David Andrews Blog

A Great sandwich and be careful what you sign! - Mar 14

A Great Sandwich and Be Careful What You Sign!!

This is a really a long blog, but I think its’ contents are important and worth reading, whether you are looking for a great sandwich, or a great estate agent to sell your home  Some months ago a new shop opened on our row of shops at the Chorlton end of Upper Chorlton Road - It’s a Moroccan food shop and there are lots of tasty looking items for sale. Shortly after opening, the owner called in and said he would soon be offering fresh sandwiches, and would let us know when he was ready to start selling them. A few days ago they started selling sandwiches, so I called in to see what was available. After much deliberating, I chose roast beef salad, with whole grain mustard, on a white barmcake, (some might call it a muffin). It was made in front of me while I waited, and looked good. Back at the office, it was equally as good in the eating as it looked in the making, and I have not been able to stop myself telling people how good my sandwich was, from the Moroccan food shop on Upper Chorlton Road! I’ve had another one today and, being a creature of habit, it was beef salad again.

You might wonder why an estate agent is blogging about a sandwich shop? I will confess that I do have an ulterior motive, but it is always good to tell people about something they might not know about, and which they will probably enjoy. But here is the real reason for talking about good sandwiches in this months blog: Towards the end of lunchtime, the owner of the food shop called in with a free sandwich for our boss, (I paid for mine, but it was only two quid!). Whilst here, we had a conversation about how busy we both were, and the subject of estate agents agreements cropped up, and the fact that what a seller thinks has been agreed verbally with the estate agent is not always what appears in the agency contract, or on the bill when the property has been sold. Before I proceed with what is actually a few pages of stuff, which might bore you to tears, I’ll outline my conclusions, and my advice, so you can see where I’m going fairly quickly, and you can choose whether to spend some time on the detail, or not.

1) Make sure you know exactly what your fee will be, or how it will be calculated, and make sure that the contract that you sign matches what you have been told.

2) Energy Performance Certificates, (EPC), are valid for 10 years. If your property already has one, you do not need to pay for another. There is a database that anyone can access to check which properties have an EPC, and which do not… so an agent should know whether you need one, or not. If you need or want a new EPC, you should not need to pay more than about £55 for one. You do not need to obtain an EPC via an estate agent, there are plenty of Assessors who can be found directly on the internet.

3) Some estate agency contracts entitle the agent to charge their fee, even if you do not exchange contracts with a buyer. If you see the words “a purchaser who is ready, willing, and able…” in an estate agents contract, you should be wary as it means they might be able to charge their fee even if you do not sell your home.

4) Many agents have a sole agency contract with a minimum term which can vary from Nil, (e.g. David Andrews Homes), to several months. We have seen contracts with a minimum term of 4 months, and are aware of some agents who have a minimum of 6 months. A long minimum term is fine if you are happy with your agent but, if there is any reason you might wish to change to another agent, or introduce a joint agent, you will not be able to without risking having to pay two agents fees. You might also consider how confident an agent might be of providing a good service that you will be happy with, if they need to impose a minimum term of any kind.

Forgive me for blowing our own trumpet but:

David Andrews Homes’ agency agreement is two sides of A4, all in normal sized print which is easy to read. It makes the fee clear on the front page, (its usually 1% of the selling price, with a minimum fee of £1200, and VAT at the prevailing rate of 20% is added to it – Its not a secret  )

David Andrews Homes will check whether your home already has an EPC and will advise you if you need one. The assessors we introduce you to charge £55.

With David Andrews Homes, our fee is only due if/when you exchange contracts for the sale of your home. Even if we have introduced a buyer who wants to buy your home, and is ready to do so, if you decide not to go ahead, there is no fee. That does not mean we wont be disappointed, but we wont charge a penny.

David Andrews Homes do not have a minimum period of agency – zero, nil, zilch, nada  This means that you are not chained to us for any period of time, and are free to judge us on our service and performance - which is how we like it!

If you are busy, or not motivated to read further, the above is as much as you need to read. If you are interested in more detail, and some anecdotal examples, read on….. I do not propose to mention any names, and two of the following anecdotal examples do not relate to agents in the local area.

Example One – Estate Agency Fees

After visiting the flat the agent advised that their fee would be 2% inclusive of VAT, and this would amount to about £2400, (suggesting the flat was worth about £120,000). The seller negotiated the fee and the agent eventually agreed verbally to a Fixed Fee of £1500, if the seller signed the agency agreement there and then. The seller signed the agreement, which was several pages of small print, without reading it, on the basis that the agent was a nice lady, who she trusted, and the seller was keen to sell her flat.

In the event, a buyer was found reasonably quickly, the transaction proceeded reasonably smoothly, and completion took place. The seller was extremely pleased with the service she had received….. until she received her bill, which was for £2,400, and not for £1500, or even £1500 + VAT, (which would have been £1800). Having heard that this particular agent was very quick to take legal action over unpaid and disputed bills, she paid the bill without querying it. You would have to ask why she did this with asking the question, but some people are very trusting, and extremely wary of confrontation.

We do not know the outcome of the above – whether the error was corrected, or whether the contract stated the higher fee, contrary to the verbal agreement the seller thought she had with the agent.

Whatever the outcome of the above, it highlights the importance of knowing exactly what you are committing yourself to when you instruct an estate agent. If you are presented with an agency agreement, you should read every clause in it, even if it involves several pages of small print.

Example Two: Energy Performance Certificates (EPC)

It is now a legal requirement for all properties to have an Energy Performance Certificate, (EPC), if they are to be marketed for sale, or to let - there are some exceptions, but for the purposes of an informal blog, the exceptions generally do not apply to residential property.

As an estate agent and lettings agent, we are in an ideal position to advise people on the need for an EPC, and to arrange for an Energy Assessor to visit them. Some agents use this as an opportunity to make money and, in many instances, we hear of extremely excessive prices being charged for an EPC.

In the example I am talking about, the agent offered to arrange an EPC, and their charge was £160, which the owner of the property paid the agent, (as a comparison, if David Andrews arrange an EPC, the property owner pays the assessor directly, and the charge is £55 for most properties. We don’t make any money out of EPCs as we believe it is part of our service to help people find reliable suppliers at competitive prices).

In the example, the charge is high, but the owner may have found it convenient to use the agent for the EPC, rather than having to shop around – which would be fine except that his property already had an EPC from either a previous attempt to sell, or because it had been let out – we do not know which.

Many people do not know that, once a property has an EPC, it is valid for 10 years, so not all properties need a new EPC. In addition, there is a national database, accessible to all, which provided details of all properties which have had an EPC, including a copy of the EPC if you wish. Whilst most people will not be aware of the datatbase, it would be very poor if an estate agent or lettings agent did not know about it, and did not check it.

We do not know if the agent in the example did not know about the database, and therefore were not aware that the property had an EPC already, or whether they chose not to disclose the information to their client, in order to make some money out of his naivety by supplying a new one. Whichever the case, if the former, it was poor practice and, if the latter, what can we say?

Here is the link to the EPC database: https://www.epcregister.com/reportSearchAddressTerms.html?redirect=reportSearchAddressByPostcode

At David Andrews we always check whether a property has an existing EPC, and make an owner aware that, if one exists, they do not need to pay for a new one. They still have the choice of obtaining a new EPC, particularly if the energy performance of their property has changed to a level where they might consider it a worthwhile investment of £55.

Example Three: When Is The Fee Due

This example does relate to an agent in the local area, but we do not propose to name them. The property in question was on the market jointly with ourselves and the agent in question. In this case, the other agent had found a buyer at significantly less than the asking price, but the seller reluctantly agreed to sell as they had found a house that they really wanted to buy. The sale proceeded, but there reached a point where the sellers were not happy with things, contracts had not been exchanged, and they decided to withdraw from the sale. Their intention was to think about finding another buyer, and another house to buy.

After making us aware of this, I received a further call from an upset seller telling me that the other agent had told them that even if they withdrew from the current sale, they would be charging their fee, and that their contract allowed them to do so. Whilst it is a moot point as to whether the sale had proceeded far enough for a fee to be due, there is a clause which you might find in some estate agents contracts which entitles an agent to charge a fee if they have found a “ready, willing, and able, buyer”, even if contracts have not been exchanged.

Clearly, an estate agent is entitled to have any terms and conditions in their contract, (subject to them being legal, and complying with the terms of the various laws relating to estate agency). It is then up to the customer to decide whether to go ahead and, if they don’t like the terms, they can try to negotiate them, or find an agent with less onerous terms.

However, in the real world, people can get carried away with the excitement of the situation, the “value” of their home, the buyers that will be coming to look, the thought of moving to a new home and, faced with reading reams of small print, (or even just a couple of pages), they sign up on the basis that they like and trust the estate agent. This is exactly what our client did with the agent in question. She had signed an agency agreement which included the above clause, amongst all the other clauses, but she didn’t read it properly, and didn’t know what it actually meant!

If you see a clause in your agency contract which uses the words “ready, willing, and able, buyer”, or similar, it might actually means that your agent may be able to charge you their fee, even if you do not sell your property.

Needless to say, David Andrews agency agreement does not include a clause which entitles us to a fee if we have merely found a ready, willing and able buyer – you have to exchange contracts with them, (which legally binds them to buy, and you to sell), before our fee becomes due. Even if we have found you a buyer who you choose to sell to, if you withdraw from the sale at any time before exchange of contracts, no fee will be due.

Example Four: How long is the contract?

This isn’t really a specific example, it’s some advice about another thing to be wary of when appointing an estate agent.

I’ll start this bit by saying that at David Andrews, our agency agreement has no minimum term… so the answer to the question, “How long is the contract?” is, “As long, or as short, as you , the customer, want it to be!”.

This is a part of the marketing material that I often use in letters to potential customers:

A No Notice Agency Contract

LIKE most local estate agents, David Andrews Homes offer a No Sale-No Fee service.

UNLIKE most local estate agents, David Andrews Homes’ Agency Contract has no minimum period of obligation.

This means that you are not chained to us for any period of time, and are free to judge us on our service and performance - which is how we like it!

Why am I talking about this, and why is it important?

I have lost count of the number of times I have been asked to visit a property that has been on the market with another estate agent, because the owner is considering changing agents for one reason or another. Invariably, this is generally not long after the property has gone on the market and, whilst the reason isn’t necessarily important, needless to say, something isn’t going right, or I would not be there. In these circumstances, and before accepting the instruction, I always ask to have a look at the existing agents contract for reasons which will become clear.

Most estate agents have a clause in their contract which stipulates the minimum period of time before a seller can withdraw the property from the agent, and instruct another agent to market it. In most cases this a month or two but, in some cases, we see minimum agency periods up to 6 months, and a 4 month minimum period is not uncommon. Not unsurprisingly, it usually customers of agents with the longer minimum periods that are not happy, and who are considering changing agents. They are generally extremely disappointed to find that they cannot change estate agents for some time, without risking having to pay two fees, as well as wishing that they had read the small print of their agency agreement.

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