Estate Agent Withdrawal Fee - Unenforceable because penalty?

giddypenguin

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.

At the moment if you withdraw you pay £1000 (you signed the contract... as far as I can see you owe the money) or you could stay on the market, they MAY get you a full asking price offer in 12 weeks (I personally think that is unlikely... but still) if they don't get you an offer you are £1000 better off, if by some magic they do, you owe them £1000 - I'd take the gamble that they won't.

ILW

If you think the £1000 is unreasonable, why did you agree to it in the first place?

bebewoo

ILW wrote: »

If you think the £1000 is unreasonable, why did you agree to it in the first place?

Because he does not have regular dealings with estate agents and so did not realise that they would make unrealistic promises (lies) in order to get this money? And then that they would try to scr*w him for the money regardless of their failure to deliver?
Now he HAS dealt with estate agents he knows what they are like, but it's a bit too late for hindsight now.

giddypenguin

bebewoo wrote: »

Because he does not have regular dealings with estate agents and so did not realise that they would make unrealistic promises (lies) in order to get this money? And then that they would try to scr*w him for the money regardless of their failure to deliver?
Now he HAS dealt with estate agents he knows what they are like, but it's a bit too late for hindsight now.

As far as I can see they haven't failed... in 10 days they've got him an offer, others complain of no viewings in 10 months! They've advertised his house and in accordance to the contract he signed he owes them money.

Read the contract, think about the implications, then sign. We've all had to learn the lesson... some of us the hard way.

martinsurrey

okay let’s assume an estate agent earns £30k a year.

On a 220 day working year that’s £136 a day, add in employment costs (NI, Pension etc at say 25%) and we have £170 a day.

Say 3 estate agents have one admin staff (reception cleaner etc) who costs a total of £20k a year, so £30 per day per agent.

Say there is one office manger per office earning £50k (so costing the company £62,300), managing 6 agents, that’s £47 per agent day

Office costs, say an office costs £60k a year for 6 agents and support staff, (Inc rent rates electricity gas, car costs, phone costs, photocopy costs, computer costs) that’s another £45 per agent per day.

So we’re up to £292 per agent per day.

Add to that the costs of actually marketing your property

Now then you say you had an offer so at the least the agents did the following

-spent time at the property getting full details
-photographed
-created the listing
-spent time listing the property on all the portals
-talked to the potential viewers on the phone as well as phoning their contact lists
-spent time on viewings
-spent time on second viewings
-spent time talking to people after viewings
-negotiating the offer
-talking to you about various things

I can VERY easily see them getting to their £1’000 fair costs...

worldwide666

Thank you once again. I should add that the offer was made based of a viewing that we did ourselves as the EA failed to show up!

For those that say read the contract - I did and as you all note I still signed the contract based on desperation to secure a purchase and the understanding that I would get asking price in short order (to get credibility to secure my purchase) - which I was assured by the EA immediately prior to me signing the contract. Suffice to say, things did not work out as intended.

The example of working out costs by martinsurrey assumes that the EA and its staff solely spent the day dealing with the marketing of my property. Is it right to assume that my property was solely marketed by an individual or individuals for a full working day for 9/10 days when the EA has a book of numerous other properties? Further, the costs associated with operating an office and having staff seems to pre-suppose that the sole reason for the EA being in business is based solely for the reason of marketing my property (it is not as if I asked the EA to provide some unique service outside the oridnary course of their business justifying them passing this cost on to me). Again, I would welcome thoughts if I am wrong but doubt it very much that a court (or even the ombudsman) would consider it fair to pass on employment/office related costs, which are oridinary costs in operating a business. I am also curious if this is the EA's standard contract, and the asking price was a much lower amount, then a cancellation fee equal to 10% of that amount would also be lower - how does this impact the costs and expenes sought to be recovered by the EA? Why should some people end up paying more than others when the costs invovled in the marketing of the property are the same/constant if the property is withdrawn? Remember, I have asked the EA to provide a breakdown of costs and have not received this to date.

I find it interesting that where there are protections clearly implied by law, certain people on this board are taking the view that signing the contract is the end of the matter. I should point out that this is clearly not the case (see the OFT guidance on unfair contract terms). With respect to dealings between business and consumers, there is always an inequality in bargaining power - although I do acknowledge that I did have freedom to walkway, this particular EA had insight into my property and verbally at least promised to deliver asking price within a short time frame (but, again, you can argue I signed a contract). I am also somewhat suprised that certain commentators here take the view that it should be the consumer that must suffer the "hardway". Why should it not be the party that is imposing an unfair term (or is it that in my case the consensus here is that a fee based of a formulaic approach that results in £1000 plus "punitive" fee is just and reasonable)?

Thank you all again - an interesting set of views and thoughts, which are all welcome.

GDB2222

You started off saying it's a penalty. I don't think it is.

You've now moved on to unfair contract terms legislation. Which particular part of the regs do you think applies here? I guess that the crucial question is whether or not you were aware of the £1k fee when you signed up or whether it was hidden in what the red-tops call the small print.

Assuming you were aware of the £1k fee, surely that was the time to argue about it. You say that you didn't because you were desperate to find a buyer, so why didn't you find another estate agent? If you knew about the fee and still went ahead, I think you'll find the UTICC regs 1999 won't help you.

outdoorcjc

worldwide666 wrote: »

Further, the costs associated with operating an office and having staff seems to pre-suppose that the sole reason for the EA being in business is based solely for the reason of marketing my property (it is not as if I asked the EA to provide some unique service outside the oridnary course of their business justifying them passing this cost on to me). Again, I would welcome thoughts if I am wrong but doubt it very much that a court (or even the ombudsman) would consider it fair to pass on employment/office related costs, which are oridinary costs in operating a business.

I would expect the EA costs their fees etc in order to recover these fixed costs across the business they do during the year so it's possible the court could award a percentage of these fixed costs in any settlement.

googler

worldwide666 wrote: »

Again, I would welcome thoughts if I am wrong but doubt it very much that a court (or even the ombudsman) would consider it fair to pass on employment/office related costs, which are ordinary costs in operating a business.

Surely the whole purpose of the withdrawal fee is to cover these costs?

You've denied the EA the chance of earning their full fee by withdrawing your property before the end of the contract term. The full fee, in theory at least, covers the running costs and provides a surplus to generate income for those in the business, plus (hopefully) a profit margin. They now can't even cover their costs from this fee, so the withdrawal fee applies.