When you’re considering putting your house on the market for sale and talking to estate agents, you’ll likely be looking over and potentially signing estate agent contracts.
From the types of contracts estate agents use to the fee agreements and what happens when you want to terminate a contract, our blog shares what you need to know about estate agent contracts when choosing a selling agent to work with.
Type of Estate Agent Contracts
There are various types of estate agent contracts that sellers might enter depending on how many agencies they intend to employ and how the fees would be divided, or not divided, between those marketing the property.
Sole Agency Agreement
A sole agency agreement is one type of estate agent where just one estate agent is chosen to sell a property. The estate agent works exclusively during the contract term and is entitled to a fee if they introduce a buyer who successfully purchases the property.
Sole Selling Rights
A slight difference from the sole agency agreement, an estate agent contract that is based on sole selling rights grants the agent full exclusivity to sell a property. They are entitled to payment, even if the seller finds a buyer themselves.
Joint Agency Agreement
Under a joint agency agreement, two or more selling agents will collaborate to sell a property. The fee is split between the two agents, on a pre agreed rate. This might be 50/50 but it could also be 60/40 to the agent who introduced the buyer, the exact split is decided between the two agents working together. This can lead to increased exposure for the property but may involve higher fees.
Joint Sole Agency Agreement
In a joint sole agency agreement, two agents work together exclusively to sell a property, with the agent who successfully sells the property taking the entire fee.
Multi Agency Agreement
A multi agency agreement involves hiring several agents who all work independently to sell the property. The agent who introduces the buyer collects the fee. This provides extensive exposure but typically comes with the highest fees due to increased competition between agents, and the ‘winner takes all’ setting making the stakes higher for those agents working on the sale.
Estate Agent Fees
As with the multiple types of estate agency contracts that can be used, there are many arrangements of fees and types of fee agreements within estate agent contracts that sellers should be aware of before signing.
No Sale, No Fee
Estate agent fees in the UK can vary, typically ranging from 1.5%-2.5%. A common arrangement for estate agent fees is the “no sale, no fee” basis, where the estate agent only charges a commission if they successfully sell the property.
Sliding Scale Fee Arrangement
Some estate agents offer a sliding scale fee structure, where the commission increases as the property sells for a higher price. This can incentivise agents to achieve a higher sale price.
Fixed Fee
Fixed fee arrangements involve a pre-agreed, flat fee for estate agent services, regardless of the sale price. Whilst these arrangements can provide certainty about costs upfront, sellers should be sure of the basis on which the fixed fee is payable – ensure it is only based on successful selling.
Questions about estate agent contracts
The following are questions that sellers often have or should be asking about estate agent contracts.
Is there a cooling off period?
It is standard for an estate agent’s contract to include a 14 day cooling-off period.
During this time, a seller can change their mind about instructing the estate agent to sell their property without incurring a penalty.
Are Estate Agent contracts legally binding?
Yes, estate agent contracts in the UK are legally binding documents.
Both the seller and the estate agent commit to a specific set of terms when they sign the contract.
Do I need a contract with an Estate Agent?
In the UK, if you choose to use an estate agent to sell your home, it is necessary to sign a legally binding contract.
Whilst some agents might suggest that they are able to conduct business without contracts, and it is often the case that agreements on email, are yet to be signed, but agreed to in writing, it is best practice to have a proper contract in place with an estate agent to avoid discrepancies.
Can you get out of an estate agent’s contract?
In the UK, estate agent contracts typically include a 14-day cooling-off period under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. During this period, clients can cancel the contract without penalties.
After the cooling-off period expires, the terms of the contract stand in their entirety which is why sellers must carefully read the wording.
To avoid complications and penalties, it is crucial to understand the contract’s terms, rights, and implications of cancellation before signing.
How long are most real estate agent contracts?
Estate agent contracts in the UK can vary considerably, and sellers should be aware that some agent agreements have standard contracts that cover 12 or even 16 week periods.
Sellers should be sure to fully understand the duration as well as any clauses for extending or terminating the agreement early prior to signing an estate agent contract.
When negotiating with an agent, it is prudent to consider discussing the desired length of the contract to meet your specific needs and expectations, many agents are willing to be flexible on their standard terms and should be confident in their ability to sell your property within a reasonable period, if priced correctly.
Do I have to pay my estate agent if I pull out of a sale?
In the UK, whether you must pay your estate agent if you pull out of a sale depends on the terms of the contract you have signed with them.
Generally, if a buyer has not been found within the contract period, despite the agent’s best efforts, you may not have to pay any fees.
However, some contracts may include withdrawal fees or require you to pay specific charges, such as advertising and photography costs.
Always read and understand your estate agent contract carefully and consider negotiating any fees before signing.
This way, you can protect yourself from unexpected charges if you decide to withdraw from the sale.
What to watch out for in an estate agent contract
There are a few specific things that sellers should watch out for in an estate agent contract:
Costs of marketing
It is standard practice for an estate agent’s contract to include provision for the cost of marketing that the agent will entail, and recovering these costs in the instance a seller chooses not to sell.
Should a seller decide to withdraw the property from the market it is often the case that they will be liable to pay reasonable marketing costs.
This is usually detailed within the contract and is often capped at a certain amount. Be sure to check for this clause.
Length of contract
Estate agent contracts often have a specific length of time during which the agent exclusively represents the property.
Carefully review these terms and consider negotiating on commission percentages if possible, as a small decrease can potentially save you thousands of pounds.
Tie in periods versus total contract length
The length of a contract is not the same as the tie in period and many sellers confuse the two the two.
A typical 16 week contract might include a 12 week tie in period, during which you cannot terminate the agreement under any circumstances, followed by a four week rolling notice period.
Some agents quote a 12 week contract but include a notice period that extends the real commitment to 16 weeks or longer.
Always ask for the tie in period and the notice period as separate figures and ask what triggers the start of each.
Contract start
Always check when the contract clock starts, as it isn’t always the day that you signed and dated.
Some contracts begin on the day of signing, others on the day active marketing goes live. If there’s a delay between the two, which there often is, a clock that starts at signing reduces the time your agent is actively selling within the tie in period.
Neither is wrong, but you should know which applies and factor it into how long the tie in really gives the agent to perform.
Ready, willing and able purchaser clauses
Whilst this clause is now only used by a minority of agents, it is worth being aware of when reviewing any contract.
A ready, willing and able purchaser clause entitles the agent to their full fee if they introduce a buyer who is prepared and able to exchange unconditional contracts, even if the sale never reaches exchange.
In practical terms, if you accept an offer and then withdraw for any reason, you remain liable for the full commission.
The clause is legally defined under the Estate Agents (Provision of Information) Regulations 1991, and any agent using it must explain the effect in writing using a specific prescribed wording.
The Property Ombudsman has raised ongoing concerns about disputes arising from these clauses, particularly because determining whether a buyer genuinely qualifies as ready, willing and able is rarely straightforward.
A buyer might be financially able and prepared to exchange, but assessing whether they are truly willing if the transaction does not proceed leaves considerable room for interpretation.
The HomeOwners Alliance actively campaigns against the clause and advises sellers to refuse it outright.
Read the fee section of any contract carefully. If you see any reference to ready, willing and able purchasers, ask for the clause to be removed before signing. A reputable agent will either confirm the clause is not used, or explain clearly why it appears and what circumstances would trigger it.
How agents define an introduction
The word introduction carries more weight than it appears to.
Most contracts state that the agent is entitled to a fee if the eventual buyer was introduced to the property during the contract period, even if the sale completes months later through a different agent or directly between buyer and seller.
The standard introduction period is six months but some contracts extend this to two years.
This is why switching agents can become expensive. If you change agents mid sale, the new agent could sell the property to a buyer who originally viewed it through the previous agent, leaving you liable for two sets of fees.
Ask for the introduction period in writing and check what evidence the agent needs to demonstrate the introduction.
Questions worth asking before you sign
Before signing any estate agent contract, ask for the tie in period, the notice period, the introduction period, the full fee structure including any withdrawal or marketing recovery costs, and whether the contract contains a ready, willing and able purchaser clause.
A reputable agent will answer all of these clearly and in writing.
Selling your property
Whilst the process of selling your property will undoubtedly require some paperwork, if you’d like to discuss your property sale with us, please do contact us.
