High street agents come under fire over long tie-in contracts

High street estate agents have come under fire for not letting sellers switch agents more easily.

By contrast, online agents are highlighted for allowing vendors to walk away.

A blog on the Home Owners Alliance website says: “If you’re with an online agent which often ask you to pay upfront or after a certain amount of time, and want to swap provider, in most cases you can walk away, albeit having lost the £500 or so you paid to advertise with them.

“In fact one agency, eMoov, have just introduced a no sale no fee approach. So if you don’t like the service you can walk away without losing money.

“With high street agents it can be more difficult to cut your ties.

“There is no law stopping you switching estate agents. But too many agents have one-sided anti-home owner contracts that make it extremely difficult, slow or expensive to switch.

“It leads to huge legal conflicts between home owners and their estate agents, who often end up suing the home owner.

“It is probably the biggest single source of complaints that we get from our members, and we spend much of our days helping members sort out disputes with their agents.

“It stops competition working within the estate agent business (which presumably is the point) and makes the home selling experience much more fraught than it should be.

“We have seen cases where a home owner’s life is on hold for months until they can safely switch from one estate agent to another one, or are at risk of getting a lower price than they should for their home because they have to pay estate agents twice.”

The blog argues: “How much you get for your home arguably depends on how good your estate agent is, but if they are not up to scratch, how easy is it to switch them?

“The answer is – it is often almost impossible. This means that home owners are often left trapped with a terrible agent in the biggest transaction in their lives – and the government are doing nothing about it.”

The blog says agents make it difficult for vendors to switch by lengthy tie-ins of often two months, and up to 26 weeks. It says there should be a maximum period of six weeks.

It says agents also make switching harder by insisting they get a share of the commission after the vendor goes to a new agent if the eventual buyer was “in contact with the first agent at any point”.

The blog goes on: “This is an almost ubiquitous clause in estate agents’ contacts, and they justify it by saying that if they introduce the person (even if they don’t actually sell the house) then they should get a fee.”

It says both long tie-ins and the charging of double fees should be banned.

[EYE’s note: In 2008, in Foxtons v Pelkley Bicknell  a seller was sued by Foxtons for its commission because the firm said it had introduced a buyer, who was successfully reintroduced by a second agent, Hamptons. The Appeal Court ruled that it was no longer enough to introduce a buyer to a property. The buyer had to be introduced to the sale. As Foxtons had not introduced the buyer to the sale, they were not entitled to their fee. In other words, for an agent to be entitled to payment of their commission, they must show that they were the effective cause of the completed transaction.]

The full blog is here

Originally posted here.

comments powered by Disqus