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Estate Agent contracts – what to watch for

Estate agent contracts can be complex - know what you're signing, challenge anything you don’t like and never pay more than you need to. We explain different types of contracts, clauses to be careful of and what to expect in relation to fees, standard terms and notice periods.

estate agent contracts

Types of estate agent contracts

There are different types of estate agent contracts. Each has its benefits and drawbacks, so make sure you know what they are and choose carefully:

  • Sole agency – Sole agency is the most common type of estate agent contract. Sole agency means the estate agent is the only agent with the right to sell your home during the term of the contract but if you find a buyer yourself, you don’t have to pay the estate agent fees. However, if the contract is open-ended, the agent might be able to claim commission, even years after the contract is over (see below).
  • Joint sole agency – Under a joint sole agency agreement, you appoint two agents, who agree in advance who gets the commission, which may be shared. This usually only makes sense if you want to appoint a specialist agent who acts nationally, as well as a generalist local agent, rather than having two local agents competing with one another.
  • Multi agency – You can use as many agents as you like and only pay commission to the one who sells your property. The more agents you get working for you, the more potential buyers you will reach, and potentially the higher the offers you will get – but you will pay higher fees. Using this approach depends on what type of property you have, and the state of the market. Read more: How many estate agents should I use?
  • Sole selling rights – If your contract gives the agent “sole selling rights” then think carefully before signing.  The estate agent in the contract is the only one allowed to sell your home during the period stipulated. And you will have to pay that estate agent, even if you find your own buyer.
  • Ready, willing and able purchaser – Do not accept this! It means you have to pay the agent for finding a buyer, even if you decide not to sell.

Shop around for the best estate agent near you – compare their latest performance using our free EstateAgent4Me tool

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Estate agent fees – what to watch for

When you are agreeing the estate agent fees and the terms of your contract, your estate agent should quote their commission rate including VAT and set out their total fee calculated using the asking price. Check this is the case when you are reviewing your agent’s commission:

  • Work out the total commission as an amount so the final bill doesn’t come as a shock. Remember the commission amount can go up or down depending on the final agreed selling price.
  • Make sure that the commission or fee includes VAT.
  • Always negotiate on the commission %. The agent wants your business so they’re likely to be flexible. A small lowering of the percentage might seem trivial but it can make a big difference and save you thousands of pounds.
  • You may want to adjust the amount of commission you give the estate agent according to how good a job they do. One way of doing this would be to offer 1% if they reach asking price, 1.25% if the final price is above asking price. You can also use this technique to try and push them to find a quicker sale.

For more advice on estate agent fees see ‘How much should I pay the estate agent’.

Fixed fee estate agents

Some agents prefer to work on a fixed fee or fixed commission basis. Most online estate agents will ask you to pay a fixed fee upfront. This has the advantage of working out an exact budget for estate agents’ fees and the total fee is often lower.

The flip side is that the agent may be less motivated to get you the best price, as they will receive the same fee regardless.

As with % commission, always check if VAT is payable on top of the fee.

Compare online estate agents – their packages, fees and ratings.

No sale, no fee

Most high street agents are no sale no fee.  But some online estate agents offer a ‘no sale, no fee’ option as well.  This means you won’t have to pay if the agent doesn’t find you a buyer or if the sale falls through.

Tie-in periods and notice periods

Most estate agent contracts will specify a tie in period. But if you end up not being happy with their service, you will want to be able to terminate the contract within a reasonable timeframe.

  • Make sure your contract gives you the flexibility to terminate without incurring a penalty or withdrawal fee.
  • Pay attention to the sole agency lock-in period which varies dramatically across agents. 4 weeks or 12 weeks are the most popular terms. More than this is unnecessary.
  • There can also be a notice period on top of the minimum lock-in period.
  • We have found instances of tie-in periods of 20 weeks with a 4 week notice period, so be sure to check this and negotiate if you are not happy.

Hidden fees

Check the estate agent contract for extra fees, such as marketing (which should be included in the commission fee!) or penalties for ending the contract early. Ask for these to be removed if you don’t like them. Any additional charges need to be agreed with you in writing in advance of you being charged.

Cooling off period

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations indicate that sellers have a right to a 14 day cooling off period for contracts signed at a location away from the agent’s business premises – usually, the selling property.

Agents have to give sellers 14 days in which they can change their mind, without penalty, about instructing them. The seller must be given clear notice, in writing, which states their right to cancel within the 14-day period.

Importantly for those agents who give the vendor the option to sign away the right in order for agents to begin work immediately, consumers will nevertheless have the right to cancel a service which has begun within the cooling-off period.

So, for example, a vendor who has, in writing opted out of the cooling-off period might change their mind a week later, and is entitled to withdraw from the contract.

Find and compare local estate agents: check typical fees, success rate & asking price achieved

Open-ended contract and ongoing liability

With open-ended agreements the agent can claim commission if you sell to someone who they originally introduced to your property, even if months or years have passed since.

For example, imagine you were with Agent A, on a sole agency contract. But were not happy with their service so you terminated the arrangement, served your 2 weeks notice and were off. Then you signed up with another estate agent – Agent B. Three months later, the sale of your property goes through. You pay Agent B the commission you owe them for selling your home only to be approached by Agent A asking for a percentage as well because they argue the purchaser was originally “introduced” by them. This could happen months, or even years after you left the original contract if you have an open-ended agreement.

So read your contract carefully and understand what continuing liability you might be signing up to beyond the term of your contract. Fight any suggestion that you should pay two finders’ fees. And, if you switch agents, it is a good idea to get a written list of people the agent feels they have introduced (and share this with your new agent). Read our Ask an Expert Q&A on continued liability

Checklist before signing an estate agent contract

Review any estate agent contract carefully before signing and before allowing the agent to take photos or to begin marketing your property. Be mindful of the following:

  • Review all commission rates. They should be in line with what you discussed with the agent and should be set on the agreed final sale price.
  • Be sure it is clear whether or not the fee includes VAT.
  • Review the type of contract. Resist agreeing to sole selling rights as this means the estate agent gets a commission even if you find the buyer yourself.
  • Ensure there are no additional charges or withdrawal fees and that commission is payable upon completion.
  • Be wary of contracts with handwritten changes. Some agents use this to apply additional marketing charges or withdrawal fees. Sometimes called a ‘marketing incentive fee’.
  • Ensure you have not been signed up to any estate agent in-house services (such as conveyancing, energy performance certificates) you have not agreed to. Check that no services have been handwritten onto your contract.
  • Review the length of the tie in period and the written notice period. Negotiate this if you are not comfortable. Be sure there is no extended introducer commitment period. Open ended sole agency contracts can mean that an agent can still claim commission if it introduced a buyer. Even if the offer is made months (or potentially years) after the estate agent stopped marketing your property.

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