When you sign a sole agency agreement with an estate agent, you give them the exclusive rights to be the only agent to market and sell your property within a set period. If the estate agent is able to agree a sale on your home within the time indicated on the contract you will owe them a predetermined commission.
Having secured the exclusive rights to sell your property, an estate agent has eliminated the competition. For this reason traditional estate agents normally offer a lower commission for a sole agency agreement (typically 1-1.5% plus VAT) than for a multiple agency fee (2-2.5% plus VAT)
Despite being cheaper than a multiple agency agreement, using just one agent can slow down the sale of your property – so it’s not always the best option if you’re in a hurry.
Moreover, if you’re unhappy with the service provided by the agent, you cannot switch to another one until the contract has expired.
Most importantly, even at a reduced rate of 1-1.5% (plus vat), most home-sellers would benefit and save more via online/hybrid estate agencies. For example if selling a property at £240,000, the seller would be paying fees of between £2,400 and £3,600 with a local agent, whilst most online agents charge between £600-1500 for the same service.
Some sole agency contracts may reactivate in the event that a sale falls through, giving an estate agent automatic rights to sell your property again.
The contract may also contain an extended introducer commitment period. This may permit an estate agent to a commission after the contract has ended, if they introduced you to the person who eventually buys your home – even if the sale was sealed by a different agent.
If you change your mind immediately after signing a sole agency agreement, you have the right to cancel it by 5pm on the next working day after you have received a copy of the contract. To do this, you must present the estate agent with a formal written request, such as a letter or email.
If you want to cancel after this time, you normally have to provide an agent with two weeks’ notice. This is often required even if the agreed period in the contract has run out. If you cancel the contract before it has expired, you may be liable to pay a charge.
A sole agency agreement can work for customers who are in no hurry to sell and want to pay as little as possible in the way of commission.
However, in order to avoid any issues, it is absolutely vital that you have your contract checked thoroughly by a trained professional. You should also have a good look at the contract yourself and raise any concerns you have about it.
Ensure that there is a specific length of time indicated in the contract and that it has a definite end. Typically, the contracts range from between six and 16 weeks. Aiming for a shorter time can help you to avoid being tied in, in the event that you’re not happy with the service.
You also need to make sure that the contract doesn’t have an extended introducer commitment period.
Lastly, shop around – if you’re not sure about a particularly agent for whatever reason, there are plenty more about, some of which may be a better fit for you.
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