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Do I have to pay estate agents if I pull out of the sale?
Help for first time sellers
08 July 2020

Do I have to pay estate agents if I pull out of the sale?

Rosie Hamilton
Writer & Researcher

Sometimes life doesn’t go to plan. A change of circumstances can have consequences for every facet of your life. If your position has changed - for whatever reason - you may find that you need to pull out of your property sale, or take your house off the market altogether.

Below we look at your rights as a home seller, what happens if you pull out of a property sale, and what estate agents fees you’ll have to pay.

What happens if you pull out of a house sale?

What happens when you pull out of a house sale depends hugely on how far along in the process you are. The earlier in the house sale you are, the easier and cheaper it is to get out of it.

Looking for more information on the home buying process?

I want to pull out of my house sale: before exchange

If you decide you no longer want to go forward with selling your property, and it’s before you’ve exchanged a contract, you can withdraw at any time - even if you’ve verbally accepted an offer from a potential buyer.

If you’ve not yet exchanged a contract with a buyer, you’re not legally bound to continue. However, if your buyer had begun to make formal preparations to move forward, you may wish to contribute to their out of pocket expenses if you back out unexpectedly. These could include their legal costs, or their survey fees.

In terms of estate agent fees, it’s unlikely that you will need to pay the estate agents anything at this point. High street agents work on a commission fee model, and are only paid once a property sale is confirmed and complete.

However, if you’re working with an online estate agent, you will still have to pay their fees (if you haven’t already paid). Most online agents are paid a non-refundable fee upfront. If you pull out of the house sale at any point - even before you’ve exchanged contracts with a buyer - they will keep their fee.

I want to pull out of my house sale: after exchange

Withdrawing after you’ve exchanged contracts with your buyer is much more difficult. Once you’ve signed the contract and your buyer has paid a deposit, you’re legally obligated to continue with the sale.

This means that if you decide to back out, you can be sued by the buyer. You’ll have to pay back their deposit, their legal expenses, and any other costs that they’ve incurred during the sales process.

As well as the financial and legal implications of pulling out at this point, backing out could have significant consequences for your buyer. For example, if they’re part of a chain the impact of pulling out at this point could be huge for the buyer.

Note: It’s important to have a valid reason for withdrawing from a property contract, or the legal and financial consequences will be much greater. For example, you cannot back out because of a buyer’s race, religion, or gender.

Do you pay estate agents if you don’t sell?

Whether you'll have to pay estate agent fees if you decide not to sell depends on the type of agent you chose, and the terms of your contract.

If you’re using an online agent it’s likely that you will have to pay the whole fee. If you’re using a high street agent with a commission fee, the situation is a bit more complicated.

Online agents

If you’re working with an online agent, you’ll have to pay regardless of whether you sell or not. This is because most online agents operate an non-refundable, upfront fee service. This means you pay them right at the start, and you won’t get any money back if they can’t sell your house, or you decide you no longer want to move.

Some online agents now offer a ‘deferred fee’, or ‘no sale, no fee’ option. But, these generally come with terms and conditions requiring you to sign up to their partner services. Purplebricks for example have a ‘Pay Later’ option with the compulsory condition that you use their partner conveyancing service - regardless of whether you sell with a Purplebricks agent or not.

If you’re working with an online agent it’s likely you’ll have to pay all or most of your estate agents fee if you decide to pull out before completion.

Thinking about switching estate agent? Read our guide.

High street estate agents

The situation is a little different with high street estate agents. Most good local agents will ask you to pay commission on your property transaction. This means they are paid a percentage of the final sale price of your home, and they’ll only get paid once your house is sold.

So, in most cases, if you decide not to sell before you’ve exchanged contracts with a buyer you won’t have to pay your estate agent anything.

After you’ve exchanged contracts, you’ve made a legal commitment to selling your home, so things get more complicated. In some cases an estate agent will expect their full fee if you pull out at this point. Technically the agent has fulfilled their role by finding a suitable buyer and progressing the sale to the point of legal commitment. Your estate agent has a legal position for claiming their fee at this point.

Some high street agents won’t charge the full amount, but will expect expenses such as marketing, and time costs to be reimbursed.

The best thing to do is to thoroughly check your estate agency contract. In many cases there will be a specific clause covering the eventuality of a seller pulling out of their house sale contract. This will detail in full what fees are due.

If you’re unsure of your obligations and rights when pulling out of contract, make sure to seek legal advice from your conveyancer, or from an independent advisory body.

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Estate agent contracts

Key things to look out for in your estate agent contract are the following:

  • A ‘ready willing and able’ clause

If you find a ‘ready willing and able’ clause in an estate agent contract, you should be hearing some alarm bells. This is a weird little clause that means that if your estate agent introduces you to someone who is ‘ready, willing, and able’ to buy your property, you have to pay their fee - even if you don’t want to sell your home to this person.

Say, for example, you decide you no longer want to sell your home (perhaps a job offer changed, or you want to stay close to family) but you enlisted an agent with this clause in the contract. If this estate agent approaches you with proof of a willing buyer you’ll have to pay their fee. This could happen months - or in rare cases years - after you’ve decided you no longer wish to sell.

Before you sign your estate agency contract, ask for this clause to be removed, or work with a different agent.

  • A ‘sole seller’ clause

If your contract has a ‘sole seller’ or ‘sole selling rights’ clause, this means that you will have to pay your estate agent when you sell your home, regardless of who finds the buyer. For example, if you find a buyer yourself, you will still have to pay the estate agent's fee. Many high street agents will only charge their fee if they find you a buyer - this is called a ‘sole agency’ agreement.

Before you sign your contract, make sure that you’re not committing to a ‘sole selling rights’ agreement. Look instead for a ‘sole agency’ agreement.

  • The term of your contract

The term of your contract is the amount of time that you’re legally tied to work with a particular estate agent. Most estate agency contracts last from 2-6 months, and many will offer a break clause. This means you can give a certain amount of notice if you decide you no longer want to work with them anymore.

If your estate agent contract has a term that’s longer than 6 months, or there’s no mention of a term length in the contract, this is a warning sign.

Combined with a ‘sole seller’ clause, an unlimited contract term would allow an estate agent to charge a fee even if you find a buyer for your home years later. Similarly, if there’s a ‘ready, willing and able’ clause, your agent could present a ‘suitable’ buyer months or years later and you would have to pay their fee.

When reading through your contract, make sure the term length is clear and reasonable.

For more information on what to expect from your estate agent contract, check out our guide.

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