As the property market continues to heat up and shortages of homes for sale in certain areas and price brackets start to develop, buyers and investors are increasingly turning to estate agents directly and paying them a fee to go out and find suitable properties.<\/p>\n
Homeowners and sellers need to understand that any agent who introduces a buyer in these circumstances is actually working for that buyer, said Gerhard Kotz\u00e9, managing director of the RealNet estate agency group.<\/p>\n
“The agent\u2019s primary responsibility will thus be to act in the interests of the buyer \u2013 and that could include negotiating to try to secure the property at the best possible price.”<\/p>\n
Kotz\u00e9 said that home sellers\u00a0who have already given a different agent a mandate to market their property should be very wary of accepting an offer from an agent who scouted their home on behalf of a buyer, as this could quite easily give rise to a ‘double commission’ claim.<\/p>\n
“The reason is that the agent who introduced the buyer might well claim that they were the \u2018effective cause\u2019 of the sale and thus entitled to a commission.<\/p>\n
“However, if the sellers agree to this, the original agent with the mandate could then launch a claim against them for breach of contract – and damages equal to the amount of the commission already paid.”<\/p>\n
Kotz\u00e9 said that the only way this can be avoided is if the sellers tell their original agent about the offer brought by another agent and ask for a written indemnity against any later legal claims for damages \u2013 before they accept the offer from the second agent.<\/p>\n
Hopefully, the agents will also reach an agreement to share the commission, he said.<\/p>\n
Kotz\u00e9 said home sellers should also be very wary of giving mandates to multiple agents simultaneously, as this can also lead to disputes over commission and again end up with them having to pay twice for the same service.<\/p>\n
“What might happen, for example, is that a prospective buyer views the property through one agent and then, at a later stage, decides to purchase but makes an offer through a different agent who also has a mandate.<\/p>\n
“Both agents might feel that they were the \u2018effective cause\u2019 of the sale and entitled to the commission, and if the sellers want to avoid a \u2018double commission\u2019 situation they will again need to secure indemnity against legal action and, ideally, an agreement for the agents to split the commission \u2013 before<\/em> they accept the offer to purchase.”<\/p>\n Kotz\u00e9 said this is problematic as you as a seller may not be aware that your buyers have engaged with more than one agent.<\/p>\n “To avoid this we suggest you should make sure that any offer to purchase made in a multiple mandate situation contains a clause in which the buyers warrant that they did not view the property through any other agent, and indemnify you against any claim by another agency.”<\/p>\n An even better alternative, he said, is to do your homework and choose one agent in your area who has an excellent reputation and a track record of successful sales, and grant them a sole mandate.<\/p>\n “You should also make sure that the mandate document accurately reflects what was discussed with regard to the marketing of your property \u2013 and look out for a clause that stipulates that the agency will still be entitled to commission if the property is sold to anyone who viewed it during the mandate period, even if that sale takes place after the mandate has expired.<\/p>\n “This is very common and there is nothing wrong with it, but to make life easier and lower your risk of a \u2018double commission\u2019 claim, you should then add a condition that the agency must provide you with a list of all the people who view the property during their mandate period.”<\/p>\n “If they don\u2019t achieve a sale during this period and you only get an offer to purchase at a later stage, you will then easily be able to check the buyers\u2019 names against this list,” he said.<\/p>\n
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