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Estate agent fees and contract
Scottie48
Posts: 16 Forumite
Hi, we are in the process of going on the market and having agreed on an agent we have received their contract for us to sign. A fee of 1% plus VAT has been agreed but upon reading the contract I'm a little confused. The for sale price is £450,000 therefore fees should it sell at that would be £5400 inclusive of VAT. Now the contract reads should the final sale price be higher or lower than the asking price, our commission will be correspondingly higher or lower and is subject to a minimum fee of £5400. Is this correct? I would have thought if it only sells for £400,000 then their fee should only be £4800. Maybe it's me but it reads a bit contradictory, just want to be prepared before speaking to the agents tomorrow, thank you
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Comments
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Tell them no minimum fee, arrangement is 1% plus VAT. Otherwise there's little incentive for them to obtain best price for you, especially if they've over-priced it for the market.
Have you timebound the arrangement too? Three months I'd suggest as reasonable.
Be prepared to go elsewhere.1 -
Without reading the exact words, all of them, difficult to opine.0
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Its a bit of weak wording but still stacks up, they've introduced a floor in their pricing and set it at the expected sale price so in practice the price cannot go down but is free to go up. Just need to renegotiate the floor before signing it either to remove it totally or substantially reduce it.0
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I would not sign that as there is no incentive whatsoever to try and get a good price for it! It's almost a sign that they've over-valued it just to get you to go with them.
I'd ask for an amendment without that clause.Should've = Should HAVE (not 'of')
Would've = Would HAVE (not 'of')
No, I am not perfect, but yes I do judge people on their use of basic English language. If you didn't know the above, then learn it! (If English is your second language, then you are forgiven!)0 -
It looks like you have agreed to a 1% rate based on the asking price not the sold price. I made this mistake when i last sold. However they sold it in 1 day during covid so i was happy to pay an extra couple of £££.0
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It's "correct" if you agree to it. You don't have to.Scottie48 said:The for sale price is £450,000 therefore fees should it sell at that would be £5400 inclusive of VAT. Now the contract reads should the final sale price be higher or lower than the asking price, our commission will be correspondingly higher or lower and is subject to a minimum fee of £5400. Is this correct?0 -
Tbf, 1% + VAT is quite high! All our local EAs are 0.9% inc VATScottie48 said:Hi, we are in the process of going on the market and having agreed on an agent we have received their contract for us to sign. A fee of 1% plus VAT has been agreed but upon reading the contract I'm a little confused. The for sale price is £450,000 therefore fees should it sell at that would be £5400 inclusive of VAT. Now the contract reads should the final sale price be higher or lower than the asking price, our commission will be correspondingly higher or lower and is subject to a minimum fee of £5400. Is this correct? I would have thought if it only sells for £400,000 then their fee should only be £4800. Maybe it's me but it reads a bit contradictory, just want to be prepared before speaking to the agents tomorrow, thank you2006 LBM £28,000+ in debt.
2021 mortgage and debt free, working part time and living the dream0 -
"Tbf, 1% + VAT is quite high! All our local EAs are 0.9% inc VAT"
Depends very much on location, does not seem that long ago that 2% or more was the norm.0 -
All the local EA's in our area were 1% + VAT, we negotiated 0.9%+VAT. There's no minimum fee on our contract, does sound a disincentive to maximise sale price in a buyers market. Depends where you are.0
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Many thanks for all of your replies, they are very much appreciated. Based on similar properties that have sold in the area recently we don't expect to achieve it's listed price and would be prepared to listen to offers however given the agent have this minimum fee perhaps we should go on the market at a price we would accept without considering any offers0
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