Property: Cheat an estate agent? You must be joking

Suppose you sell your house privately, some time after the estate agent has given you up as a bad job. What about your agreement with them? Penny Jackson lays it on the line
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Indy Lifestyle Online
It is not unusual for anyone living in a popular area to find a friendly note from a frustrated house-hunter on the doormat, asking whether they are interested in selling.

The prospect of a hassle-free, commission-free sale can be tempting for anyone thinking of moving, but for those who have already put their homes on the market it is too late to cut out the agent.

All sorts of ingenious and even genuine stories about Australian cousins of a neighbour, and friends who have had their eye on the house for 10 years, won't wash once an agreement with an agent is in place. Neither will withdrawing a house from the market, then selling it a few months later.

Elizabeth Moore found herself in an increasingly common predicament. She had no shortage of prospective buyers for her family home in south London, but could find nothing to buy. After months of fruitless searching and failed negotiations on the part of the agent, she took the house off the market for what turned out to be six months.

She says: "Right at the beginning, people we knew turned up saying they wanted to buy. Even though they'd heard about it from friends, we referred them to the agent. They kept in touch, and when we finally found somewhere, we asked whether they were still interested at an increased price. We went ahead with the sale and did all the negotiations ourselves. We did inform the original agents, if somewhat reluctantly, given their non-existent role."

Although the Moores felt that not to have done so would have been indefensible, they did draw the line at paying a multiple agency fee. "We said we would only pay the sole agency fee of 2.5 per cent." Multiple agency fees are likely to be 3 to 3.5 per cent.

Certainly, since all terms, conditions and fee structure have to be confirmed in writing, there is little room for misunderstanding. Some agents even ask the vendor to sign the document, although that is not required by law.

However, a recent ruling in the court of appeal against an estate agent could mean some rather close scrutiny of standard terms. The court decided that an agent with sole selling rights was not entitled to commission where, during the agency agreement but without any involvement by the estate agent, the vendors answered a newspaper advertisement from prospective purchasers which led to an exchange of contracts for the sale of the property after the agency agreement had expired. The court did not consider that it was made clear to the vendor that he was liable to pay commission for a sale outside the agreement period, when the introduction was not effected by the agent.

A discussion of all such details at the outset tends to prevent problems from brewing, says Ian Stewart, of FPD Savills. "Once we set everything up and produce good competition, we expect full commission even if the property is sold to a private buyer. After all, on many occasions it isn't until the marketing starts that many of the vendors' friends discover the house is for sale. But if there's very little interest and no offers, I believe there should be some compromise."

He also suggests a break clause after a period, so that client and agent can get together to review strategy. "If we have any doubts about the quality of a client, we are prepared to withdraw. There are those few, particularly with off-shore companies, who are bluntly [warned off] regardless of any contract or agreement they have signed."

But it is not always easy to spot even the most outrageous defaulters. Peter Young, of John D Wood, vividly recalls the only two occasions when clients failed to pay up. "One man turned out to be on the run from an open prison. Every time I met him at his house, he should have been inside. Once I had sold the house he disappeared altogether. I wasn't surprised to find out that he had been jailed for fraud."

His other client used the rather more conventional deception of suddenly taking the house off the market. "I only found out years later, when the purchaser asked me to sell the same house and he produced the details I had originally sent out. I happened to meet the vendor again, and had a huge amount of pleasure in doing him out of two rented homes."

Generally, estate agents accept that there are some customers they will lose. They can't keep checking on everyone who has ended an agreement to see whether they have sold to a buyer introduced a year ago by them. But it does seem that the very few slippery customers around are not the ones who are strapped for cash.

Brian D'Arcy Clark, of Chesterfield, had a client with a pounds 4m house in Kensington who swore that his purchaser had been introduced by friends. "I always ask at the beginning whether there is anyone interested in buying," he says.

Colin Strang Steel, of Knight Frank in Edinburgh, still has to collect from the owner of a castle. "Alarm bells ring when clients don't live in the property, the correspondence file is thin, and the owner moves out well before the sale is completed, leaving no forwarding address."

But Winkworth, in London, could not have foreseen a protracted legal case arising from the sale of a celebrity's house. "We ran a massive marketing campaign and achieved pounds 100,000 more than the asking price, and a letter from the owner thanking us," says Kate Clark. "He then refused to pay commission, claiming he hadn't wanted the publicity. In the end he had to pay the full commission, plus interest, plus costs." Sometimes 2 per cent can seem very reasonable.

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