Sellers told to beware the double fee trap of estate agents

Sellers told to beware the double fee trap of estate agents


Homeowners selling their property and tempted to ignore their sole agency agreements with estate agents are being urged to think twice.

In a recent ruling by the Court of Appeal, in the case of Nicholas Prestige Homes v Sally Neal, Ms Neal was ordered to pay an extra £10,883 commission after she granted one firm sole agency status but did not revoke this before the house was sold by another.

Sole agency is an exclusive agreement between estate agents and sellers, whereby the estate agent with sole agency status is due their fee even if another firm sells the property and claims a fee.

Trevor Kent, former president of The National Association of Estate Agents, explained: “Sole agency means just what it says...Sellers should be very careful to consider the terms of the contract with their existing agent when contemplating 'widening the field' to bring other firms on board.”

The case began in 2006 when Ms Neal instructed several agents to sell her property. But in December, she stopped using all but two agents and informed Nicholas Prestige Homes that as from January 2007, they would be her sole agents. However, she failed to inform the second agent.

In January, the eventual buyer of the property rang Nicholas Prestige Homes but the phone was engaged. She therefore rang the other agent that was still representing the seller. Although Nicholas Prestige Homes rang straight back, the purchaser was by then engaged with the other agent, and bought through them in May 2007.

Nicholas Prestige Homes issued proceedings against the seller, but when the case went to court, the district judge found that it was the second agents, rather than Nicholas Prestige Homes, which had introduced the buyer, and dismissed the claim for commission.

However, the Court of Appeal ruled that the breach of contract caused Nicholas Prestige Homes “to lose the very real and substantial chance of earning the whole of its commission”. The Court decided it was accordingly entitled to the damages, based on the commission it would have earned.

The case serves as a timely reminder to those who are struggling to sell their home that they can only give one estate agent sole rights to the sale or they will be forced to pay twice for the service.

Mr Kent added: “By all means use more than one agent to market a home - a greater selection of buyers and an element of inter-agent competition can often speed a sale and sometimes even increase the sale price, but make sure that no agent believes they are the 'sole agent' when others are offering the home too. The phrase to look out for is 'multiple agent' to avoid falling into the double fee trap.”

By Shelley DeBere

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