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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

to be surprised that our estate agent's took their commission from the original marketed price rather than the final sale price?

51 replies

Housewife2010 · 14/03/2011 21:05

My sister has just sold our late Mother's house. It has been on the market for nearly 2 years & we had to keep dropping the price. It finally sold last week & we were surprised that the estate agent's took their 1.25% commission from the original marketed price rather than the final sale price. We had to drop the price by 40k to finally get a sale. As my sister lives near the house she organised the sale & missed the small print. As she did all the work I don't blame her at all. However, I want to know if this is standard practice? If so, surely it's in estate agent's interests to give an over-inflated starting price to ensure that they get more money.

OP posts:
Original poster
Housewife2010 · 14/03/2011 21:47

It's not a VAT blip. Unfortunately because of the rise we're paying the extra VAT too. Thanks very much to BetsyBoop for the links. We'll definitely look into that.

OP posts:
theyoungvisiter · 14/03/2011 22:03

God that's shit - can't believe it's in their contract.

Do as Betty says and challenge it. Also it might be worth speaking to your solicitor and seeing if they have any advice?

(Secondcoming - the inheritance tax issue you mention is different - I don't know about the Irish system but in the UK it's normal to agree a value of the house at probate and you pay tax on the value at that point regardless of what happens later. Sucks for your friend but that's how it usually works unfortunately.)

Acanthus · 15/03/2011 09:59

Oh. Well you're stuck with it then, I should think. Shame your sister didn't look at the terms more carefully.

sue52 · 15/03/2011 10:03

Bunch of crooks.

nobodyimportant · 15/03/2011 10:04

That's really outrageous! I've never come across that before. If it's in the contract I'm not sure there's much you can do about it though.

theyoungvisiter · 15/03/2011 10:05

Acanthus, they might not be stuck with it. It could be ruled unreasonable, or if they're a member of a professional body and haven't abided by their code of conduct, they might be over-ruled by their professional body or ombudsman.

Worth a try anyway!

poshme · 15/03/2011 11:38

Sounds like a flat fee... Just expressed as a percentage of the asking price. We have had agents suggesting it to us. If contract was signed agreeing to it I would think you're stuck with it.

maighdlin · 15/03/2011 11:42

sneaky bastards. go to trading standards/ombudsman. write the agents a polite letter explaining that you have an issue with their fees and the matter is currently with the ombudsman and you will get back to them when you have received a response.

keep all further correspondence from them. write down in a notebook every time they call and who it was called you.

they may threaten proceedings but if the case is with an ombudsman any decent judge would tell them to eff off.

mrsscoob · 15/03/2011 12:09

It may be a flat fee or it might just be a mistake. The admin person would have raised the invoice and estate agents notes get all covered in scribbles it wouldn't surprise me if the admin just read it wrong, especially as it was at the original price, just give them a ring.

caughtinanet · 15/03/2011 12:19

What was the actual percentage ?

Its all very well to say its not a resonable calculation method but if the %age is less that it would be for an agent who charges on the final selling price you may still be paying around the same £ value.

I'm out of touch with what EAs charge nowadays but I'm sure everyone else will know what's reasonable

fizzyliftinggas · 15/03/2011 12:22

You are certainly not being unreasonable, but I am not surprised, estate agents are thieving wankers... all of them Grin

theyoungvisiter · 15/03/2011 12:37

Caughtinanet - the OP says that it was 1.25% certainly around our way is fairly standard for a price achieved % so I don't think there's a strong argument to say that she received special treatment.

Anyway the point is that flat fees are fine but they should be flagged as such - in this case it sounds like the vendor was convinced she was negotiating a price achieved %.

Of course there's an onus on the client to read the small print before signing, but if the agent misrepresented the deal verbally, that's pretty serious.

ThisIsANiceCage · 15/03/2011 12:46

Try getting money back through ombudsman, etc. But if that fails, name and shame to local media: it's a perfectly respectable public interest story about reading the small print.

And the estate agent will hate you forever. Grin

caughtinanet · 15/03/2011 12:48

Oop theyoungvisiter, missed that thanks.

Its hard for the OP as it seems she didn't speak to the agents herself and whilst I'd be the last person to stick up for them as a group a signed contract is going to be hard to get out of.

I'd go down the shabby terms and conditions route and try to shame them into reducing the fee - unlikely I know.

Happymm · 15/03/2011 12:55

Loving duplicitous bitch comment! Gave me a right giggle, though no help with your problem of course OP :o

Virgowoo · 15/03/2011 18:34

In a similar position here.
DM has just accepted an offer on her house which is somewhat less than the original asking price.

When the contract was arranged with the agent, the fee was negotiated at a % of the selling price verbally, now we have been referred to the document signed which has a flat fee on it, which is equal to the agreed % based on the original asking price. We've complained and are waiting for a response. I'll be checking out that code of practice in the meantime I think.

Can't complain about the amount of viewers they got through the door, and we now have a sale, but can't help feeling it's sharp practice to get you to reduce the asking price to get a sale and then ask you to pay the original fee.

freshmint · 15/03/2011 19:34

If I were her I would pay the commission as calculated on the sale price, plus vat, together with a covering letter saying that that was an unusual term, outside the market norm, not justifiable and not pointed out to me at the time of contract and accordingly you think it is void pursuant to the unfair contract terms act. In that case no commission would be payable but to be fair and without prejudice to your position you enclose a cheque for x% of the sale price plus vat.

Then I would let them sue me for the remainder in the small claims court and if they bothered, defend on that basis.

It is a very arguable defence and I think any DJ they appeared in front of would be very sympathetic to it.

ThisIsANiceCage · 15/03/2011 23:47

Bad in so many ways. Sad

If the EA's percentage depends on sale price, they have an incentive to suggest a high price, but a realistic one as they won't get paid until the house sells.

If the EA's percentage depends on original asking price, they have an incentive to suggest a ludicrous asking price, leave you dangling for a couple of months, then drop to the realistic price. Well worth the wait for them; potentially disastrous for the seller.

microserf · 16/03/2011 08:20

I think you may have a case to take to the property ombudsman. He regulates estate agents.

www.tpos.co.uk/consumer_guide_sales.htm

in particular look at 3H in these terms and conditions: www.tpos.co.uk/downloads/IES02_code%20of%20practice_sales.pdf

it states that the commission fee should move with the actual realised price.

i am not sure this gets you 100 per cent of where you need to be, but it gives you an arguable case. to check your position, you could also call their office today to see what their views on this situation are. They would be the agency to discipline the agent if their actions are contrary to the code.

once you have done that, my advice would be to follow freshmint's advice and pay what you think is owed, state that the term is onerous and that it was not drawn to your attention and is therefore not binding on you and that in addition you believe it contravenes the Code of Practice for Residential Estate Agents. There is a risk they will pursue you for the rest in which case you will need to likely need to file a formal complaint with the Ombudsman.

microserf · 16/03/2011 08:22

actually, having read the code again, i think it is pretty clear. i would definitely call the ombudsmans office today.

manticlimactic · 16/03/2011 08:35

"In the small print it says that the "fees are regardless of whether the property realises a higher or lower value"

Sounds like a good money making scheme for the EA. I don't suppose they could over estimate the valuation to get a bigger wodge? Cynical moi? Grin

AnnoyingOrange · 16/03/2011 15:50

Haart estate agents base their fee on the original asking price as a standard practice

see comments here www.houseweb.co.uk/house/forum/Forum10/HTML/000067.html

that forum is from 2005 and they still do it today

AnnoyingOrange · 16/03/2011 15:56

Haart estate agents base their fee on the original asking price as a standard practice

see comments here www.houseweb.co.uk/house/forum/Forum10/HTML/000067.html

that forum is from 2005 and they still do it today

AnnoyingOrange · 16/03/2011 15:56

oops sorry - double post

Mumwithadragontattoo · 16/03/2011 16:10

Freshmint's suggested way forward seems very sensible to me. You pay what you thought you owed ie a percentage on the final sale price and they have to take legal action against you and defend their position before a judge if they want the difference. They probably won't be bothered to chase for it and if they do there's a good chance they will lose since their contract is v unusual and probably unfair.