Can estate agents really sell a house for free?
I suppose the real catch can be summed up in that well-worn phrase: "You don't get anything for nothing."
For a long time, it has been common practice amongst a certain type of estate agent to undercut fees in order to win instructions. And while it would be stretching credulity to suggest that cheap always equals bad, nevertheless the fact remains that you generally get what you pay for. A cheap agent simply can't afford to devote the same time and effort to marketing your home as one who charges a more realistic fee.
With that in mind, how on earth can any agent offer to sell your house "for free"? Well, of course, they can't. What they are proposing to do is recoup their fee from the buyer instead. (In passing, it's worth pointing out that this fee may well be higher than the one that you, as the vendor, may have been able to negotiate when the agent was keen to win the instruction!)
But so what, you might ask. The buyer coughs up thousands, instead of you. What's not to like?
The obvious answer is that the majority of buyers are probably already stretching themselves to make the purchase, so they won't necessarily have enough spare cash lying around to pay the agent's fees as well. Indeed, if they are asked to do so, this may impact on the price they are able to offer you - or even put the entire purchase in jeopardy. Let's say, for example, that a prospective purchaser has a 10% deposit to put down on a property priced at £400,000, but they also have to pay £4,000 to the agent. This effectively reduces their deposit from £40,000 to £36,000. As a result, the lender may well refuse to play ball. Not only that, but the buyer may also be liable to pay Stamp Duty on the fee they pay to the agent, since this could be considered to be an associated transaction in the eyes of HMRC. Suddenly, the figures wouldn't add up, and you could either end up selling for less - or lose that potential buyer altogether.
Finally, there's always that vexed issue of the agent's duty of care to you, their client. If the buyer is paying them, instead of you, how can you be confident that they really have your best interests at heart...? Is the agent determined to get you the best price or just get a sale agreed?
When all is said and done; take a very close look at the proposal and make sure it is what you really want as, given you will be entering a sole agency for a period, you cannot just jump ship if you are not getting the service you expected.
Paul Bonett F.N.A.E.A. M.A.R.L.A.