Estate Agent Agreement Query

Northtim

I've done a search but can't find the answer so hope someone can help.

We are starting to maket our house and I have the Estate Agents Agreement to sign.

There is a term in there that defines what is payable if we withdraw the agreement (subject to the 2 week notice at any time). Firstly £150 + VAT is payable which I am fine with as they will have incurred costs re advertising etc.

However they also state that if they find a ready, willing and able purchaser and we withdraw then the commission % as agreed is payable. Is this normal? We are putting our house on the market as we have seen another place we like, but the budget will be stretched. The property also needs some work done and will need a survey. In the event that the survey throws up a problem and we can't find an alternative property then we would not be able to move (this is not the intention, we really hope all goes to plan but there are unknowns). The contract in theory gives the EA rights to claim full commission even if contracts have not been exchanged. Plenty of other scenarios could apply as well - the seller withdrawings their property, it selling elsewhere etc..

Is this clause normal practice as I am planning to strike through that clause - if we have to withdraw through some unforseen situation I do not want to be landed with EA fees.

Any knowledge gratefully received.

Thanks

PasturesNew

So far as I am aware it is fairly standard.

Look at it from the EAs point of view, if they've invested time and money to produce your details, market your property, show people round, then you just change your mind and pull it off the market, they've lost time, money and the potential to have been putting their efforts into placing that buyer with another seller that did complete.

I have no legal knowledge to give an opinion on the chances/outcome of you striking through that part of the contract. But, it's worth speaking to the EA, then striking through once it's agreed you can. And writing on the contract and initialling what agreement was made with the EA, with whom and when.

courtjester

If you have not yet signed the agreement, just strike out the "ready,willing and able" buyer clause and advise the agent that you will accept their terms without this - all contract terms are negotiable, you don't have to accept anything you don't want. The agent will agree to the revision if they want your business and most agents are scrambling for anything they can get on any terms at present.

If you are stuck with it, don't worry too much - the point is that the buyer must be 'ready, willing and able' (obviously), so if the survey throws up a problem, then clearly the buyer has withdrawn their 'willingness'. The clause is really designed to prevent a vendor pulling out of the sale for no reason at the last minute when all other parties have commited. For the agent to enforce this clause, the sale must be pretty far advanced and virtually certain. Most sales fall through due to chain, mortgage or survey problems - all generally buyer related - so the clause would not catch this. However, it is an unfair term and all vendors should endeavour to remove before signing.

Northtim

Maybe I am worrying too much. If the place we want to move to turns bad and we can't find an alternative then we still don't need to withdraw so I guess the fees won't become payable. Only an issue if they have found a buyer but the buyer will have to wait until we find somewhere to go.

We are not messing anyone around in putting our house on the market and wouldn't "just change our mind".

The agreement is not yet signed so I will speak to the EA about it and try to strike the clause out.

Jorgan_2

I wouldn't sign it. Looking at the worse case scenario, everybody is geared upto exchange contracts but the people you are buying from withdraw on the morning of exchange, it happens, so you take your house of the market, you are still liable to pay the EA's fee.

country_sport

My solicitor has always warned me about this clause. Dont sign it.

jimc_2

Cross it out. If the Agent insists, walk away and go next door. The Consumers Association listed this as one of their 'unacceptable clauses' along with 'sole seller' because they are so open to abuse by agents and have actually been the basis of fraud in the past.

Although the point of the clause (seller walking away it the last minute) is clear, the downside is a possible demand for fees if the your purchase goes awry. It is there in black-and-white and is legally enforceable!

April_Bride

We have a similar clause which states that if we find a buyer for your property then you withdraw your property, either to sell privately or with another agent and the original party buys the property then we are entitled to charge commission or a "introduces fee".

I agree with courtjester, just score through it.

Ab's
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Northtim

Have added thanks to all. Really appreciate others thoughts, this site can be so useful for this sort of thing.

I have said to EA that I won't sign the agreement with this clause in, and stated examples of the type of unknowns in house buying/selling that could mean we lose the house we want and still have EA demanding fees. I appreciate they don't want timewasters but if all goes well they will get their commission and if it doesn't happen then that is their business risk.

I'll let you know what happens.

Northtim

Success - Estate Agent readily agreed to remove that clause (maybe I should have beat down the commission as well!!)

Will now sign the agreement feeling much happier. Thanks again to those who replied.