Estate agent's commission

Hi,

I have a query relating to estate agents' commissions on house sales.

My brother sold his house recently. He had it with two estate agents, but the eventual buyer went through neither of these, and he actually ended up showing the house, and arranging the sale himself.

Once he knew he had a sale, he informed both agents to take it off the market, and to send on their bills.

One agent forwarded an itemised bill that included advertising, showings, etc. The other however included a 0.5% commission on the sale of the house, despite the fact that they hadn't sold it. The commission is based on the original asking price, and not the sale price (which was a bit less, and which they obviously wouldn't know, as they didn't organise the sale.)

No contract was signed when the house was put on the market by this agent; and there was obviously no verbal agreement stating that a commission would be payable, even if they didn't sell the house.

I'm just wondering if this is the norm? I've contacted I.A.V.I. to enquire about it, but they say that they refuse to get involved in the area of fees, and that it needs to be sorted out between the parties concerned.

It seems very strange to me. I mean, if the other agent had sold the house, would they still be charging this commission? If not, then I don't see how they can justify charging it when the owner has found a buyer himself.

Also, if he had just gone into them and told them to take the house off the market, and not mentioned that it'd been sold, they couldn't have charged commission. In that case, is he being charged because he revealed the sale to them?

I'm not very knowledgable about this type of thing. Any feedback or information would be greatly appreciated.

I think that costs are all they are entitled to in this scenario-in the absence of an agreed contract/sales agreement/sight of terms of business it's hard to see how they are entitled to 'commission'.

The stance of the first agent would seem to add some weight to this argument.

Yeah, doesn't make sense why one agent would feel entitled to it, and the other wouldn't. Would probably plead different terms, but again, no contract was signed, and no verbal agreement was in place. Thanks for the advice.

This question crops up fairly frequently. The answer is that where an estate agent has a property for sale, puts up boards, advertises it, then they are entitled to the fee in the event of a sale as they can successfully argue that the buyer was attracted by their ad or board. There have been court cases on this very point and the outcome was that the agent was entitled to the fee. If there had been a specific agreement to the contrary then that would be fine but is there here? Did your brother make an agreement that if he sold it himself they were not to get commission- did he have his own board up, did he advertise it himself. Where two agents have been engaged there should usually be an agreement as to what happens in the event of a sale by either- sometimes they agree to split commission, sometimes the successful one gets the commission.

I won't disagree with a solicitor's opinion on this issue, but unless the agent actually did more than just advertise the property, are they really entitled to commission? Especially commission based on the asking price as opposed to the actual sale price?

Do they have any obligation to prove that they actually had any influence on attracting the buyer in question?

CCOVICH said:

I won't disagree with a solicitor's opinion on this issue, but unless the agent actually did more than just advertise the property, are they really entitled to commission? Especially commission based on the asking price as opposed to the actual sale price?

Do they have any obligation to prove that they actually had any influence on attracting the buyer in question?

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Usually the first anyone will know a property is for sale is by seeing an estate agents board or advert. If they then approach the owner directly ( hoping to cut out the middle man) and make an agreement then the estate agent is still entitled to his fee. It's a little more muddled here because there were two estate agents but that is essentially the usual conclusion in these circumstances. Now if the Op's brother had his own board up, or advertised it himself for sale and could conclusively prove the buyer was found in that way only then there might be an argument against. But really he should have spelled this out in an agreement with the estate agents beforehand.

I won't disagree with a solicitor's opinion on this issue, but unless the agent actually did more than just advertise the property, are they really entitled to commission? Especially commission based on the asking price as opposed to the actual sale price

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they might just be being cheeky looking for commission on the asking price, but they are definitely entitled to commission on the sale price. Both agents have differing views, but the first sending a bill for 'showings' is basically charging commission aswell. If you try to sell a house and it has 10 viewings but you take it back off the market you are generally on charged for advertising costs, but in this case a sale occurred so commission should be due, especially if it was with the agents for a lengthy period (which we don't know) or if many viewings had occurred.

If it has to be paid, it has to be paid. It’s frustrating because the estate agent had the house on their books for months, and couldn’t sell it. My own impression is that advertising costs should cover the fact that the buyer may have seen the sign, etc., but I appreciate that might not be the way it works.

It’s immaterial now, but as a matter of interest, if the estate agent had merely been told to take the house off the market, and not informed of the sale, what would the legal position have been? Into the future, would they have been seeking proof that the ownership of the house had remained the same?

Red77 said:

It’s immaterial now, but as a matter of interest, if the estate agent had merely been told to take the house off the market, and not informed of the sale, what would the legal position have been? Into the future, would they have been seeking proof that the ownership of the house had remained the same?

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The legal position would remain the same. If they are legally entitled to their fee, the fact that they are not informed of the sale does not change that. They might not seek their fee now but if they became aware of the sale in teh future they could seek it then.