I bet most people have no idea what the agency agreement (or terms of agency as its sometimes called) they signed actually says.
In fact I would go as far as to say that all most sellers do is sign on the bottom line, keen as they are to get on with things.
Just recently I was asked by a friend of a friend to look over the agency agreement he had signed earlier this year with another local agent as he had just received a bill for £2000, five months after he had withdrawn his home from the market having decided not to sell after the agent had found him a buyer. Imagine his shock when this unexpected invoice popped through the letterbox.
Having looked through the offending agency agreement it became clear that hidden within the small print (why are all contracts written in such small print? Maybe they’re sponsored by Specsavers!) was a paragraph that no sensible seller would agree to if they knew it was there.
So what were the offending words……. ‘READY, WILLING and ABLE’, on their own nothing too scary but when added to the sentence ‘If we introduce a purchaser who is ready, willing and able to exchange unconditional contracts for the purchase of the property, we reserve the right to charge the fee agreed even if you subsequently withdraw from the sale and unconditional contracts are not exchanged irrespective of your reasons.’
So, in simple terms what does this mean, well basically if they find you a buyer who is ready to proceed and you change your mind for any reason they can charge you the full amount of the fee.
Now I’m sure you might be saying that seems fair as the company has presumably worked hard to find a buyer and deserves to be rewarded for their efforts. However, there are so many reasons why you may not be willing or even able to proceed, such as not finding a home to buy, or changes to your personal situation, maybe even financial or health events.
Would you be happy to pay the agent if any of these events occurred, maybe you would but probably not if you didn’t know this was a possibility.
So what’s the answer?
Firstly, don’t sign any paperwork unless you fully understand the consequences, remember an estate agency agreement is legally binding. Secondly, insist the agent explains clearly and concisely your obligations before you agree to go ahead and if they can’t or don’t choose another company. Finally, choose your agent wisely preferably one who has been recommended to you and definitely one who doesn’t look to charge you for work not completed.
Estate agents are regularly accused of bad practises and not looking after their clients interests properly and who can blame people when contracts like these are still being used.
So, what happened to the friend of a friend I can hear you ask. Well, the matter is still being discussed but hopefully in this case as the buyer was not in a position to exchange contracts at the time he withdrew it shouldn’t cost him any money. In fact the Property Ombudsman , who oversees the conduct of estate agents in the UK has clear views on this type of wording. Although there is nothing legally wrong with using this sort of paragraph the agent must prove that the purchaser was actually in a position to exchange contracts not just that they were willing to.
But just because it’s legal doesn’t make it right and in my humble opinion if estate agents want to be respected by the public they could go a long way to achieiving this by being more honest, transparent and fair.
If you would like my advice on an agreement you have or are thinking of signing please get in touch, or of course give my team a call and let us help you with your move.
I think you’ll find us a lot more customer friendly.