What you need to know before you sign an estate agent contract

Last updated: March 2021 | 3 min read

Selling your home can be a stressful process if you do not have the correct information. This is especially true when it comes to hiring an estate agent. This article will provide you with information on what to be on the lookout when signing an estate agent contract.

The commission charged is exclusive of VAT

You should never rely on the estate agents commission at face value. Often estate agents quote theirfee exclusive of VAT instead of telling you what you actually will end up paying.

The commission percentage is negotiable

Always try to negotiate the percentage of commission. Even a small lowering of the percentage can save you a few thousand pounds.

You may also consider adjusting the amount of commission according to how well a job, the estate agent was able to do. For instance, if the estate agent manages to get an offer equivalent to asking price, he will charge a 1% commission. However, if they can sell it for more than the asking price, you will give a 1.25% commission.

Fixed-rate commission

You may also come across estate agents that work on a fixed rate commission rather a percentage commission. This will be advantageous for you since you will know precisely how much you will pay the agent. However, the estate agent is less likely to be motivated to get the highest sale price.

No sale no fee

Some estate agents offer this arrangement. This means that you will not have to pay the estate agents it’s a fee if the sale falls through.

Hidden fee

Carefully read the contract for any additional fees such as marketing or penalties for terminating the contract before the stipulated period. Further, insist that any additional charges will have to be agreed in writing in advance.

Tie in period

Most estate agent contracts will include a tie in period. During this period, you cannot terminate the agreement if you are not pleased with their service. The tie in period varies from 4 weeks to 20 weeks.

You also need to make sure that there are no punitive clauses if you decide not to sell your home and take it off the market.

In other types of contracts which are rolling, you will need to serve a notice of termination. You should check how much the notice period is.

Types of contractual arrangements

There are various types of contracts. Each has its benefits and downsides. Make sure you choose one carefully. These will generally fall into the following categories:

  • Sole selling rights – In this type of arrangement, you give the estate agent the exclusive selling rights. Only your estate agent will be allowed to sell your home during a stipulated period. So even if you find the buyer, you will still have to pay the estate agent.
  • Ready, willing and able purchaser – It would be best if you avoid these types of contractual arrangements. In this type of arrangement, you will be paying the estate agent for finding a buyer, even if you do not sell to that particular person.
  • Multi-agency – This type of arrangement allows you to use as many estate agents as you prefer and pay commission only to that estate agent which is able to sell your home. This is a beneficial arrangement because it is likely to attract more potential buyers. However, estate agents offering this type of arrangement will charge a higher fee.
  • Sole agency – This type of arrangement is the same as sole selling, but you will not have to pay the estate agent if you find the buyer.
  • Joint agency – In joint agency, you will sign up two estate agents who will share the commission in between themselves regardless of which one is able to make the sale.

Be cautious of “future liability”

A future liability clause will allow the estate agent to demand commission from you where you have signed up another estate agent because you were not satisfied with their service even if the other estate agent makes the sale.

It would be best for you if any future liability clause is removed from the contract.


  • Review the commission rates
  • Ensure whether or not VAT is included in the fee
  • Review the type of contractual arrangement
  • Look for additional charges, withdrawal fee, commission that is to be paid upon completion.
  • Look out for handwritten changes to contracts. Do not accept handwritten changes.
  • Ensure that you have no signed up for an in-house service you have not agreed to.
  • Review how long the tie in period or the written notice period is.
  • Be careful of future liability clauses.


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