Let's be honest, nobody really likes going through contracts, there are far nicer things to spend time doing such as spending a day on the beach with the kids, walking the dog or even enjoying your favourite tipple down at the local pub! If you asked a hundred people what they prefer to do their spare time, reading through an estate agency sales contract would be unlikely to be at the top of the list. However, it is likely that your home is your most valuable asset, and understanding exactly what is included in the estate agents terms and conditions is vital to ensure you don't get any nasty (and often expensive!) surprises down the line.
So What Is A Tie In Period?
Most estate agents include in their contract a 'tie in period' which will often be for 8-16 weeks. If this agreement is on sole agent terms, then you will be contractually obliged to continue using them, even if you're unhappy with their service or they've not generated any interest in the property. If you query the estate agent is to why this period is for so long, you'll likely hear 'justifications' such as "We spend so much time and money marketing your property......." Whilst there is some truth in the fact that there is an associated cost with putting a property on the market (photography and portal fees etc), the reality is that the internet has significantly reduced the amount of time and cost for an estate agent to put your property on the market.
Let's look at a potential scenario, which unfortunately plays out every day in estate agency world. Mr and Mrs Smith have decided to put their property on the market, and have invited three estate agents round to give them a choice of who to use to sell their property. It's a good idea, they're doing their homework right? When they're discussing the potential sale with the estate agent, they mention that they will be speaking with a couple of other agents, to decide who's best. The temptation for the estate agent is now to provide a higher valuation as they will be 'protected' by their long tie in period.
"Mr and Mrs Smith, I think we should put your property on the market for £200,000!"
This figure of £200,000 is around £20,000 more than Mr and Mrs Smith thought it was worth, and the other two agents had given a figure closer to their estimated figure of £180,000. However, Mr Smith has his eyes on a new Mondeo, and Mrs Smith has always fancied a trip to the Seychelles, so they decide to go with the higher valuation.
Now the reason that the other two agents had given the price of £180,000 was this figure was realistic for the market, and was a price which they thought they could acheive a sale. However, the third estate agent is now marketing the property, and is protected by their 16 week tie in period and sole agency agreement.
Eight weeks on however, and there is very little interest in the property, no-one has been around to view it, and the estate agents have suggested 'it might be worth reducing the price to get more interest in it....' Mr and Mrs Smith cannot cancel with their estate agent for at least another two months, and they are now looking at reducing it to the realistic price in order to sell it.
So How Can You Avoid The 'Tie In Period Trap?'
Here at Indlu, we think there are a couple of ways to avoid the 'tie in period trap.'
1) According to The Advisory, the average time to accept an offer on property in the UK is 7 weeks. This means there is no justification for your estate agent to tie you in to a 12-16 week tie in period, except to protect their fee! Remember, you can always negotiate with them on this, they want your business!
2) Ask the estate agent to justify their valuation. Every estate agent should be able to provide you with written comparables of similar properties acheiving similar prices. You are the client, so ask them to provide this for you.
What Is Indlu's Tie In Period?
When we set up Indlu, we took the decision not to include any tie-in or exclusivity period. We were looking to provide the most fair way to work with vendors, and we thought that if someone was ever unhappy with our service, they should have the right to walk away at any point, without it costing them a fee.