Estate Agents and the Conveyancing Process
Estate agents have a notoriously bad reputation and unfortunately, it is sometimes with good reason! Nonetheless, like most professions, the majority are decent and honest. Finding a good estate agent can be a real asset when it comes to selling your property, not just in terms of finding a buyer but in helping to ensure that the matter proceeds to completion.
The purpose of this article is to look at an estate agent’s role in the conveyancing process rather than their ability to actually secure a buyer though it is probably wise to avoid the type that are prepared to mislead a buyer. Not only are buyers too clued up these days to fall for the tactics, these agents are likely to cause problems further down the line.
Instructing the Agent
Estate agents are covered by money laundering regulations so when instructed by a seller an agent will need to see his original ID documents (passport/driver’s licence and utility bill for example) so have these ready when approaching an agent.
If you choose to instruct you will need to sign an agreement. The terms of the agreement are legally binding so make sure the estate agent fully explains it. In particular, ask about the fee (a typical fee is around 1% – 1.5% of the eventual sale price), any penalty fees should you take the property off the market before it is sold and whether the agreement allows you to market the property with another agent either simultaneously or having withdrawn it from the current agent. Don’t be afraid to negotiate on terms.
Remember that should the agent secure a buyer then his fee becomes payable should the sale to that buyer complete. You cannot dis-instruct the agent and continue to sell to the buyer to avoid the fee unless a time period set out in the contract with the agent, usually 6 months, has elapsed.
Making an Offer
The conveyancing process begins when a buyer has an offer accepted. When an offer is made the agent will need to do two things. First, he will need to check the buyer’s identity for the purposes of money laundering regulations. He will need to see the originals of either the buyer’s passport or driver’s licence and address ID such as a utility bill or bank statement. Second, he will want to see evidence that the buyer is actually in a position, financially, to proceed with the purchase. If he is buying with the aid of a mortgage the evidence will need to be in the form of an “offer in principle”. This will be issued by a lender where it has agreed to lend up to a certain amount subject to the buyer’s chosen property being suitable security.
Regulation of Estate Agents
There is no statutory regulation of estate agents. This is arguably why dubious practices, which other professions would not get away with, are able to continue. Many estate agents however are members of the National Association of Estate Agents. Agents are under no obligation to join but those who do are bound by a code of conduct. If your agent is a member of the NAEA and if you have a complaint that is not resolved internally you should refer it to the NAEA.
For those estate agents who are not members of the NAEA you may be able to get some assistance with a complaint from the Office of Fair Trading.
Estate Agent Fees
Estate agents’ fees are typically 1% – 1.5% of the sale price of the property and are paid on completion of the sale. Don’t be afraid to negotiate on the fee, you may not get any success but you have nothing to lose.
The fee should cover all of the work of the agent, i.e. his appraisal of the value, preparation of the sales brochure, online listings, for sale boards and viewings. The agreement you sign may contain a provision requiring you to pay a penalty fee should you dis-instruct the agent before the property sells, whether to place it with another agent or to withdraw it from the market. Check this before you sign up and negotiate or shop around. You may find you can get a deal without such a clause.
Usually the estate agent’s fees will be paid directly from the sale proceeds by the seller’s conveyancer. If you do not want your conveyancer to do this therefore you should advise them. They cannot pay the agent if you ask them not to.
Use Your Estate Agent
The estate agent only gets paid on completion of a sale and individuals who work for a firm they don’t own are usually paid on a commission basis, so in this respect they have the same goal as you, they want to get the matter completed as soon as possible. A good agent will therefore be prepared to help you achieve this.
You can ask the estate agent to case all of the solicitors in the chain, pick up and drop off documents, visit the council offices to pick up copies of planning permissions – basically anything that will speed up the process or prevent a transaction from falling through. They are not obliged to do all of this but if it means they get paid a bit sooner they often will.
Don’t Believe Everything the Agent Tells You
Having said that an agent has the same goal as the buyer and seller there is an important caveat – the agent only has a vested interest in getting to completion, not what happens after. There are unfortunately agents out there who will “bend the truth” in order to get what they want, which won’t always be in your best interests. To protect against this, if an agent tells you anything about the transaction in terms of proposed completion dates, threats by the other party to withdraw etc, or if he offers you any advice on a legal issue, such as whether lack of planning permission for an extension is a serious problem or how a defect in a lease might affect its value etc then check this immediately with your conveyancer.
Disclosure of Transaction Details
Most conveyancers will discuss the transaction freely with the selling agent. When you sign the initial forms instructing your conveyancer they will often state that by instructing them you authorise them to do so. If therefore you don’t want them to discuss the transaction with the estate agent, or if you don’t want a particular point disclosing, then you should inform your conveyancer as soon as possible as if you withdraw your consent he cannot disclose any information. He cannot lie on your behalf however and you should consider what effect withholding information might have.
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