5K estate agent fee for BUYER on 220K house

KnightSmile

I recently placed a bid on a 220K house.

I was informed I have to pay a 2% plus VAT estate agent fee. (£5000+). An 'introductory fee'.

I like the property and I was made aware of this fee before bidding (they made me sign a form!). So in that respect I'm going in with my eyes wide open.

I just think it takes advantage of buyers in the current market. If my bid is successful I need to find an extra 5K from somewhere!

Is this now the norm? On other places I have bidded on there hasn't been a fee...

KS

googler

Why did you sign the form?

KnightSmile

I had no choice. In order to place a 'sealed bid' I had to complete the form. Otherwise it wouldn't be accepted as an offer.

tigsly

you needed to put your off in to reflect the difference - so if that house was worth 200 - then I'd have offered 195.

It seems to happen alot around here - (SE London).. I'm really hoping it doesn't take off because it sucks (tho in some ways if a vendor - choses this route - and the buyer offers full asking price.. then vendor will be very happy wont they..)

For me the main issue is that you are paying a fee - for a service which doesn't favour you (as I assume the EA will still be working for the other party?!)

googler

KnightSmile wrote: »

I had no choice. In order to place a 'sealed bid' I had to complete the form. Otherwise it wouldn't be accepted as an offer.

But the EA is legally obliged to put your offer forward to the seller, regardless of whether or not you accept them as an agent for the purpose of them charging you a 'finder's fee', and is prevented by at least two codes of practice from forcing you, the buyer, to make use their services as a condition of having your offer put forward.

KnightSmile

Yes you are correct tigsly. I offered slightly over the guide price (excluding the fee) so effectively offered 6K over asking.

Its just horrible as a buyer as I cant add it to my mortgage, I have to find the cash up front on completion. Although it did mention that late payment will incur a 3% interest penalty. So in my mind I might just swallow the 3% and pay it in my own sweet time.

It says on the form that there is no service element to the fee and the agent acts wholly on behalf of the seller.

googler

Assuming the legal definition of 'Sale by Informal Tender' to be as per this document (i haven't found any legislative references yet)

http://www.williamshedge.co.uk/pdf/methods_of_sale.pdf

I don't see how that over-rides or supercedes the legislative requirements of the Estate Agent Act 1979, which, as I recall, contains the legal requirement to pass on offers regardless of conditions.

KnightSmile

1. Offers are invited for the above property by sealed informal tender only.
- bids must be received at XXX branch by 12pm on Saturday 8th March 2014 (this was incorrect as they meant Monday)
- All tenders must be submitted on the attached bid form which must be fully completed and signed
- Bids must be sent to XXX branch only in a sealed envelope

2. all CORRECTLY submitted tender bids will be submitted to the seller for consideration

3. An introduction fee of 2% + VAT of the contracted sale price or £2000 + VAT (whichever is greater) will be payable if the tender bid is accepted and a sale results at any time. The fee is payable for execution of the introduction only, not for any advice or service to the buyer.

KnightSmile

Googler, I agree it is fishy but if they cant do that, they are being pretty open about ignoring legislation!

googler

http://www.oft.gov.uk/about-the-oft/legal-powers/legal/estate-agents-act/handling-negotiations#named1

"You must give your clients written details of all offers received from potential buyers. This information must be passed on promptly. It can be sent by hand, post or fax.

You should keep a written record of all offers that you receive.

If your client tells you in writing that it isn't necessary to pass on certain offers, you don't have to write in those circumstances. For example, this could happen if the client doesn't want you to write with offers below a specific price level."

Darn. If they can claim they have explicit instruction from the seller not to accept offers which aren't in exactly the form you describe, that gives them licence to ignore regular offers. And we can't tell that without seeing the (confidential) contract between seller and agent.

KnightSmile

googler thanks for the info.

Yes that sounds about right to me.