agents may be able to help if your estate agent is a member.
- The Office of Fair Trading
Under the Estate Agents Act 1979, the OFT monitors the fitness of people who carry out estate agency work. The OFT will investigate complaints about estate agents if it looks likely they have not complied with the Estate Agents Act.
The OFT can warn or ban estate agents, but cannot get involved in individual cases. An OFT investigation will not directly help in any dispute between you and an agent. The can only guide you what actions to be taken.
Buying and selling a house or properties can be a stressful time in itself. Choose your estate agent carefully for extra piece of mind.