Before instructing an estate agent, read our handy guide to ensure you get the best deal for the sale of your property…
So, if you’ve considered how to sell your house and have decided that going with an estate agent is the most appropriate choice for your situation, you’ll next need to decide on which estate agent you would like to work with and then instruct them to begin the process of selling your house.
Instructing an estate agent – Step-by-step
What terms you would like to instruct your estate agent
First of all, you’ll need to decide on what basis you’ll be instructing your estate agent. Options include:
- Sole Agency
Sole agency instruction tends to be favoured by both the agent and the seller, encouraging the estate agents to work hard for a quick house sale (good for the property owner) and gives exclusive right to one agent to market the property and therefore receive the agreed percentage of your sale.
Don’t forget, it is possible to negotiate with an estate agent, particularly when instructing them as a sole agency.
- Joint sole agency
Joint sole agency is where a property owner instructs two estate agents to market their property at the same time.
The commission on the sale will then be divided by both of the estate agents, no matter which agency actually secures the buyer.
Although on the outset it seems hugely advantageous to have two estate agents working for you, the following significant pitfalls can put property owners off joint sale agency instruction:
- Commission charges tend to be higher when you have two estate agents on board. It is also more difficult to negotiate on a joint sole agency basis.
- Joint sole agency agreements can decrease estate agent motivation, in comparison to sole agency agreements.
- Multi agency
Your choice of estate agent may well be limited when you opt to instruct an estate agent on a multi-agency basis, since many estate agents do not choose to work this way.
Multi-agency instruction is generally ill-advised for a number of reasons. These include:
- High rates of commission (similar to joint sole agency)
- Raising buyer suspicion (seems like a more credible house sale to be on the market with one estate agent)
It is worth noting that if you instruct an estate agent on a sole agency basis, they are much more likely to push for a sale and offer their motivation in comparison to both sole and joint agency instruction.
Setting an estate agency fee
Estate agent fees and contract terms vary. Most estate agent will charge a fee based on the sale price achieved. This can be anywhere from 0.75% to 3%, however, there is room for manoeuvre in these charges.
When negotiating with your estate, remember that estate agents need incentive to work hard for your sale and bear in mind that your estate agent will profit anywhere between £75 to £300 for every £10,000.
It is important to bear this in mind during the house selling process. When agreeing a fee with the estate agent, it is often advised to aim for 1% plus VAT for sole estate agency agreements.
Setting an estate agency contract terms
Pay particular attention to your agent’s contract terms. You should be provided with a copy of this before you instruct. Sole agency agreements will tend to have a lock-in period, which basically means you are unable to sell your property through another estate agent until this period expires. Sole agency agreements can be anywhere from 4 – 12 weeks although you should work hard to negotiate these terms down. This gives you the flexibility to move to another estate agent if you feel your current one isn’t doing enough to progress the sale of your house.
Another contract term to be very vary of is something called ‘sole selling rights’. This type of contract legally stops the seller from being able to sell their own property through any other means. For example, if your situation changed and you wanted to sell your house quickly using a cash home buying company, under these terms you wouldn’t be able to. These particular contracts can tie sellers in anywhere between 12-16 weeks on average.