Landlord Products / Services
So, the question is, does an estate agent get paid even when they’re not even responsible for selling your home?
It’s very possible, it all ultimately depends on the small-print! But is anyone surprised by that? We’re talking about estate agents here.
But’s let’s take a closer look at the situation and provide a real scenario.
First and foremost, the presumption is that we’re referring to a traditional high-street estate agent that is paid by commission after the sale, so we’re not talking about an online agent that charges an upfront fixed fee.
So, let’s say hypothetically speaking that you instruct your local high-street estate agent to sell your property with the condition of being liable for a 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 do the terms apply for?
As always, the devil is in the details of your contract.
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 naively cough up the doe while crying themselves to sleep for working with such slime-balls.
How to protect yourself from paying unnecessary commission when selling your home
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 and question 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?
Disclaimer: I'm just a landlord blogger; I'm 100% not qualified to give legal or financial advice. I'm a doofus. Any information I share is my unqualified opinion, and should never be construed as professional legal or financial advice. You should definitely get advice from a qualified professional for any legal or financial matters. For more information, please read my full disclaimer.
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?