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Original poster

Estate agent f***ery - is this even legal?

98 replies

raratigera · 03/02/2023 00:04

I'm house-hunting and very keen to move. I've seen several in the last few weeks and will be putting an offer on one of them. Then I noticed the small print the estate agent has written at the bottom of one of the house brochures.

Basically they want a reservation fee, "refundable on exchange", of £500/£1,000/£1,500 depending on the cost of the house to mark it as Sold Subject To Contract. The fee will be reimbursed upon exchange of contracts or retained by them if I back out of the sale unless there are structural issues or other issues that come up after a survey.

So they want me to pay £1,000 to have an offer accepted? That they may or may not reimburse? And who decides if an issue is serious enough to make me withdraw an offer? And what if I don't agree with their decision?

I've bought and sold many houses and have never come across this. I'm a serious buyer ready to move, but I think I'm going to give this house a miss. And also the house removal company, building society and solicitors they recommend, when I do buy and move in the near future. The fee is to cover the work they do to move the sale forward but that's part of their job.

Is this how it is now?

OP posts:
minipie · 03/02/2023 00:08

Is the fee for the EA or for the seller. I can imagine a seller stipulating this so that they get serious buyers only and don’t waste time with someone who’s going to pull out - especially if they’ve been burned before. It’s unusual but the seller can make whatever stipulations they want. If it’s a fee to the EA - bloody hell and if I were a seller I certainly wouldn’t be using them as so many buyers would be put off!

UsingChangeofName · 03/02/2023 00:15

I've never come across it, but have been advocating for some sort of scheme whereby the buyer actually has to show some commitment, and where a buyer pulling out for no good reason, for a long time.
The is a special place in hell for those buyers that offer a fair price, have the house taken off the market, then the vendors pay out for all the costs on the next home they are buying, then they suddenly drop their offer price 2 days before the move.

Agree with pp the EA shouldn't be expecting a fee from the buyer when they are already being handsomely rewarded by the vendor, but I'm not reading it as being that.

Original poster
raratigera · 03/02/2023 00:24

The fee is for the estate agents. If a buyer pulls out of a sale for a reason they don't think is valid, the estate agents keep £500/£1000/£1500.

OP posts:
LauraNicolaides · 03/02/2023 00:35

raratigera · 03/02/2023 00:04

I'm house-hunting and very keen to move. I've seen several in the last few weeks and will be putting an offer on one of them. Then I noticed the small print the estate agent has written at the bottom of one of the house brochures.

Basically they want a reservation fee, "refundable on exchange", of £500/£1,000/£1,500 depending on the cost of the house to mark it as Sold Subject To Contract. The fee will be reimbursed upon exchange of contracts or retained by them if I back out of the sale unless there are structural issues or other issues that come up after a survey.

So they want me to pay £1,000 to have an offer accepted? That they may or may not reimburse? And who decides if an issue is serious enough to make me withdraw an offer? And what if I don't agree with their decision?

I've bought and sold many houses and have never come across this. I'm a serious buyer ready to move, but I think I'm going to give this house a miss. And also the house removal company, building society and solicitors they recommend, when I do buy and move in the near future. The fee is to cover the work they do to move the sale forward but that's part of their job.

Is this how it is now?

This sounds like something that vendors (and agents) might do in a crazy sellers' market where buyers are desperate, prices are going up by £20k a month, and there's a real cost to the seller in taking the house off the market for a buyer who has not got much at stake.

But unless I'm mistaken the market has gone tits-up and is teetering on the verge of collapse? Shouldn't they be doing all the can to encourage you to make an offer, rather than charging you for the privilege?

Original poster
raratigera · 03/02/2023 00:56

I can't say I'd agree with it even in a busy market, like we had last year, and I wouldn't do it on principle no matter how much I liked the house. But you're right, I've been the only person to view most of the houses and will not be putting myself in a position where I could potentially lose money. Circumstances can change, problems can happen, I think its cheeky beyond belief to be charged for having to back out. I think most prospective house buyers are serious. I'll be buying a house from a better agent and telling the seller of this one why.

OP posts:
minipie · 03/02/2023 01:14

Do you think the sellers are aware the EA is charging this fee? I wonder if they haven’t made it clear to their vendors.

Original poster
raratigera · 03/02/2023 01:25

It's on the brochure and online so I expect so, yes. I'm not sure why a prospective house seller would sign up to an agent who angers potential buyers and there's no benefit to themselves. Buying and selling is a risky business and there probably should be a better way, but we all get there in the end. EA profiting from a buyer backing out for a reason they don't think is valid? Just no.

OP posts:
caringcarer · 03/02/2023 01:26

I have bought lots of houses and never seen anything like this. Which EA is it? I'd go with a large one that does not charge these reserve fees if I were you.

ChilliBandit · 03/02/2023 01:31

Oh god, I really hope this doesn’t catch on or it’s clamped down on by the regulators quickly.

Original poster
raratigera · 03/02/2023 01:32

I've bought lots of houses and never seen this either! I'd better not say which EA it is, they cover quite a large area but the house I'm looking at is rural. Not central London/city.

I'm buying, not selling, so I don't get to choose which agent I deal with. I am turning this house down though.

OP posts:
FeinCuroxiVooz · 03/02/2023 01:37

Drop a note through their door saying that you are a serious buyer interested in their property but you will not under any circumstances agree to this ridiculous fee, which is unnecessary as if you make and offer and all surveys and searches are completed without raising concerns then of course you will go ahead to contract, so the only possible reason to charge such a fee would be to force a sale through despite concerns and warnings from surveys and searches, which therefore means you will not be proceeding for now.

But give your email address and ask them to drop you a line if they either change to a different agent, or if they find that having such an unreasonable condition on their details is making it tricky to sell such that their current agent agrees to drop the idea.

Original poster
raratigera · 03/02/2023 01:40

Yes, I might do that.

OP posts:
Original poster
raratigera · 03/02/2023 01:43

But it seems bad luck and bad feeling already. The sellers and agents know my circumstances and that I am very keen to move. It's the principle for me.

OP posts:
Roselilly36 · 03/02/2023 05:01

We have bought & sold many times over the years, never heard of a reservation fee. It would definitely put me off too.

FickleOnion · 03/02/2023 05:27

Outrageous! EAs get 1-1.5% Commission at least on a transaction. I just paid £16k commission on a house that sold in 48h! but that’s how he works, some are quick and easy to sell, others are not. And once the offer is agreed they just pass the sale on to solicitors so they don’t do anything anyway!

CellophaneFlower · 03/02/2023 07:03

I have seen this before. I'm sure it was probably on MN with somebody else querying it. It certainly isn't the norm.

Like you say, even disregarding the pure cheek, I cannot imagine how tricky it would be trying to get the money back if there's survey issues. You'd assume it to be more in your favour, as generally the survey ALWAYS exaggerates issues, but I suspect it wouldn't be that easy.

Ime agents do very little work once the offer has been accepted, perhaps a few phonecalls. People pulling out is something that happens and which I assume they factor into their fee, such as a tradesperson might do, for all the time they spend putting quotes together for clients that then don't use them.

I'd definitely drop them a note explaining. If they change agents they'll almost certainly have to still pay that agent a finder's fee though. You wouldn't have to pay the reservation fee though obviously.

Lcb123 · 03/02/2023 07:17

Never heard but as someone who recently sold after much stress of buyers repeatedly pulling out for no reason, I wish there was something like this to make buyers commit early on

XVGN · 03/02/2023 07:29

No need for secret squirrel when you can just search for "refundable on exchange" on Rightmove:

www.rightmove.co.uk/properties/129878807#/?channel=RES_BUY

ImTheOnlyUpsyOne · 03/02/2023 07:32

We had this too on my recent house purchase. When my offer was accepted I naively said ' no thank you, we don't wish to pay that ' as I assumed it was optional 😂Anyway EA explained it would be more likely to stop gazumping and would help the whole process to be faster (none of that true...if our seller found a better offer I'm sure he could pull out and we'd just get our 1k back...it wasn't any faster on their end) but anyway,we did pay as it wasn't optional

Reallybadidea · 03/02/2023 07:41

I don't understand how this is enforceable. Estate agents are obliged to pass on any offers to the seller. And the seller is perfectly entitled to accept any of these, regardless of whether the fee has been paid.

And nobody is going to continue with a house purchase of hundreds of thousands of pounds just to get a £1500 fee refunded. So it's just a way of EAs ensuring they make money even if a house sale falls through?

ImTheOnlyUpsyOne · 03/02/2023 07:44

I will also add.....the seller is the one who showed us around his home and when we mentioned it, he wasn't actually aware of the 1k fee - it was on the Rightmove listing though so no secret, he obviously hadn't paid attention. I did also have to sign a Contract that outlined what constituted a suitable reason for pulling out. The survery was a reason we could pull out. At my time of signing this I didn't have a solicitor in place and my parents were annoyed I was entering into that agreement, but I did do it all in a rush and frenzy because I was desperate for that property. We complete next week so this thread reminds me that I must get it back.

LemonBounce · 03/02/2023 07:45

UsingChangeofName · 03/02/2023 00:15

I've never come across it, but have been advocating for some sort of scheme whereby the buyer actually has to show some commitment, and where a buyer pulling out for no good reason, for a long time.
The is a special place in hell for those buyers that offer a fair price, have the house taken off the market, then the vendors pay out for all the costs on the next home they are buying, then they suddenly drop their offer price 2 days before the move.

Agree with pp the EA shouldn't be expecting a fee from the buyer when they are already being handsomely rewarded by the vendor, but I'm not reading it as being that.

This would be reasonable if the same also applies to sellers!!
So many pull out, lie about key aspects of the property....! Often leaving the potential buyer homeless.

Mydogatemypurse · 03/02/2023 07:59

raratigera · 03/02/2023 00:24

The fee is for the estate agents. If a buyer pulls out of a sale for a reason they don't think is valid, the estate agents keep £500/£1000/£1500.

Absolutely not

sorrynotathome · 03/02/2023 08:03

I imagine it’s to deter timewasters - I have heard of this. I’ve also had two buyers pull out, costing me time and money. I haven’t gone down this route though. This is quite normal on new builds though, isn’t it? They aren’t considered “disgusting”.

Lastqueenofscotland2 · 03/02/2023 08:05

I’ve definitely heard of reservation fees in the last 5 or so years. I don’t think it’s catching on per se but is more common