Does An Estate Agent Get Paid Even Without A Sale?

Estate Agents love money

So, the question is, does an estate agent get paid even when they’re not responsible for selling your home?

I’m afraid so, it’s very possible. But then again, I’m sure no one here is surprised. It’s just another day, another dishonest dollar for an agent. In any case, it’s an interesting question, and a situation that I’m sure many people have got themselves into. So what are we specifically talking about here? Ok, let’s paint a picture. Hypothetically speaking, you instruct an estate agent to sell your property with the condition of being liable for a pay 1% commission fee if the agent introduces the buyer. But somewhere with in the contract it states,

“you will be liable if we find you someone ready willing and able, even if you subsequently withdraw from the sale

What does that exactly mean? If the vendor decides to withdraw their property from the market for no reason other than changing their mind, will they still be liable to pay commission? What if the vendor finds a private buyer? More importantly, how long does the terms apply for?

Ultimately, it can vary from agent to agent, and as always, the devil is in the details of the T&C’s.

The general rule is that commission is paid only where there is a completed sale of the property, and not where the agent merely introduces a potential buyer. And of course, that’s how we all know the operation of paying an estate agent works. However, some of the more sneaky, sneaky estate agents often stuff the agreement with a clause which implies that they are entitled to a commission fee if they introduce a buyer that is “ready willing and able” to exchange contracts at a certain price. If there is such a clause, you may have to pay commission if you choose to back out after a buyer makes a firm offer.

The law- Foxton’s Vs Pelkey Bicknell case study.

The law is quite sketchy about the entire issue- there is nothing set in stone, from what I’m aware. However, there was a recent case that dealt with a similar issue, by the Court of Appeal in the case of Foxtons Ltd v Pelkey Bicknell.

A Foxton’s agent showed a potential buyer around a house. The potential buyer later viewed the same property through another agent a few months later. Eventually, the buyer purchased the property from the 2nd agent, so they got the commission.

This rubbed the poor folks at Foxton’s the wrong way, they believed they were entitled to the commission because they initially introduced the buyer to the property, while also arguing that there was a clause in the agreement with the vendor, which stated something along the lines of them being liable to pay commission if they introduced the buyer.

So disgusted with the possibility of losing out on a precious sale, Foxton’s took legal action. Yes, Foxton’s wanted the vendor to pay commission to both estate agents. Fair.

Fortunately, the court decided that Foxtons weren’t entitled to the commission because they had not been the “effective cause” of the sale itself.

But the question is, how many people would actually take an estate agent to court over this issue? I’m sure many people would just read the clause in the agreement, and then navively cough up the doe while crying themselves to sleep for working with such slimeballs.

Things to remember

I guess the most important rule is to ALWAYS read the agreement in complete when pursuing a working partnership with an estate agent- be wary of pretty much every clause.

A few questions to ask agents:

  • Will I be entitled to pay commission if I end up selling privately?
  • How long am I tied into our agreement for?
  • Am I still liable to pay commission even if I change my mind and decide not to sell my property

If the estate agent DOES have a clause which states that you are liable to pay commission even if they don’t ultimately push through a sale, then I would either:

a) tell them to remove that clause
or
b) refuse to work with them. Why would you want to work with such money grabbing parasites anyways?

Has anyone been in this kind of situation, or heard of anything alike?

22 Comments- Join The Conversation...

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adnan ghani 22nd October, 2011 @ 15:19

I was using Foxtons to sell my house. The buyer introduced by Foxtons exchanged but did not complete. I am being asked by Foxtons to pay full amount of the fee because their standard contract states that fees are due on exchange and not completion. What should I do?

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Sarah 12th September, 2013 @ 13:54

Yes I've heard of such a thing! I've just, regrettably, had to decline using an estate agent, because of 2 clauses:

1/you're tied into the agreement if we find a buyer 'ready, willing, and able'

(What if they're in a chain, and we don't want to accept? We're tied into the contract indefintely, or liable to pay the FULL selling price fee!)

2/ Payment on 'exchange of contracts'

I spoke to the estate agent today, he was very abrupt, when I questioned his terms!It was really upsetting, to be honest!

He was condescending towards me, and made me feel stupid. He assured me in 16 years of working in the industry he has never seen a deal fall through after exchange. Yet when I asked him why it would harm him to change the terms to 'completion', he said, because what if you then decide to take your home off the market? If a deal falls through after exchanging contracts! Then we'd have worked for nothing!

I said, why would I want to take it off the market? He said, you might be so stressed by then, you think it's not worth the hassle!

He couldn't wait to get me off the phone.

I know deals fall through because it's happened to somebody I know!

Very stressful!

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Rosie 6th November, 2013 @ 14:48

We as one of the more honest Agents out there only charge a fee when successfully introducing a buyer, no hidden fees, if you privately sell it or sell through another agent you cannot expect a vendor to pay your fees. Unfortunately there are agents that strip you for every penny but if you can prove you are the company who provided the buyer and the offers etc you are entitled to a fee. Don't lose faith in all Agents some of us are honest and reliable :)

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Gill Job 6th November, 2013 @ 17:35

my property was on the market approx. 18 months ago, we did
not find a buyer at that time. Recently however one of our previous viewers came back willing to purchase our house,privately, not through an agent. How do we stand commission wise, are we liable to pay commission to the agent who did previously introduce this buyer, even though our house was not on the market, and had not been for approx. 18 months. thankyou.

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Owen 24th May, 2014 @ 17:48

I was previously with Dixons estate agents. Shocking they are. Got me to sign some paper work saying he's ok to put my house on the market and pictures. But I didn't recieve the 'contract' anyway I know someone in that sector and found out they tied me in for 16 weeks and they are shocking. Be aware.......

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Louise 27th May, 2014 @ 17:53

I have pulled out of a sale as I believed my agent wasn't working in my best interests but in the best interests of the buyer and did not comply with the conditions of the offer I accepted. I now discover the small print stated that I'm liable to pay a fee if they find a client that is willing and able regardless of the reason I sacked them.

My sale wasn't progressing and I did not trust the agent which is why I pulled out as I was being asked to jump through all sorts of unreasonable hoops post accepting the offer. After I told the purchaser I was pulling out due to all the unreasonable demands and delays they told me that they were willing and able to go to exchange without any further delays.

I'm willing to go to court over this as firstly the agent assured me that it was a no completion no fee contract and they did not progress the sale in the time frame I had specified in relation to accepting the offer and believe the buyer was either a friend of or a relative of the buyer.

This stuff is totally dishonest to be fair and yes I should have read the "small" print but who does really until you have been stung? Contracts should be honest and open and an agent shouldn't tell you things that are not in the contract, they should draw your attention to the detail that is detrimental to the client at every stage of the sale. Not to do so is dishonest.

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Nigel Bartlett 3rd July, 2014 @ 15:56

All seems very one sided. You instruct an agent to find you a buyer. You pay no fees up front. You do not pay for your advertising. You do not pay for the time spent by the agent. Name another advertising business that works this way - Autotrader, your local paper or any other business would laugh you out of the office if you suggested they only get paid if the product was successfully sold. That aside, as said, you instruct an agent to find you a buyer. So if the agent finds you a buyer, you agree to sell it to that buyer at an agree price and that buyer is "ready, willing and able" to purchase, why is it then unfair for the agent to get paid if you change your mind about selling? They've done the job you asked them to do!

I see nothing "sneaky" about an agent having a clause allowing them to be paid for completing the job instructed

Regarding the Foxtons case used as an example - this is nothing to do with a ready willing and able clause. This is to do with a change of agent. Firstly, the agent taking on the property from Foxtons had a duty to disclose if there was a possibility of duel fees. Foxtons had a duty to provide a list of introduced parties when they were dis-instructed. If an agent markets the property and introduces a buyer, should they not get paid if the seller decides to withdraw from them? If that's the case then every vendor will just get the agent to do the work and then dis-instruct as soon as a buyer is found

Not all agents are perfect, some are corrupt but I've heard of more vendors trying to get out of paying for a service they've agreed to and ripping off their agent than agents ripping off their vendors

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paulp 16th July, 2014 @ 11:19

Nigel,

If the model does not work for the estate agents, I suggest they take the plunge and charge up-front fees to defray the initial costs. For argument's sake say £1,000. That can be deducted from the eventual fees (say 1 per cent of sale price).

Any takers?

PP

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James 7th August, 2014 @ 15:01

Marsh & Parsons do this using a number of clauses including 'Ready, Willing and Able'. I would strongly advise against using them - my experience of it, having had a private buyer come along completely independently of them, is they will even try to claim they have a buyer who is Ready Willing and Able, even when they do not.

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Pam 7th September, 2014 @ 11:54

I changed my estate agent after 6 weeks into a 6 month contract and now signed with another agent but they are even worse not producing any protentual buyers and now I am thinking of going with someone else, how do I stand if the next agent gets me a buyer will I have to give the first two any money as well, eleven though I will have cancelled them.

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Paul 14th November, 2014 @ 13:33

I wonder if anyone might help.

I signed an agreement with an estate agent, in the agreement you had the 14 day cooling off period, but a clause that should you cancel they are entitled to a fee of upto £200. They decided to advertise my property without having the draft details signed by me, and most the details were wrong. So i called them to cancel the agreement. I was told they would only stop advertising the property if i paid them the £200 as stated as they had paid this to rightmove, papers etc, etc.

Are they right to charge this, or as i had not even signed the correct draft details, should the cost be with them, after all, they decided to advertise a property that hadnt been approved.

If anyone could help, that would be great.

Thanks

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Chas 20th January, 2015 @ 09:42

A friend of mine has a house for sell with an agent, if I deal with him direct will he still be liable for the estate agent fees?

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Ruth 29th July, 2015 @ 16:19

Struggling with a bad agent with a very similar case to that quoted of Foxtons v Pelkey Bicknell. They introduced a buyer who decided they did not want the property in March 2015. End of April I asked agent to stop marketing the property as another agent had sold it. That sale fell through so I signed up with a completely different agent as Sole Agents. The original buyer from March went to them in June and eventually we came to exchange on the property. The bad agents are now citing that they showed the buyer the property in March. A bit of confusion arose when the buyer also went to the bad agents as they believed the nice agents had not passed on their offer which was very quickly sorted out.Even when they knew the buyer had gone to this other agents they did not make any contact with me whatsoever once they were told the nice agents were dealing with this sale. The bad agents are now threatening me with court. Go for it I sale as it's a "distressed sale" and I will still owe £50,000 after the completion so they can just join the queue the greedy what-nots!

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Jim 29th October, 2015 @ 13:34

Our agent has a 50% "withdrawal with a sale in progress" clause. We have/had a buyer who wanted to exchange in the next couple of weeks (as they'd sold their house and had a pushy buyer themselves); however our purchase fell through and despite putting an offer in on another property we were unsuccessful. We've been looking desperately but no other suitable properties have come up.

Our EA has been phoning and putting all sorts of pressure on (on behalf of the buyer - thought EAs acted for the vendor...?), and eventually gave us a deadline of Monday. So I called on Monday and said that we hadn't been able to find a property, we weren't willing to exchange and go into rented, so as we had been given a deadline I had no choice but to say we wouldn't be able to proceed with the sale as we can't meet the exchange timescales.

Now they've sent us an invoice for the 50%. I don't feel this is fair (and therefore enforceable) because we have been harassed and left with just the one option.

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Andrew 30th June, 2016 @ 07:42

Can anyone advise me of the situation I'm in. I sold my house last year I was with 1 estate agents who introduced a possible seller, in between as no offer I went with another agent the original vendor then put in an offer but it was through the 1st agents I was advised to wait till the 3 month period of agreement was at an end the go back with 1st agents. The sale went through, I had a few emails from the 2nd agents stating I owed them but 1st agents assured me I didn't. I moved everything fine then yesterday, over a year later I receive a demand for payment with the threat of debt agencies being called. I am wondering if I do owe them and 1st agents lied?

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Nigel 30th June, 2016 @ 19:20

Andrew, from what you say there should be no fee to the second agent. They did not introduce the buyer and you were not in sole agency contract with them when you exchanged / completed the sale. Ask for their complaints procedure and chances are they will back off as it should lead eventually to the property ombudsman getting involved which they won't want. Every "profession" has its bad apples unfortunately. Hope you get sorted

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monabri 5th July, 2016 @ 15:22

Purple Bricks - they put your home on the market and even if it ain't sold after 10 months they want paying.
Of course, you can pay up front and you then get to decide who does the conveyancing.
If you don't pay upfront, the THEY decide and I bet they get a juicy kickback.

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Mrred 25th February, 2017 @ 01:17

I signed up with EA1 as sole because my offer was accepted on a property they were selling. This was on the terms I can sell my property quick from the sellers because they have another buyer on that property with another estate agent.

The owners of that property then went with the the other estate agent after 2 week as they had completed exchange of contracts.

I was with EA1 for 2 weeks then verbally told them I no longer want to use them as the property got sold with the other EA and I did not get any viewings of my property during the 2 weeks with EA1.

1 week later my offer was excepted on another property with an online EA and I place my property back on the market with EA2.

Now EA1 has called me to inform if I sell my property with EA2 within 8 weeks I am liable to pay them a fee. And I should go back to EA1.

I did sign a contract with EA1 but he did not give me a copy and I have asked him to send that copy by email but got nothing.

Please could anyone give some advise on this.

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Nigel 25th February, 2017 @ 19:33

I'm assuming EA1 has a minimum contract term within their contract of 8 weeks. You may want to check their definition of "sold". It's unlikely that you would get an offer agreed and get to "completion" within an 8 week period. Hope this helps

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Andrew Overs 11th March, 2017 @ 11:23

Isigned a sole contract, I had written on it NO Sale No Fee, which was agreed to.
There was a 20 week Initial Period.
I gave cancellation in time so that when the date that the Initial Period ended the house would be taken off the market.
I had no viewings at all over the 20 week period, but when the house was taken off the market I was sent a list of 350 'names' no address or postcode or area next to the names.
It looks like a list taken from anyone who looked at Rightmove.
I was told if the house was to sell with another agent or myself, to any of the names on the list I would be liable for payment.
On the Agency Agreement Part 5 - Agency Agreement - Paragraph 2 - it states 'After the Initial Period I/We agree that the terms remain UNLESS the agreement is terminated by Me/Us or a multiple agency arises.
If I/We instruct another agent or use a website/portal other than your own (with or without our knowledge) the fee payable will be 3% (three percent) of the selling price plus vat at the prevailing rate.'

I am able to sell the property after 6 months of the agreement otherwise when my 'obligation' ends.

The agreement was cancelled in time so that when the Initial Period was reached the property was taken off the market. Does the above mean that I have no further obligation.

Thanks for your help - I am the seller

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AZA 15th May, 2017 @ 12:23

The market is flat at the moment, so I cannot blame an agent for no views, regardless of the interest on search engines. I have seen five now, and each contract is different with at least one clause that I do not find acceptable.

Greene and Co is the agent I would love to use, yet there is a clause I do not like (they have agreed on some others). The payment should be made on completion and their fee should be paid at the same time by the solicitor; not me. The clause states I would have to pay 4% above the Barclay rate if the payment was delayed by 14 days. I don't understand how the money could be delayed, unless the solicitor would fraudulently put the money into her/his company account. I will be so disappointed if I don't use this company. I seem stuck to get advice on this topic.

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Jenny 5th June, 2017 @ 11:21

I have had my Home on the market with local Eagents, but after 7 months of no sale I want to cancel the sale for at least another 12 months. Would I be liable to pay my Eagent anything for pulling out??
Many thanks

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