Some agents are claiming they can sell my home for next to nothing. Others say they can do it for free! What’s going on, and what’s the catch?
What’s going on is this: after the market became more buoyant a year or so ago, a number of generally larger agents started offering to sell your home for under £200. Other agents, sensing an opportunity, have jumped onto the bandwagon by offering to sell your home without charging you a fee at all! How can they do it? Well, in both cases it is based on the idea that the normal agency fee is paid by the buyer, rather than the seller.
This might sound like a great idea. You, the vendor, either pay nothing at all, or just a nominal ‘administration charge’, while the buyer picks up the main tab. Perfect! Except...remember the old saying: if something sounds too good to be true, then it probably is!
So, what’s the catch?
Firstly, it may actually put a lot of buyers off, ‘out of principle.’ In other words, many buyers won’t even consider purchasing a property if it involves paying the agent’s fees – particularly if they are selling their existing home in the usual way, and have to pay fees on that half of the deal as well!
Second, if you’re selling a first-time buyer property, it could seriously limit the number of possible buyers. First-time buyers generally only have very limited funds at their disposal. Consequently, any additional expense will directly impact on the amount of deposit they are able to put down – which in turn will drastically reduce the amount they can borrow. In other words, by asking them to pay the agent’s fees, you may be making it impossible for them to buy your home at all!
Thirdly, many buyers’ solicitors will advise their clients that there could be additional Stamp Duty due on the agent’s fee, since duty is generally calculated on the total amount of money (or ‘money’s worth’) paid – either directly or indirectly – by a buyer in order to acquire a property.
Last, but by no means least, there’s the little matter of conflict of interest.
If the buyer is paying the agent’s fees, then who is the client? Can you really be confident that ‘your’ agent is going to act in your best interests, when the bulk of his fee is actually being paid by someone else?
I don’t think so!