Is Agency's fee fair, for letting and any later sale?

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    Is Agency's fee fair, for letting and any later sale?

    Hi, my mother died last year and as we have been unable to sell her house we have decided to try to let for the time being. I chose a letting agent that seemed to be efficient and not charge too much, but having looked closely at the contract i'm not too sure. For a start, they wanted 1.75% of the selling price if their tenant subsequently bought the property. I protested at this - it just seems like a fine for taking away their customer to me - and they agreed to reduce the rate to 1%. Can anyone advise me if this is a fair rate? It worries me that there is no end date to this clause. I have seen posts about the Foxton/OFT case, but there has been no conclusion to that yet. Also, what is a fair figure for renewing a 12 month contract with an existing tenant. Any advice or recommendations will be gratefully received

    #2
    Negotiation is the key

    Not charging too much should not be your main motivating factor for choosing an agent. I have learned to seek out agents that are members of NAEA or ARLA and that are willing to negotiate the terms of their contract.

    If you have not yet signed anything with this agent, there is nothing stopping you from saying "I don't want to pay any renewal fees and I want that written into your contract with me".

    I am presuming that there are other reputable NAEA or ARLA agents in the property's locality that you can negotiate with. Are there?

    As for any future sale fee, at least you have reduced that to 1%. You're on the right road.

    Who will manage the property? You or the agent?

    Comment


      #3
      Hi Poppy,
      Thanks for your reply. I tried to choose a reputable agent at a reasonable cost, which i think i did - it's just the contract terms that i'm not sure about. They are members of the Ombudsman scheme, but i can't find any mention of the other organisations in their literature. Am i allowed to say who they are in the post? When you say that i'm on the right road - how far along it am i? The renewal fee is £100 by the way. No, i haven't signed yet.

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        #4
        When I said you're on the right road, I'm just pointing out that you have successfully negotiated something - what else can you negotiate?

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          #5
          I don't know, that's the point! I'm a reluctant landlord because of the current state of the housing market. The property is costing us money so it has to be rented out. I have been given the responsibility of sorting things out and I don't want to let the family down by signing up for something that will cost us dear in the future. I keep reading articles on letting which warn to watch out for certain clauses in contracts but they don't say what to do if i find one.

          Comment


            #6
            Originally posted by pam1 View Post
            I don't know, that's the point! I'm a reluctant landlord because of the current state of the housing market. The property is costing us money so it has to be rented out. I have been given the responsibility of sorting things out and I don't want to let the family down by signing up for something that will cost us dear in the future. I keep reading articles on letting which warn to watch out for certain clauses in contracts but they don't say what to do if i find one.
            Are you sure that you've sufficient knowledge to do this unaided? You doubt your own abilities, I feel.
            JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
            1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
            2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
            3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
            4. *- Contact info: click on my name (blue-highlight link).

            Comment


              #7
              Quite right. That's why I want a Letting agent to do it for me. What I need to know is if it is fair for them to put the clause in the contract about selling the property to a tenant.

              Comment


                #8
                Originally posted by pam1 View Post
                Quite right. That's why I want a Letting agent to do it for me. What I need to know is if it is fair for them to put the clause in the contract about selling the property to a tenant.
                Well, fairness has a flexible meaning. They think that it is; you don't. Your remedy is:
                a. to give in;
                b. to negotiate a compromise; or
                c. to take your business elsewhere than there- serves them right if you do.
                JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                4. *- Contact info: click on my name (blue-highlight link).

                Comment


                  #9
                  Can you tell me if this clause is usually included in this type of contract?

                  Comment


                    #10
                    Originally posted by pam1 View Post
                    Can you tell me if this clause is usually included in this type of contract?
                    Sorry, but I don't know.
                    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                    4. *- Contact info: click on my name (blue-highlight link).

                    Comment


                      #11
                      My contract with my agent does contain such a clause - i.e. that if the property is sold to a tenant originally found by the agent, the agent gets what would have been the estate agent's fee.

                      However, my agent takes only a (reasonable) management fee - no extra "finding" fee for finding tenant, no extra fees for contract renewals etc. etc.

                      I believe his terms are fair.

                      This is the important thing I believe - that I feel I can trust my agent and that he is fair in his dealings with me and with the tenants.
                      Mrs Jones
                      I am not an expert - my posts are my opinion and should not be taken as fact!!

                      Comment


                        #12
                        It must be very reassuring to feel that way. I still don't think that this clause is reasonable though. If i put my property up for sale with an agent they will advertise in the press, in their offices, online and in various publications. they will also carry out accompanied viewings and do their best to 'sell'. If a tenant buys - the LA will have done none of these things but he wants the same commission. That can't be right.

                        Comment


                          #13
                          but the LA has still "found" the tenant and is therefore losing their commission so a fair fee is normal - we charge a fee but its well under what EA charge and we deal with the whole process via solicitors, sruveyors etc just as an EA would - why should we not get a fee?

                          Comment


                            #14
                            The LA is paid to find a tenant. If the tenant gave notice and found his next property by himself or through another agent the LA would have lost a customer - that's business! Customers come and go. Nowhere in the Terms and conditions that I've come across does it say that the LA will manage the sale but they want 1.75% of the purchase price. I think that is extortionate. If it was just a case of a flat fee, a one off payment to acknowledge the introduction, i might not feel so strongly about it.

                            Comment


                              #15
                              Originally posted by pam1 View Post
                              The LA is paid to find a tenant. If the tenant gave notice and found his next property by himself or through another agent the LA would have lost a customer - that's business! Customers come and go. Nowhere in the Terms and conditions that I've come across does it say that the LA will manage the sale but they want 1.75% of the purchase price. I think that is extortionate. If it was just a case of a flat fee, a one off payment to acknowledge the introduction, i might not feel so strongly about it.
                              And ...as has been pointed out in earlier debates on this issue, but worth remembering : if LA finds a tenant who turns out to be unsatisfactory (doesn't pay rent/causes damage/antisocial behviour, etc.), you don't see the LA offering to pay for the eviction process, or finding L another tenant for free, and certainly not offering a refund on the finding fee...or is the Pope not a Catholic any more?
                              'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

                              Comment

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