Estate Agent Withdrawal Fee - Unenforceable because penalty?

worldwide666

Hi - I had put an offer on a place and therefore desperately needed to sell my property. I contacted an estate agent who stated that they would definitely get me my asking price knowing that I only had one property in mind to purchase (in order for my offer on the prospective purchase to be taken as credible, I needed to show that my property had an accepted offer).

I was asked to sign a 15 week contract which specified that the estate agent has the "right" to charge a "nominal" withdrawal fee of 10% of the fee that would be due to the estate agent if I got asking price in the event I terminated my contract early. In this case, the withdrawal fee amounts to £1000. Within 10 days I had lost my purchase as I was not "credible" (since my property was not under offer) since in that time I only received one offer which was £50k less than the asking price and so not accepted by me. I therefore decided to withdraw my property, since I was not willing to move for another property.

I asked the estate agent to confirm their fees, costs and charge for a reasonable amount in respect of the time spent in marketing the property for 9/10 days and bill me for this amount. I never got a breakdown and instead they are pursuing me for the full £1000.

This withdrawal fee to me seems to be a excessive and does not represent a genuine pre-estimate of the estate agent's loss. I'd be happy to pay a reasonable sum but the amount of withdrawal fee being claimed (notwithstanding the contract) seems to me to be punitive and disproportionate - in other words a penalty, which under English law, surely must be unenforceable.

Does anyone have experience with this. Am I being wholly unreasonable here simply because I signed a contract on the basis of a verbal representation that they would get me asking price in short order?

I cannot shake the feeling that I am being penalised for having chosen an estate agent who in effect promised me asking price in short order so that I could put a credible offer on my purchase but failed to deliver and so I have lost my onward purchase. Again, I am not asking for the fee to be waived, simply that they present to me the reasonable costs and expenses they have suffered and which I will then be more than happy to pay - in 9/10 days, I cannot imagine how costs are even close to £1000 (they stated that the fee was to cover photography, advertisement on the website, property details, viewing arrangements and administration costs - note that there was no EPC or floor plan).

Thanks
WW

Kayalana99

Am I being naive to say this but why not leave the house on the market for 15 weeks but just not accept any offers?

If you signed a contract saying you had to pay a £1k withdrawal fee then thats what you need to pay - thiers no debating whats in writing.

Its not about whats 'fair' its about what you signed up for.

k0sh

As an Estate Agent, I am shocked at this tactic. You should always go with a "No sale no fee" agent and never go above 12 weeks contract. You can always keep a good agent on after the contract period. The cost of marketing your property will be minimal. In any case....
"I was asked to sign a 15 week contract which specified that the estate agent has the "right" to charge a "nominal" withdrawal fee of 10% of the fee that would be due to the estate agent if I got asking price in the event I terminated my contract early."

You did not get the asking price and therefore no fee is payable?
Is the EA in the TPO scheme? You could always complain to them if so.

Could you send me a copy of the contract?

Sponge

Kayalana99 wrote: »

...thiers no debating whats in writing.

Its not about whats 'fair' its about what you signed up for.

Of course it's open to debate and fairness is a legal requirement!

That aside, and if all else fails, I agree with your suggestion to consider leaving the property on the market for long enough to satisfy the contract and be able to cancel without penalty. But don't tell the EA, or even give them cause to wonder, that's what your doing.

You'll probably have to accept viewings and even consider offers, making it look like you're still wanting to sell. Your house could be overvalued if the only offer you've had is £50k below asking, but keeping the asking price high will assist you in not selling.

outdoorcjc

k0sh wrote: »

You did not get the asking price and therefore no fee is payable?
Is the EA in the TPO scheme? You could always complain to them if so.

Didn't get the asking price after 10 days, the contract runs for 15 weeks, surely the EA needs to be given a chance to get the asking price during the contract term.

Why not leave the house on the market with them, you may get an offer at the asking price and your prospective purchase house may become available again. If neither of those things happen then you can take the house off the market at no cost.

ValHaller

outdoorcjc wrote: »

Didn't get the asking price after 10 days, the contract runs for 15 weeks, surely the EA needs to be given a chance to get the asking price during the contract term.

The risk is that the EA does get the asking price - or the agreed acceptable offer - from a procedable buyer. And OP will be liable for the full EA fee, not just the £1000.

cheekychappy

deleted as different sort of similar issue.

ValHaller

cheekychappy wrote: »

Sorry for the slight hijack here,

Please start a new thread and link back to this one (and delete your post here). You both have complex issues and it is not helpful to mix the 2 problems.

worldwide666

First, thank you for all the responses.

With respect to comments suggesting that I continue to market the property for 15 weeks, please note that the 10% fee also applies if an offer at asking price from a "ready, willing and able purchaser" (i.e. someone who prepared and able to exchange unconditional contracts) is declined. I do not know why I need to "see out" a contract when I am willing to compensate the EA for REASONABLE costs, expenses (and time) incurred - not an amount that is disproportionate pursuant to a provision which seems to me to be a penalty designed to keep me tied into a contract when I wish not to be so tied (since my prospective purchase has fallen away due to no offers coming in at the asking price within a short time frame which was on numerous occassions made clear to the EA albeit not in the written contract).

Kayalana99 wrote: »

Am I being naive to say this but why not leave the house on the market for 15 weeks but just not accept any offers?

If you signed a contract saying you had to pay a £1k withdrawal fee then thats what you need to pay - thiers no debating whats in writing.

Its not about whats 'fair' its about what you signed up for.

Kayalana99, I appreciate a contract is a contract but there IS an element of fairness implied by law. One of the few circumstances where the courts will step in and deem a provision in a contract to be unenforceable is with penalty clauses. The annexure to the Unfair Terms in Consumer Contracts Regulations 1999 guidance gives the following example:

Cancellation fees and penalties... Original term "The Company reserves the right to charge a cancellation fee, the minimum being 30 per cent of the order value, this does not represent a penalty and serves to liquidate the company's costs." Action taken = Term deleted.

The intention behind the withdrawal fee should be to compensate the EA for their costs and expenses incurred by virtue of the contract - it should not serve to keep me tied into a contract for the maketing of the sale of my property in circumstances where I no longer wish to sell (this is my home).

Didn't get the asking price after 10 days, the contract runs for 15 weeks, surely the EA needs to be given a chance to get the asking price during the contract term.

As noted above, I was only selling becuase of a prospective purchase, which fell through. I am not saying that I am not willing to pay for the EAs costs and expenses incurred to date. I have requested the EA gives me a breakdown of your reasonable costs and expenses and summary of time spent and offered to compensate them for this. I cannot for the life of me imagine how anyone could expect costs to be £1000 plus in 9 days of marketing a property; otherwise this is just excessive and one of the commentators above, who is an EA, has commented that the cost of marketing the property will be minimal.

My research leads me to consider the clause is a penalty (just look at the interntion behind it and the fact it does not in my circumstances represent a genuine pre-estimate of their loss) and I hope I can make the EA see sense here. If this gets them to change their contract terms, it is a result for all customers.

Once again thank you all for your time.
WW

GDB2222

I would say that the EA works hardest in the first week or two of marketing a property, so 10% probably IS reasonable.

Given your circumstances, you should not have agreed to the contract terms. It's a bit late now.

googler

OK, if you don't find the charge to be reasonable, then how do you derive a reasonable one? how would you calculate it?