I have to sell my mothers' house (she’s gone into a home) and a local estate agent is offering to sell my property for free – as I need every penny to pay for her care it sounds ideal but what’s the catch? Mr. N Corrant
Hello Mr Corrant,
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 some 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 fee agent very rarely devotes 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 (and should by law have told you) is recoup their fee from the buyer. It’s worth pointing out that this fee is nearly always higher than the one that you, as the seller, 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? Well, the answer is that the majority of buyers calculate what monies they need to spend on the property before making an offer and won’t be thinking that they have to add in the agent’s fees as well. Indeed, if they are asked to do so, this would 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 £200,000, but they also have to pay £2,500 to the agent. This effectively reduces their deposit from £20,000 to £17,500, and as a result, the mortgage 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.
Surely it would be better to select an agent who is going to charge you a mutually agreeable fee (all agents I know are willing to negotiate on their fees) and concentrate on working to get the best price on your mums home, rather than grabbing the first buyer they can at a selling price that will probably be below the true value. Finally, if this wasn’t enough, there’s always that vexed little issue of the agent’s duty of care to you, their client. If the buyer is paying them, instead of you, it immediately creates a clash of interest and how can you be confident that they really have your best interests at heart? You’ll have enough on your plate with mum going into a home. You need an agent working for you.