Sole selling contracts and other key terms you need to know about...
The key terms in estate agents agreements to watch out for are:
· Sole agency (or sole agency rights)
· Sole selling rights
· Ready, willing and able purchaser
The important point is if any of these three terms appear in the contract they must be explained in writing.
Sole selling rights in the news
In August 2007, the issue of sole selling rights resurfaced. An online estate agent has complained to the Office of Fair Trading to re-examine the nature of competition in the industry.
Sole selling rights give the background to the story. The fact that the story has appeared at all is symptomatic of the state of the industry. While we're not against these contracts in principle, as with any agreement, you must know what you are signing before you put pen to paper.
On a wider front, the comments from agents in the BBC story are indicative of an industry that might have had its own way for too long. But just like any other industry agents must adapt to thrive.
What does all this mean for you? With competition intensifying we suggest you scrutinize your agent's agreement carefully, particularly if you want to try your hand at more than one method of selling.
This applies if the estate agent is the only agent with the right to sell your property. If you find a buyer yourself, you don't have to pay the estate agent's commission although you may still have to pay for advertising or a 'For Sale' board.
Watch out if you decide to change agents there may be a period of overlap when both contracts apply. This is as expensive as it sounds as you have to pay both agents' commissions if your property is sold during this time.
Sole selling rights
This is a very restrictive term. In essence it means that only your estate agent has the right to sell your property. This means regardless of who finds the buyer or how the buyer is found you still have to pay the agent.
Watch out if you're looking for a quick sale. In these circumstances this arrangement is not ideal as it may increase your costs if you decide to back up your estate agent's efforts with internet advertising or additional press advertising. It's also an unsuitable arrangement if you need a certain sale by a specific date. Under these circumstances you want to be able to have a 'plan B' which might mean seeking a cash buyer or putting your house into an auction...
Ready, willing and able purchaser
This is a clause which stipulates that you have to pay your estate agent if they find a buyer who:
· Agrees to buy
· and is able to buy your house
· Exchanges unconditional contracts
But you still have to pay if you withdraw from the sale and unconditional contracts are not exchanged. This is because the agent will have fulfilled the terms of the contract under the ‘ready, willing and able purchaser’ clause.
Multiple agencies
You can ask several estate agents to act for you on a multiple-agency basis. Only the estate agent who sells the property will be entitled to a commission. The rate of commission may be higher than for sole agency/selling rights contracts.
Joint agency
some estate agents offer a 'joint sole agency' contract where two estate agents agree to share one commission, although the total fee may be higher than for other agreements.
Watch out if you appoint more than one estate agent to sell your property under a sole agency or a sole selling rights contract, each agent has the right to claim their fee when the property is sold.
Remember none of these contracts can stop you advertising online, the option to renegotiate your contract is your right; it is always in your interest to show your property on the web to help it sell quicker.
Here are a few links to official information sites you may find useful.
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