Advice on Estate Agents fees

squirrel8

Have never posted on MSE before but read lots of fab advice in the past so hoping you all can help me with this.

Myself and my partner are selling his property to purchase a new one between us. We accepted an offer from a first time buyer through our estate agent and so proceeded to secure the house of our dreams for a very reasonable price. We accepted the low offer as were told they were first time buyers so could proceed with the sale quickly and would leave us with enough money for a large deposit on the new property. We were also told by the EA that they had their mortgage in place.
The trouble is the people purchasing our property have now dropped out of the sale. They were not first time buyers, they had a property to sell that fell through and they didn't even have a mortgage in place.

We know this is all too often occurs, but are desperate to not let our house purchase fail as a result so are considering the options available to us.

The Estate Agent must have known they were not first time buyers as the people received mortgage advice directly from the Estate Agent mortgage advisors. Also in arranging the mortgage they did a little fiddly business to raise our sale price higher to enable then to get the right % deposit to secure a mortgage. So we know they are not 100% innocent in their ignorance.

I have taken a look at the Code of Practice for
Residential Estate Agents from The Property Ombudsman that:
"7. Financial Evaluation
7a At the time that an offer has been made and is being considered by the seller, you must take reasonable steps to
find out from the prospective buyer his source and availability of the funds for buying the property – and pass this
information to the seller. Such information will include whether the prospective buyer needs to sell a property, requires
a mortgage, claims to be a cash buyer (*) – or any combination of these."
so we could argue that they did not do this as all documentation we have received from the Estate Agent notes that they were first time buyers and did not have a property to sell.

We have however now received a private offer from a friend of my partners. It is even lower again but would just about let us proceed with the sale as there is a fair amount of equity in his property.

We have contacted our conveyancer and received lots of conflicting advice of what to do now so please please offer all your suggestions:

• Should we try to renegotiate the fee we have with our Estate Agent? We are tied into a sole agreement agency (the 12 weeks has passed but would still need to give 21 days notice). I know we are tied into a contract but the new buyer wasn't even aware the house was being sold until my partner and friends met us socially so has not used any of the Estate Agent's services. Our fee is fixed at 2100k+VAT on a 130k property so seems extortionate enough. Perhaps we could offer 1k as a goodwill gesture to enable the sale to go through?
• Should we just keep quiet completely or would this come back to haunt us somewhere down the line? (our conveyancer seemed to suggest this as a solution, but we are honest yet naive players in this house buying game! And although it seems morally wrong to pay estate agents for no work on the sale, it also seems morally wrong to not recognise the work they have done previously, or more importantly our contract!)

In any case, if we are not able to sort this and therefore lose the sale, we are not happy with the estate agents morals or work so far in handling our matters to this point so are looking to cancel our contract with them and move to a different estate agent, so if we wished to do this do you know if the 21 days notice could be renegotiated?

Any advice appreciated!

DVardysShadow

Write a letter and accuse the EA of lying and breaching the Code of Practice and terminate the contract immediately without notice - if you think this position is defensible. Deliver by hand and by recorded delivery Then take your time to think the rest of this through. At least if you put the letter in immediately and the 21 days has to tick by, then the clock is started, but AFAICS, they are in breach of a duty of fidelity [to be faithful to you]. Given that your failed buyer had mortgage dealings with the EA, if they take you to court, you could get discovery on that paperwork, so you could also insist in your letter that they keep that paperwork available if they intend to take you to court?

Another example of why EAs should not conduct mortgage business. Plainly in this case, the mortgage fee has blinded them to the need to be honest with their client - they have put their own interests above yours.