If you are considering putting your home up for sale, what do you need to consider when choosing an agent?
Here are our top 10 points for consideration.
1) Contracts
2) Selling Fees
3) House Price
4) Marketing
5) Experience of Selling Similar Properties
6) Customer Reviews
7) Personal Recommendations
8) Comparison Websites
9) Online Vs Traditional High Street Agent
10) Professional Bodies
1. The Contract
The Contract that you will be signing may well prove to be the most important deciding factor in your choice of estate agent and yet, very few people realise the importance of what they are signing until they are unhappy with their chosen agent’s service.
Have you noticed how estate agents generally, don’t reveal their Contracts publicly for scrutiny before you sign?
Let’s take a look at Contracts. Here’s what The Property Ombudsman has to say in their Code of Practice for Residential Estate Agents about signing them.
“You must give your client written confirmation of their instruction for you to act in the buying or selling of property on their behalf. You must by law give the client written details of your Terms of Business including your fees and charges before they are committed or have any liability towards you. You must sign and date your Terms of Business before they are given to your client. The client must be given sufficient time to read them before signing and agreeing to instruct you. The client should be given a copy, signed by both parties to retain.”
Here’s what they say about Fair Contracts.
“Your Terms of Business and your contract must be consistent with the provisions of Practice and comply with Part 2 of the Consumer Rights Act 2015.”
“Your Terms of Business should be written in plain and intelligible language. In particular you must use in your Terms of Business the specific definitions in the Estate Agents (Provision of Information) Regulations 1991. You must take particular care for example in defining and distinguishing between ‘sole agency’ and ‘sole selling rights’; and in describing a ‘ready, willing and able’ contract. You must use the relevant definitions in full, display them prominently and clearly explain the implications of the terms to your client, especially where multiple definitions are used”.
So what is a Sole Agency Agreement?
This is where the seller signs a Contract with one agent only to act in the disposal of their land or property, usually for a specified period. This means they are the only agent with the right to sell your home. If you then sell to a friend or family member who has not booked a viewing through the agent and you can prove you introduced the buyer, then you usually do not have to pay the agent. The agent may try to argue if you have a for sale board, that the buyer would not have known the property was for sale without it or that they had seen it advertised on Rightmove through the agent. So if you think you might want to sell to a friend or family member tell the agent you are going to sell through before you sign your contract and/or provide the agent with the name of the person you may sell to so that they are excluded from the contract, should they come forward with an offer.
What are Sole Selling Rights?
Where an estate agent has the exclusive right to sell a property, often for a limited period.
The agent will be paid no matter who introduces the buyer, whether this is by another agent, the seller themselves or another person. Beware of signing one of these contracts. Check the wording. If you subsequently decided to part-exchange your property for a new build, you might still end up paying the agent you signed the contract with.
What is a Joint Sole Agency Contract?
Where you instruct two agents to work jointly on your behalf on a collaborative basis. They agree how the commission will be split or whether it is a ‘winner takes all’ agreement.
This would have to be done at the outset of a Contract with agreement from both Agencies. Fees are usually higher for these contracts. They are not really needed now we have the internet but came about in the days prior to and when the agents covered different areas.
What is a Multi-Agency Contract?
Where a seller appoints more than one agency to act, with each agency acting independently of the others. Commission is paid to the agent who introduces a buyer. You can appoint as many agents as you like, although not many agents are willing to work on this basis as a lot of time, money and energy will be wasted by those that subsequently do not receive payment.
What sellers have to bear in mind here is that if you have already signed a Sole Agency Agreement, you can’t then just sign more as you would be in breach of your Sole Agency Agreement and liable to end up paying more than one fee. Again, you would need to have Agents agree to this type of Contract and again the fee is usually higher.
Offers for the property tend to come in at a lower level too as buyers perceive the seller as being desperate to sell.
Town and Country Planning Act
Stipulates that only one board is permissible to advertise a property for sale and if there is more than one agent acting, only the first board is the legally erected one.This means that if you are selling with more than one agent you should only have one board erected and you may subsequently be requested to remove any further boards as they are not permitted.
What is a Ready, Willing and Able Purchaser?
A buyer who is able to exchange unconditional contracts for the purchase of a property.
Beware of signing a contract with this clause. This means if you put your house up for sale and the agent gets you a buyer and you decide not to move – for any reason – they will still charge their fee.
What does the Property Ombudsman have to say about Fees and Charges?
All fees and additional costs must be included in the estate agents Terms of Business. They must be fully explained, clearly and unambiguously stated in writing, along with an explanation of the specific circumstances in which those fees and costs will become due, before the client is committed to the contract.
Where the fee is a percentage, it must be quoted inclusive of VAT. The example amount should be based on the asking price. However, the estate agent must make it clear that, should the selling price be higher or lower than the asking price, your commission fee will be correspondingly higher or lower.
Where the estate agent charges a fixed fee they must state the actual amount payable inclusive of VAT in the contract and ensure that the client understands that the fee will not vary whatever the sale price.
Except for any previously agreed additional costs, commission fees will become due on exchange of contracts.
However, in reality, what happens is, the agent is usually paid by the sellers conveyancer/solicitor on completion of the sale when they are in receipt of the buyers monies.
What does the Property Ombudsman have to say about the Duration and Termination of Contracts?
Estate Agents Terms of Business must clearly state the minimum duration of their instruction, and how it can be terminated by either party. When a contract is signed by a client during a visit by the agent to their home, at their place of work, away from agents premises or online, then they must be given a right to cancel that contract within 14 calendar days after the day of signing. The client should be given a ‘Notice of Right to Cancel’. Where the client wishes the contract to begin before the end of the 14 day cancellation period the agent must obtain confirmation of that request in writing. Where the agent intends to recover costs incurred during this cancellation period, the agent must obtain the client’s agreement in writing to those specific costs before work commences.
If an agent intends to charge a client a fee or recover costs for terminating an instruction they must make this clear in their Terms of Business and specify the amount of the fee and additional costs and their purpose. Fees and costs should reasonably reflect the activity undertaken and not include a penalty charge.
This includes online agencies that do not have offices open to the public and work from home.
What other Business Terms are of interest?
Minimum Agency Periods or Tie-in periods
Some estate agents do not have a minimum agency period and others have 6, 8, 12, 16 and 20 weeks. I have even come across a 26 week period. Yes! 6 months.
Anything up to 12 weeks can be considered reasonable, however, if you are not happy with your agent, or they are not performing how you expected, you will want to terminate their contract.
If an agent is as good as they say they are, then they have no need to tie you into a long Contract. The length of that tie-in gives you a good indicator into how successful they really are.
Before signing, agree your tie-in period if you are not happy with what is being offered and make sure that if there is a withdrawal fee that you know how much it is and what is being covered.
Withdrawal Fees
Do not sign a contract with withdrawal fees unless you have agreed to some additional services like professional photography or an Energy Performance Certificate where there have been external charges incurred. You should be made aware of what those charges are in advance of signing the contract.
No Sale – No Fee Agreements
This is what you should be looking for to ensure that if you change your mind about selling for any reason, you won’t have a bill to pay.
Additional Charges
Check for any additional charges and make sure you are happy with them.
Agents sometimes charge for photography and this can also be an Up-front cost along with Energy Performance Certificates, videos, floorplans etc.
2. Selling Fees
Given that most estate agents do not publicly advertise their fee, what is included in their fee, whether there is an upfront fee, a withdrawal fee, additional fees etc., it can be difficult for you to make a decision on the fee part of the equation.
Although the fee is important to you it should not be the sole basis for making a decision on which agent to use.
There is a push to encourage estate agents to become more transparent with their fees and you can find that some will publish those fees on their websites willingly whereas others won’t divulge this information until they have gained access to your property.
In the UK fees generally tend to vary from 1% - 3% + VAT of the actual selling price if they are operating on a commission basis. Some will offer a lower fee when they are struggling to get listings and competition within the industry is high.
If an agent is quick to negotiate on their fee, how quickly will they expect you to negotiate on your asking price? If they are negotiating on fee, are they also negotiating on service levels? Make sure you know what you are getting for your money.
Other agencies charge a fixed fee. It is worth working out what percentage of your initial asking price this is, so you can decide whether you are paying more than you should be.
Leasehold properties and properties that have been bought with a ‘Help to Buy’ scheme and shared ownership properties are often charged a higher rate or an additional fee for the extra work that is involved in the sale.
3. House Price
When you invite an estate agent out to your home, unless they are Chartered Surveyors, you will not be given a valuation. You will be given a market appraisal.
Whilst it is often referred to as a valuation and the person carrying it out as a Valuer, strictly speaking they are not. Again, unless they are a Chartered Surveyor. This is why some agencies call them a Lister.
What you are actually receiving is a considered, ‘honest’ opinion of what your property is likely to achieve on the open market by an experienced property professional. They should be able to provide you with information on how they reached the figure suggested.
You have to bear in mind that to operate as an estate agent in the UK you do not have to have any formal qualifications, although this is going to change in the next few years in accordance with Government proposals.
This is why you get a free market appraisal. Chartered Surveyors charge for a Valuation. Therefore, if you are not paying a fee, it is not a valuation.
This is also why you should have 3 estate agents come to visit, as they are giving you their opinion and as we all know, opinions can vary.
It is also the reason why, whilst an agent might suggest an asking price and a buyer be happy to offer that price, or more, when the Mortgage Lenders Chartered Surveyor values the property, he can state a lower valuation figure. This is disappointing for both the seller and his agent and if the buyer does not have sufficient funds to make up the shortfall or is not willing to pay more than the Surveyor has told his Mortgage Lender it is worth, then a property will be subsequently down-valued.
This is probably a good time to point out that if an agent is struggling to list properties in a difficult market, then it is very easy for them to over inflate the marketing price to get the listing. Beware of this. Greed can be a basic human failing and once a figure has been suggested it does tend to stick in your head. If you think a figure is too good to be true, then it probably is.
Once you have put your property on the market, if you are not getting any viewings, your agent may well ask you to reduce the asking price. You may not be happy with this because you have gone with what they told you it was ‘worth’.
Going back to point 1. If you have signed a Contract with a long tie in period, then you cannot even leave the agency and go with an agent who gave you a more honest and accurate figure.
So please do not base your choice of agent on ‘Asking Price’ alone.
4. Marketing
To the majority of people estate agents are in the business of selling. We are also in the business of marketing.
How your home is marketed decides your eventual selling price.
Take a look at the quality of the marketing of other properties on the likes of Rightmove and Zoopla.
Look at the photography. Is it clear? Professional? Does it enhance the room you are looking at or does it detract from it?
Look at the room. Is it tidy? Visually appealing?
Is there a floorplan? Is it a good quality one?
What about the description of the property? Is there one? Is it boring? The same as every other house? Just listing the physical attributes of the rooms or trying to create a feel for the home?
Do they provide brochures? Are they good quality? Worthy of your coffee table?
Is there a video of the home?
Where do they advertise their homes? It isn’t just the quality of what they produce but it is how they market them.
Do they use Social Media to draw attention. Which property portals do they advertise on. Do they have print in newspapers and magazines? Do they have a YouTube channel? Do they have a shop window? Everything helps market your home. The further it is marketed, the wider the spread, the higher audience and ultimately the higher the price you will achieve.
Mailing lists are still important and when operated correctly they can bring forward known people to the agent who are looking for just what you are selling and in a position to proceed. Agents and buyers who just wait until they are listed on Rightmove miss out on golden opportunities.
Good agents have a marketing strategy and when well applied achieve quicker sales and at higher prices. Ask if and what the agents marketing strategy is.
5. Experience of Selling Similar Properties
You want an agent that has experience of selling similar types of properties as your own.
If you live in a large country property with acres of land, then you would want to use an agent that is used to selling them. Different queries come to the fore depending upon whether you have a septic tank, oil fired central heating, rights of way etc.
If you live in an equestrian property, then you would ideally want an agent that knows what they are talking about when it comes menages, horse walkers and stable sizes.
There is nothing worse than an agent acting on your behalf who doesn’t know what you are talking about. They need to sing your properties praises – whatever they may be.
6. Customer Reviews
Check out agents’ customer reviews. This is a good indicator of what past clients have thought of their experiences. You may find the occasional review that is out of step with the others however, it could be a one off for some unknown reason.
7. Personal recommendations
Personal recommendations are very useful too. Especially if the person recommending them isn’t related to or works for the agency. Ask friends and family for their recommendations too. Remember that it is advice on selling that you are seeking. You have to factor in that a buyer’s opinion on the best agent may not be the same as a sellers because the agent acts on the sellers behalf.
8. Comparison websites
Just like car insurance comparison websites there are ones for estate agents.
The Home Owners Alliance have a website that gives useful advice to both buyers and sellers and has an agent comparison page. You will find it at www.ea4me.hoa.org.uk
They will tell you how successful the agents are, the average days taken to sell, their services and their fees if they are open with them.
There is also another but they charge referral fees from the successful selling agent and as not all agents are willing to pay these fees, or increase their fee to the client to cover the referral fees do not want to be included within the site. Therefore chances are if you use that site you will end paying a higher fee than if you had gone direct.
9. Traditional Vs Online Agents
Trying to decide which is best for you really comes down to personal opinion.
Do you want a local person with excellent knowledge of the area to handle your sale and who can give advice to potential buyers on schools and amenities?
You also need to consider how important having a High Street Office is? Not only for you selling but what about buyers? Not everyone is internet savvy and some like assistance with forms and the knowledge that they can just ‘pop’ in with any queries if they are local. Do you feel that your buyer will be local or out of area?
Are you happy carrying out your own viewings or paying extra for an online agent to carry them out?
Do you want to write your own property description (are you Consumer Protection Regulation savvy?)
You also have to take into consideration the marketing of your property and the what, where and how the property is advertised and the spread of awareness raised by the traditional agent. This is because they do not solely rely on the internet to sell their properties. They have their mailing lists, shop windows, newspapers and magazines and their negotiation skills on your behalf to raise offers if they come in too low.
Considering all of our points for consideration, generally speaking, the conversation basically comes down to fees, which as we have already discussed should not be the main driver on your choice of agent.
What the online agents are good at doing is being upfront with what is and what is not included in their fee and their additional services and their cost.
Do you want to pay your fees up front so that they are out of the way or wait until your sale completes? If you pay up front and don’t sell with the on-line agent then you have lost that money and if you then proceed to instruct a traditional agent, you have those fees to pay too.
You also have to take into consideration the marketing of your property and the what, where and how the property is advertised and the spread of awareness raised by the traditional agent
The bottom line equation is this: Your house selling price minus your selling fee = X
If an increased spend on your selling fee brings about a higher selling price, then which was the better fee?
10. Professional Bodies
All estate agents dealing with residential properties must join an approved Redress Scheme. They are the Property Ombudsman and The Property Redress Scheme and agents have to register with one of them.
The Property Ombudsman and The Property Redress Scheme can consider complaints raised by consumers against members of their schemes, however they are not authorised to take enforcement actions or make decisions on potential breaches of legislation. They will report breaches and/or criminal activity to Local Trading Standards, who are responsible for enforcement of legislation and regulations.
The National Trading Standards Estate and Letting Agency Team (NTSELAT) is responsible for the regulation of estate agency work in the UK and overseeing the enforcement of lettings agency work in England.
Whichever scheme agents join, they must comply with their Code of Practice and all laws relating to residential estate agency. Do not use an estate agent who is not registered with one of the schemes because if anything goes wrong and you can’t resolve a complaint with the agent, you will not have an independent body to take your complaint to. The agent may be fined up to £5,000 and have their licence revoked if they do not join a redress scheme.
The National Association of Estate Agents now comes under the umbrella of Propertymark. They are the professional body for the property sector and the leading membership body for professional property agents. They promote higher standards than the current laws demand and are campaigning for more enforcement to regulate the property sector. To become a member you must obtain a minimum of Level 3 qualification in residential sales. It also demonstrates your dedication to professionalism, development and the industry itself. You can check whether an agency is Propertymark Protected and any of its current staff, working in a branch are members by using this link https://www.propertymark.co.uk/find-an-expert.html
Other registered professional bodies operating within some estate agencies include Royal Institute of Chartered Surveyors (RICS).
Some estate agents are also certified with the Internal Organization for Standardization (ISO) which is a voluntary organisation. Use of the standards aids in the creation of services that are safe, reliable, and of good quality. They also serve to safeguard consumers and the end-users of services, ensuring that certified services conform to the minimum standards set internationally.
If you would like any more advice or support on anything you have read, please do not hesitate to contact Carol in the office on 01757 709955 or pop in to the office for a coffee.