House Valued Less Than Asking - Can Estate Agents Claim Fee?

sashy78

Hi, I hope someone can help, I've been searching for an answer online for a few hours, and I think I've got my answer, but I still can't find it in black and white.


My Dad's sold his house subject to contract, the bank survey has been done and it's come back less than the asking price, so the bank won't lend the money to the buyers.


He's spoken to his estate agents, and said that he can't afford to take any less, and asked if he can put it back up for sale and wait for another buyer, but the estate agent has 'warned' him not to act too rash because he'd still have to pay their fees.


I'm I right in thinking that he's going to have to sit on his hands and wait for the existing buyer to either come up with the extra money or for them to pull out of the sale?


I seem to be coming to the conclusion that if my Dad says 'forget it' he'll be liable to pay the estate agency fees because he's pulled out, but if he sits tight and the buyer's pull out he won't have to pay the fees???


He's happy for it to remain with the same estate agent, but can't take less than the agreed price for the house.


Can anyone clarify this for me?


Thanks in advance

SmlSave

He needs to read the contract he signed with the estate agent. Normally they are only due their fees once the house has sold so deciding not to sell should mean no fees.

hcb42

there is not much point putting it up for sale again and hoping another buyer will buy

Why isnt he accepting the valuation?

G_M

Read th contract.

However in most cases the estate agent's fee is payable if they introduce a 'proceedable' buyer.

Since this is buyer is not proceding, no fee would be due.

DRP

Exactly what gm says.

He should also think about whether he wants to do business with an agent who appears to be threatening him in this manner. Very poor practice...

eddddy

Hi sashy78

In simple terms, there are 2 types of EA contracts:

- 'No sale, no fee' contract
- 'Ready, willing and able' contract

In my opinion, always always always go for 'no sale, no fee' - then there can be no argument about whether a fee is payable. And you can withdraw without penalty for any reason.

A 'ready, willing and able' contract means the fee is payable if the EA introduces a 'ready, willing and able' buyer - even if you withdraw and the sale never happens.

I'm guessing that your Dad signed a 'ready, willing and able' contract. But even so, as others have said, the buyer is not 'ready, willing and able' to proceed with the purchase on the agreed terms (i.e. the agreed price). So a fee should not be payable.

Maybe give written notice of termination to the current EA (check the contract for terms), and find a 'no sale, no fee' EA to avoid future problems.

(But also check the current EA's contract for withdrawal fees if you terminate the contract. And make sure the next EA does not charge withdrawal fees.)

sashy78

Hi, thanks guys, the valuation is quiet a lot less, and we're not sure why at the moment, but Dad's not in a position to accept a much lower offer (we're talking £12k difference), he'd be better of staying put.


The contract is a 'ready, willing and able' purchaser so I'm going to tell him just to sit tight and wait for the buyer to withdraw so he won't have to pay the fees.


I'd not realised that there were two types of contract, I myself had to pull out of my house sale before exchange of contracts last year because my job became at risk and we had to pay the estate agents the full fee. I feel a bit guilty I'd recommended the same estate agents to my Dad


Thanks for your help!!


Sam

Freecall

You have not stated the exact figures but even under a ready, willing and able contract you are not automatically liable to pay the fees if the agent finds a buyer.

A Court would look at the facts of the case. If the agent had agreed to market the property at £300k for example and then found you a buyer at £200k then they would almost certainly not be found to have carried out their contractual obligations.

On the other hand finding a buyer willing to pay £299k would probably be considered to be a reasonable completion of the agent's obligations under the agreement you entered into.

sashy78

Hi Freecall, the sale agreed was for £112k and the valuation has come back at £100k.


They actually put the house up for £119k, but advised Dad he might have to lower the price for a sale in this market, which he was happy to do, but to drop another £12k off the price, he can't afford to do and wouldn't have put it up for sale if they'd said it was only worth £100k.


He's not going to want to go to court with it, his health isn't great, and he doesn't need the stress.


As long as he stands his ground and won't budge on price now, his buyers will have to pull out and that will leave him free to give notice on his contract with the estate agents and not liable for any fees - I am right aren't I?


Thanks

Thrugelmir

Did the valuation highlight any particular issues?

sashy78

Hi Thrugelmir, not that we are aware of, it's just the bank that aren't prepared to lend that amount to the buyers.