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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:
CellophaneFlower · 03/02/2023 08:06

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?

Once the seller has accepted the offer it's through the estate agent, so the buyer will be obliged to pay.

GreenBiscuitr · 03/02/2023 08:10

Very common on new builds, they've been doing this for decades, it's nothing new.

Greenfairydust · 03/02/2023 08:10

''@sorrynotathome · Today 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.''

In which case it should work both ways: a seller who accepts an offer but then allows the buyer to be gazumped by someone else later in the process should also pay the first buyer a fee...

OP, I personally would not deal with agents who apply this fee.

2bazookas · 03/02/2023 08:12

This is what you pay your lawyer to handle. I'd ask mine to send a formal letter direct to the vendor saying " My client would make an offer on your property subject to normal conditions, but refuses your estate agent's fee condition.

If you wish to proceed we will deal direct with your lawyer."

WhatIsThisss · 03/02/2023 08:19

Our seller initially made this a condition of accepting his offer. We would have to pay £5k into escrow which they would keep if we pulled out for any reason other than survey results (or if they changed their minds). We agreed as we wanted the house but then they realised the time and expense in putting this into force that they dropped it.

Ketchupwee · 03/02/2023 08:20

I know several house buyers over the past 2 or 3 years, who have had the same

sorrynotathome · 03/02/2023 08:25

Greenfairydust · 03/02/2023 08:10

''@sorrynotathome · Today 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.''

In which case it should work both ways: a seller who accepts an offer but then allows the buyer to be gazumped by someone else later in the process should also pay the first buyer a fee...

OP, I personally would not deal with agents who apply this fee.

I wouldn’t have a problem with that.

senua · 03/02/2023 08:31

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.

How do they know you are keen to move? because you said so?Hmm
And yet at the first sign of anything untoward - a mere £500 deposit - you are running for the hills. Actions speak louder than words.

Wheretheskyisblue · 03/02/2023 08:34

Do all the agents other properties mention this fee?

XVGN · 03/02/2023 08:35

Wheretheskyisblue · 03/02/2023 08:34

Do all the agents other properties mention this fee?

Yep

pilates · 03/02/2023 08:39

I’ve only heard of this on new builds. I would try and find another property with a different agent. What happens if you have an awful survey?

CharlotteStreetW1 · 03/02/2023 08:47

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?

They seem to have forgotten about the massive commission they're going to get paid. For doing their job.

(Yet people still complain about solicitors' fees)

Activelyannoyed · 03/02/2023 08:50

It isn’t the norm but it also isn’t that uncommon, I think it’s a good idea.

so many people put offers in, fuck about for weeks then change their mind as they got cold feet. It’s not ok.

so I think a fee that’s refundable on completion or if a valid reason Ie the house has structural issues or a thousand houses being built in the back garden is a good idea.

Stops the time wasters who think they can fuck about putting offers in and changing their minds.

Activelyannoyed · 03/02/2023 08:51

pilates · 03/02/2023 08:39

I’ve only heard of this on new builds. I would try and find another property with a different agent. What happens if you have an awful survey?

It’s right there in the op lol. It’s not even a long op. It’s refundable if there is issues in the survey etc.

Legotiger · 03/02/2023 08:53

The real issue is the state of the system here in England. In France, you offer and pay 10% of the price upfront. You forfeit that if you pull out. Equally, if the seller pulls out, they owe the prospective buyer the same amount. Saves a lot of messing about!

Legotiger · 03/02/2023 08:55

Also - to show the other side - we were burned by a seller who pulled out just before exchange. We’d paid for the survey and solicitor and everything, given notice on a rental. She just changed her mind, then sold the next year. Found out later she’d done the same thing to another family before us. That also should not be allowed!

Sotiredmjmmy · 03/02/2023 08:56

By law the agent has to put all offers to the seller, so if you make an offer they must pass it to the seller. You have no contract with the agent as buyer so I would just refuse to pay the fee, they can’t legally refuse to do anything about your offer and they want the sale. Call their bluff on it, particularly if not much other interest in these properties

YaWeeFurryBastard · 03/02/2023 08:57

I think it’s an excellent idea to be honest. At the moment anyone can make offers Willy nilly with no consequences and often at a significant cost to the seller if they take the property off the market. The seller only has your word you’re a serious buyer and the fee is very small in comparison to the price of the house.

I would happily accept this as a buyer and wish it was more common.

Snoken · 03/02/2023 08:58

Legotiger · 03/02/2023 08:53

The real issue is the state of the system here in England. In France, you offer and pay 10% of the price upfront. You forfeit that if you pull out. Equally, if the seller pulls out, they owe the prospective buyer the same amount. Saves a lot of messing about!

It’s the same in Sweden. You pay 10% as soon as the offer is accepted and you’d lose it if you were to pull out. The difference though is that the seller and estate agents are legally bound to be completely honest about any problems/issues with the property, down to smaller things like a leaky gutter, broken light-switch etc. a survey is usually done by the seller beforehand and shared with all the people interested in buying.

Sotiredmjmmy · 03/02/2023 08:58

Activelyannoyed · 03/02/2023 08:51

It’s right there in the op lol. It’s not even a long op. It’s refundable if there is issues in the survey etc.

Show quote history

The issue that is hugely subjective, who gets to decide what is a big enough survey or title issue to justify a buyer pulling out, it’s incredibly personal decision, the agent is just going to say it’s not a big enough issue and refuse to refund, likely only if a mortgage lender refused to lend as they wouldn’t be able to argue with that but that is a very high bar

pilates · 03/02/2023 09:01

^
thats exactly my thoughts

SD1978 · 03/02/2023 09:03

It's standard here (Australia) and I agree with it. Being required to show a commitment, unlike in the UK when you can juts drop it and screw the seller whenever you feel like it I don't agree with.should've a similar fee for seller too!

Sereni5 · 03/02/2023 09:16

YaWeeFurryBastard · 03/02/2023 08:57

I think it’s an excellent idea to be honest. At the moment anyone can make offers Willy nilly with no consequences and often at a significant cost to the seller if they take the property off the market. The seller only has your word you’re a serious buyer and the fee is very small in comparison to the price of the house.

I would happily accept this as a buyer and wish it was more common.

Agreed. Buying houses in this country is a joke.

CellophaneFlower · 03/02/2023 09:16

Sotiredmjmmy · 03/02/2023 08:56

By law the agent has to put all offers to the seller, so if you make an offer they must pass it to the seller. You have no contract with the agent as buyer so I would just refuse to pay the fee, they can’t legally refuse to do anything about your offer and they want the sale. Call their bluff on it, particularly if not much other interest in these properties

If this was the case, you could put an offer in, buyer accepts, then you could cut the agent out completely. It doesn't work like that. The sale would have to be through the agent and they buyer will have to accept their terms.

Sotiredmjmmy · 03/02/2023 09:20

CellophaneFlower · 03/02/2023 09:16

If this was the case, you could put an offer in, buyer accepts, then you could cut the agent out completely. It doesn't work like that. The sale would have to be through the agent and they buyer will have to accept their terms.

Show quote history

No - the seller is under contract with the agent so they can’t cut the agent out at that point. At no point is the buyer under any contract with the agent. But introducing something like a reservation fee gets the buyer on the hook with the agent, it’s win win for the agent only so they get a fee either way, it’s not for the benefit of either seller or buyer and it’s also not the norm. It’s an agent trying to protect themselves and keep cash coming into their business, which in itself is fine as they are a business but the model is success fee only