Selling Your House? Read Before You Sign ...
- AuthorEllie Gilbert
With growing possibilities to view properties for sale and the desperation for sellers to sell, putting a house up for sale is not as straightforward as it might seem. You no longer have to go anywhere to look for your dream home, when you can take virtual tours online. This means that, for a seller, there are many things to think about - you need to choose which estate agent or agents you use, agree their fee and then hope that they market the property effectively and find a buyer. Remember, you must also sign a contract with the estate agent first. How many people actually read this beyond reading the fee payable?
We have seen a growth in enquires in relation to ‘Sole Selling Rights Agreements’ which can land people in a sticky situation financially, but what does this actually mean?
Types Of Agreements Explained
Estate agents have different fee structures and different types of contractual arrangements. It is important that you know what you are agreeing to before you sign the agreement.
Multi-Agency – you can use as many agents as you like and only pay commission to the one who sells your property.
Sole-Agency – the estate agent in the contract is the only one allowed to sell your home during the period stipulated, if you sell with a different Agent, there will be fees payable to both Agents.
Sole Selling Rights – think carefully before signing this type of agreement as it means that much like Sole-Agency, 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. This means that you will more than likely have to pay the estate agent fees no matter how a buyer becomes aware of your property.
Many of the agent’s agreements include clauses to say that their fees are payable if you sell to a purchaser who was ‘introduced’ by them during the agreement period. This means that even if you sell outside of the agreement period, but to a buyer who was introduced by them, you will be liable to pay their fees.
The definition of ‘introduced’ is a wide ranging one, it may cover negotiations with a buyer, viewings, sending details or answering enquires, a buyer who knocks on your door as a result of seeing a ‘for sale’ board outside of your house, a buyer who views the property through one agent but makes an offer through another or even a buyer who knows you.
If you have entered into an agreement which specifies that it includes introductions, it may be sensible to ask the agent for a list of the names of the people they believed that have introduced to your property.
Tie-in & Notice Periods
You also need to be aware of the length of the agreement you are entering into. Estate agents are likely to specify a length of time as a minimum for them to sell your property but beware of long tie-in periods which are sometimes made longer by a very long notice period, for example, the tie-in period is 16 weeks for the agent to sell your property, after which you can cancel the agreement, by giving 12 weeks notice. In effect this means that the minimum length of the agreement is 28 weeks. This is only if you give notice after the minimum period of 16 weeks, which means you could be tied in for even longer if you do not realise this.
These types of agreement do not only arise with estate agents. We see them in many different types of contract, for example the sale of a business. It is extremely important that you read any agreement before you enter into it and, If you are unhappy with the terms of an agreement, negotiate changes with the other party which you feel more comfortable with or which suit you better before you sign it.