Estate Agent Contract Question

Tomby1

I just had a question regarding estate agent contracts and wondered if anyone had gone through something similar (or knows the answer)

To cut a long story short, we are looking to buy a property and need to sell to buy this. We've made an offer that has not been formally accepted but is likely to be the highest offer on the property. I expect they want us to be in a stronger position to sell before accepting.

We would only look to sell our property if we were able to buy the new property, otherwise we are happy to stay where we are.

So the question is:

If an offer is accepted on our property, it looks like we are legally required to pay the EA fees. If we accept an offer but the other sellers then decide to refuse our offer and sell to someone else, it looks like we'd be stuck paying the EA fees.
If this is the case, would it be recommended to either:

A) Not accept any offer on our property until the other property has formally accepted and removed themselves from the market
or
Ask the EA to amend the contract to say we are only liable to sell if they can secure the other property for us

I should note (as this is probably rather important) the same EA is selling both properties

Contract as below:

Sole Agency
You will be liable to pay remuneration to us, in addition
to any other costs or charges agreed, if at any time
unconditional contracts for the sale of the property are
exchanged with a purchaser introduced by us during the
period of our Sole Agency, or with whom we had
negotiations about the property during that period, or
with a purchaser introduced by another agent during that
period. This liability persists for six months from the date
this agreement ends.

Notice of the Right to Cancel
The client has the right to cancel this instruction within
fourteen days of signing this agreement, unless the
agreement has been signed by and in the presence of
both parties at the Agent’s premises, in which case the
instruction will be legally binding from the time of signing
the agreement.
We cannot commence marketing until the end of this 14
day period, where applicable, unless confirmed by you
at the ‘Performance of the Contract’ section below.

When you become liable to pay
The fee becomes payable in the event that X introduces a purchaser, whether directly or
indirectly, who enters into a binding contract to purchase
the property. Introduction may be made by means of
sales particulars, the internet, newspaper or other
advertisements, sign board, letter or personal enquiry
through our office or any sub-agency. The fee payable to
X is inclusive of all local advertising
carried out at our discretion. There will be no additional
costs or charges unless they have been previously agreed
by yourselves, eg any form of national advertising in any
format. Our commission is due upon exchange of contracts and
payable from the proceeds of the sale by your solicitor or
conveyancer upon completion. Interest may be charged
on accounts not settled immediately upon completion.

Termination
Termination of the Agreement or a change of the type of
Agency can and shall be effected by 14 days written
notice by either party, subject to the agreed minimum
period of 12 weeks. The Agreement shall continue after
the initial minimum period unless and until terminated by
either party in the manner prescribed above.
If you wish to remove your property from the market you
may do so immediately. However, you may not thereafter
place it back on the market with any other estate agent
or otherwise offer it for sale until our Agency Agreement
and its notice period would have expired, or you could
become liable to pay our commission in addition to any
other you may have agreed.

hazyjo

I'd ask if they'll negotiate - and add something about them deciding not to sell for any reason too further down the line. You don't want them saying you're still liable because they did actually secure the other property for you.


If not, just use another EA. I don't see how using the same EA is of any benefit really.


Presume you're not going to offer before you have a buyer.

hazyjo

PS I'd not tell any buyers that. If I thought I was buying a house where the owners were only selling if they secured ONE house and wouldn't sell if it fell through, I'd not be offering.

Mutton_Geoff

Tomby1 wrote: »

If an offer is accepted on our property, it looks like we are legally required to pay the EA fees

Your interpretation is not correct. Your contract says "The fee becomes payable in the event that X introduces a purchaser, whether directly or indirectly, who enters into a binding contract to purchase the property".


A binding contract happens when you've exchanged. You're free to walk away at any moment up until exchange. At the moment you are not a proceedable buyer so your offer on the new house won't be taken seriously, and with your condition on your sale being related to the purchase of a single onward property, the agents selling yours might not be too committed. If any buyers get wind of this they are likely to treat you as an unmotivated seller.


I think you need to open up your mind to other options for your next property and not get attached to a particular one as there are a multitude of things that can go wrong and result in you not purchasing the one you have seen.

Tiglet2

I read it that fees are only due if an exchange of contracts for the sale of your property takes place.

However you cannot terminate your contract with the EA for 12 weeks, therefore if you place your property with them for selling and the property you want to buy doesn’t accept your offer, you may find yourself having to put off other potential buyers until the 12 weeks have passed before officially cancelling your contract and being free of any possible charges.

eddddy

Tomby1 wrote: »

If an offer is accepted on our property, it looks like we are legally required to pay the EA fees.

No - not based on the contract extracts you've posted above.

The extracts you've posted specifically say that you only become liable for EA fees if/when contracts are exchanged.

So if you accept an offer from a buyer, and later 'change your mind' (before contracts are exchanged) - no fee is payable.


BUT... is there another clause anywhere that refers to a "Ready, willing and able buyer"? If so, that's the clause that could make you liable for EA fees, if you 'change your mind'.

If there is, that might have to be the clause you negotiate on.

Mutton_Geoff

Tiglet2 wrote: »

However you cannot terminate your contract with the EA for 12 weeks, therefore if you place your property with them for selling and the property you want to buy doesn’t accept your offer, you may find yourself having to put off other potential buyers until the 12 weeks have passed before officially cancelling your contract and being free of any possible charges.

Good point, I wouldn't be signing any 12 week contract. 4 is plenty before notice can be given. The agent will then have to work for their money especially as this is not a good time or year to be selling.


I always modify estate agents contracts and never sign them in their offices. If they think your property will sell, ask them why they need to wrap you up so tightly?

hazyjo

Oops - helps if I read all the quoted contract lol.


OP - yep, ignore me, it's exchange (as is usual with EA contracts).


I always negotiate with length of contract and fee. I can't remember the last time I paid more than 1%. Decades ago.

robatwork

I got my last one down to 0.65% with a combination of boyish charm and the fact he really didn't like the (non bricks and mortar) competitor who completely undervalued my property and wanted to better his rate.

Thrugelmir

Tomby1 wrote: »

We would only look to sell our property if we were able to buy the new property, otherwise we are happy to stay where we are.

The longer that you take no action the more likely the other property will be sold. Your offer however high it is has no value until you are in a proceedable position. The vendor isn't going to wait while you dither.

eddddy

Tiglet2 wrote: »

However you cannot terminate your contract with the EA for 12 weeks, therefore if you place your property with them for selling and the property you want to buy doesn’t accept your offer, you may find yourself having to put off other potential buyers until the 12 weeks have passed before officially cancelling your contract and being free of any possible charges.

If you tell an EA that you no longer wish to sell (and they can't persuade you to change your mind), they'll just accept it.

Realistically, they're not going to annoy prospective buyers by sending them to your house, if you then refuse to let them view!

But anyway, the contract states:

If you wish to remove your property from the market you
may do so immediately.

So there's no problem.