Every estate agent is different, meaning you'll across a variety of contracts. These are legally binding contracts, so as a seller, it's important to consider before you sign on the dotted line.
There are three types of agency agreements you'll come across:
- Sole Selling: this contract means your agent is the only one allowed to sell your home during the term of the contract. They are also entitled to payment even if you find a buyer yourself.
- Sole Agency: this is essentially the same as 'Sole Selling' except that if you find a buyer yourself, you don’t have to pay the estate agent fees. This is the most common type of estate agent contract.
- Multi Agency: this allows you to use as many agents as you like, and only pay commission to the one that actually sells your property. However, this usually means the fees are higher as the winning agent will share the proceeds of the sale with the other agents so everyone gets something. This is a good option if your property is tough to sell and could benefit from the agent’s extensive contact list – the more agents you use, the more potential buyers.
Things to look out for
- Ready, willing and able purchaser: avoid this clause like the plague. This means that as long as the agency can find a buyer you will have to pay the fee, even if you decide not to sell!
- VAT: agents will often give you their fee, exclusive of VAT. This means you need to add 20% on to their fee. For example, 1.2% + VAT translates into 1.44% inclusive of VAT. Make sure you check this, and that you compare fees accordingly.
- Tie-in Period: pretty much every estate agent includes a tie-in period in their contract. This typically lasts 6 weeks, with a notice period spanning 1 - 4 weeks. Always be sure to review this detail carefully as some agents’ contracts can keep you tied to them for as long as 6 months!
- Cancellation Fee: some agents will include a cancellation fee if you choose to switch to another agent or withdraw your property from the market.
- Marketing Fees & Extras: some agents will try to win business by charging lower fees than competing firms, but then try to sneak in additional costs such as marketing fees, EPCs and so worth. Find out what agent fees should and shouldn't include.
The best option for most people is a sole agency contract with a good local agent. Some sellers choose to use more than one estate agency but remember that multiple agents don’t necessarily result in more potential buyers. You could find yourself doubling your fees for no extra results.