Home Buyer Reservation Fee - do I legally need to pay this?

kristywestlake

Hello

I am a first time buyer, and the estate agent managing the property I intend to buy has asked me to pay £240 reservation fee and on their website it states that:...

It’s a non-
refundable amount, made by a buyer to ensure the exclusive rights to a property, under certain conditions and at an agreed price.

Reservation fees are set at £240.00.

We want to give you security, and that comes with knowing a property has been taken off the
market.

It all sounds lovely but is there anything in the law that means I must pay this fee?

Thanks

eddddy

kristywestlake wrote: »

It all sounds lovely but is there anything in the law that means I must pay this fee?

It's not really a question of the law. It's a contractual issue.

You need to ask the EA what will happen if you don't pay.

I guess possibilities include:
- they might advise the vendor to leave the property on the market and invite more offers
- the vendor may be contractually required to pay the fee if you don't
etc

But having said that, it's seems like a nasty tactic on the part of the EA. Most EAs don't ask for this kind of fee.

middleclassbutpoor

What a **** take.

I would politely refuse the fee and explain that you are not prepared to pay this.

If they do state that they will keep the property on the market, I would just get in contact with the seller and explain your position as a willing buyer with funds in place and their agent is close to losing a sale for them.

If they insist on you going through the agent and they are happy with the fee and you really want this house, then I would ask them to knock £1k off the price for you having to take the risk of paying a non-refundable fee or get something in writing to protect you from them pulling out etc.

I refused to look at houses who sold through purple bricks so if I had come across this agent and these practices, I wouldn't consider even looking at the house.

AnotherJoe

Never heard of this practice, I'd tell them to take a long walk off a short plank.
Tell them what your offer is and ask what the vendors response is.

P.s. it doesn't sound "lovely" at all. This would seem to be impossible to enforce and incredibly one sided. Any such "contract" would be with the EA. But they aren't selling the house, the vendors are. Suppose the vendors change their mind or you are gazumped. According to what you've written the EA would still retain the fee !
And no there is no legal reason you have to pay this and you should not you might as well burn the money in the street.

AdrianC

You don't have to pay it.

They don't have to sell you the property.

Who's going to blink first?

AnotherJoe

AdrianC wrote: »

You don't have to pay it.

They don't have to sell you the property.

Who's going to blink first?

"they" arent selling the property though, the vendors are. And I suggest the vendors will be somewhat peeved if they find they are going to lose a buyer if the EA insists. And if they arent, I'd blink and move on, who knows what other sharp practices they will condone or conduct. Especially given its its definitely a buyers market they are pushing it IMO.


For info to the OP I found this
https://www.theguardian.com/money/2017/feb/04/estate-agents-ask-homebuyers-pay-up-pre-contract-deposit

agrinnall

The way it's worded in the OP makes me wonder if this is actually a new build, in which case reservation fees are pretty standard (or so I gather from reading threads here, I've never been interested in one myself).

ACG

I came across one of these last week.
Our buyer told the agent their offer is only being made providing the property comes off the market for 2 weeks whilst their application goes in and providing the valuation has been booked in within 2 weeks they expect the property to not end up back on the market. Their offer was accepted.

kristywestlake

Hi thanks for all your responses.

My family who have much experience in purchasing property also don't think it's necessary I pay it and they've never heard of this practice before.

Sounds like they are trying to con me into paying because i'm a first time buyer and have little experience with all this.

The property I'm buying is a victorian terrace so not a new build for which I am aware of such fees.

I have copy and pasted the whole page of info on the estate agents website just in case I missed anything. But it seems that the fee I pay goes to the estate agents and is only refunded if I pull out due to certain issues as noted at the bottom or if the vendor pulls out.

it's not unlike blackmail actually... pay the fee or you may lose the property you've made an offer on.

Shelton & Lines provides a reservation/administration fee service to protect both buyers and
vendors.

Put simply, this fee is like placing a holding deposit down when renting a property. It’s a non-
refundable amount, made by a buyer to ensure the exclusive rights to a property, under certain
conditions and at an agreed price.

Reservation fees are set at £240.00.

We want to give you security, and that comes with knowing a property has been taken off the
market. So, once the reservation fees are paid, we take identification from all purchasers – in
compliance with anti money laundering regulations.

Next, we will prepare the sales memorandum. This will be sent to all parties and their legal
representatives. We will also chase the sale, and related chain, on a regular basis to ensure
everything proceeds smoothly.

Should any issues arise, we will work closely with you to resolve them. In addition, if you’ve any
general enquiries with the sale or chain, we will work to the best of our ability to help, arranging
revisits to the property if required. During this period, the conveyancing can take place in
preparation for the exchange of contracts.

As a vendor, be reassured that you have a committed buyer and are in a very secure position to
move forward with an onward purchase. And, where relevant, are able to serve notice to tenants.
You will also have the benefit of knowing the reservation fee will cover a proportion of the costs you
might incur if the sale does not go through. Although with the reservation fee paid, this is much less
likely.

Ultimately, everyone benefits from a smooth sale and reservation/administration fees help ensure
this happens quickly. Without the security of a reservation fee, the risk of a property sale falling
through, or not getting completed rises. In fact, the figure is over 33% as a nationwide average.

We understand there are always going to be circumstances in which a sale does not go through. So,
as the buyer, you are free to leave the exchange and be refunded in full if:

Structural defects are found during surveys of the property
There is a defective legal title
Information gathered by usual searches affects the value of the property
The vendor withdraws from the sale
Upon successful sale of a property, the reservation/administration fee is paid to Shelton & Lines.

Lucky_Duck_2

The reservation/administration fee is paid to Sheltom & Lines

Priceless LOL!

middleclassbutpoor

95% of what they have said to justify the fee is what I would expect my EA to do selling my property and the EA to do of the property we are buying.

Shelton with all the lines more like....