Estate agents taking me to court?

lee111s

You need to pay the money.

An estate agent round here take the payment upfront if you go for their "premium" package which includes profession photos, featured home etc.

tykesi

pitbullpeebs wrote: »

Thanks for the replies, It seems it's not a contract issue but the the ready to sell package that they are charging me for. I understand that I agreed to it in the 1st place but I didn't forsee a problem selling the house. Properties on my road are selling in days, they couldn't sell mine in 15 months.

So you've over priced it?

Guest101

lee111s wrote: »

You need to pay the money.

An estate agent round here take the payment upfront if you go for their "premium" package which includes profession photos, featured home etc.

I'd expect all EA's photos to be 'professional'

Guest101

googler wrote: »

In which case, they'd be in breach of their side of the contract.

However, the things which the EA has paid for, on behalf of the seller, which are only recoupable by means of such an exit/cancellation fee, are self-evident - printed schedules, a sale board at the property, Rightmove and other internet listings - and will be easily provable by audit trails and contracts with the third parties providing them.

Those are all business costs, no different to newspaper advertising, brochures and office costs.


They may be individual to the property, but without those the EAs wouldn't have much of a business model

lee111s

Guest101 wrote: »

I'd expect all EA's photos to be 'professional'

By that I mean they get in a third party professional photographer.

mrginge

pinkshoes wrote: »

Why wouldn't it be unfair?

The EA could just then get their £300 and not lift a finger to sell the property. A guaranteed £300 for every person on their books.

If they failed to sell within the fixed term, then that is their fault and not that of the seller.

It would be classified as an unfair term.

could you provide some kind of evidence to back up this frankly ridiculous claim.

Guest101

mrginge wrote: »

could you provide some kind of evidence to back up this frankly ridiculous claim.

I think it's an interesting point though.


If the agent is guaranteed some payment, regardless of result, the effort put in would be less than someone working on a solely commission basis.


The term may be fair, in legal terms, I've not read it.

mrginge

Guest101 wrote: »

I think it's an interesting point though.


If the agent is guaranteed some payment, regardless of result, the effort put in would be less than someone working on a solely commission basis.


The term may be fair, in legal terms, I've not read it.

In order for that to be a viable business model, the guaranteed payment would have to be enough to support all the EAs costs and their profit margin. It would also have to be high enough so that it accounts for an unknown time period.
If we estimate that the direct cost of sale for the EA selling a house is say £100 (photos, brochures, etc...) and the withdrawal fee is £300, then the EA has £200 to cover his variables and admin (rent, power, insurance, RM subs...etc). But the EA doesn't know when he will receive this money, so has no idea what he will be left with. If the withdrawal happens after six months then his £200 has to contribute to six months of rightmove costs, if it happens after twelve then it's double the contribution.

So the fee does a couple of things.
1. It covers an amount of realised costs for a reasonable period
2. It protects the EA by disincentivising agent switching.

some agents will use them, some won't. I have seen both examples, with long tie-ins and low fees, to short tie-ins and higher fees.

Now. The question of unfairness. So, the contract has a fixed period and then ongoing until notice is given. The fee is payable on termination.
Is this unfair? Clearly no it isn't. It is actually financially disadvantageous to the EA purely because the contract is open-ended.
What the EA could do instead is charge £X per week for the life of the contract. Would that be unfair?
Perhaps they could charge the same fixed fee up front instead? Would that be unfair?
Those two options may or may not be commercially sensible, but the result is the same.

Guest101

mrginge wrote: »

In order for that to be a viable business model, the guaranteed payment would have to be enough to support all the EAs costs and their profit margin. It would also have to be high enough so that it accounts for an unknown time period.
If we estimate that the direct cost of sale for the EA selling a house is say £100 (photos, brochures, etc...) and the withdrawal fee is £300, then the EA has £200 to cover his variables and admin (rent, power, insurance, RM subs...etc). But the EA doesn't know when he will receive this money, so has no idea what he will be left with. If the withdrawal happens after six months then his £200 has to contribute to six months of rightmove costs, if it happens after twelve then it's double the contribution. - An interesting argument, but a traditional estate agent business model suffers from a similar downside. An agent cannot guarantee a sale and commission in a given time. Some properties might sell in week, some in months, and obviously (otherwise why would you have such a term - which I think could be fair) not sell at all. A 'buckshot' approach - e.g. offering the lowest selling fees would draw in an abundance of clients who would withdraw over a range of time.

So the fee does a couple of things.
1. It covers an amount of realised costs for a reasonable period
2. It protects the EA by disincentivising agent switching.



- True, but part of the 'business costs' should be the marketing to sell properties, that is after all the business model. Agent switching should be disincentivised by good service, not by punishment. I think that a punishment model would fail due to bad publicity, but other variables, such as location (a small town where news travels fast or a large city where local papers are seldom read by large numbers)

some agents will use them, some won't. I have seen both examples, with long tie-ins and low fees, to short tie-ins and higher fees.


I tend to agree, I think there is some merit in cancellation fees during a fixed term contract. An agent can feel confident in securing a sale in 6 months for example, if they haven't managed to do that, then the client should be released. Otherwise the agent can simply give up on the property after a reasonable period, safe in the knowledge that their costs and some extra are covered and move onto the new clients.

Now. The question of unfairness. So, the contract has a fixed period and then ongoing until notice is given. The fee is payable on termination.
Is this unfair? Clearly no it isn't. - Well not clearly. There's obviously some debate, otherwise we wouldn't be having this discourse. I think it could be unfair, but it could be fair. It depends on the context beyond that limited wording. It is actually financially disadvantageous to the EA purely because the contract is open-ended. - True, but the agent has no reason to continue to actively market a property after the initial period. After 3-6 months an agent can simply withdraw from proactive marketing to reactive responding. MOP comes in and asks about 3 bedroom houses in the area and the agent can provide them with a list, which includes the house. Rather than phoning around investors or giving the house a good amount of space in property pages.
What the EA could do instead is charge £X per week for the life of the contract. Would that be unfair? - It depends. There's some merit in saying that marketing the property is the core business and as such the commission at the end pays for that and extra. If the agent after the fixed term was to say, we've been unable to sell the property, we are happy to continue to market at the rate of £x per week, or you are free to leave, that would almost certainly be fair.
Perhaps they could charge the same fixed fee up front instead? Would that be unfair? - It depends. But in reality the agent wont charge it upfront because it will put clients off.
Those two options may or may not be commercially sensible, but the result is the same.

We agree they're not commercially sensible, which is why agents don't do that. But I can see how it could be unfair, given that the agents runs zero risk, so once the initial market buzz dies down, they can put it on a backburner and safe in the knowledge it will be paid.

googler

Guest101 wrote: »

We agree they're not commercially sensible, which is why agents don't do that. But I can see how it could be unfair, given that the agents runs zero risk

How do reach the 'zero risk' conclusion?