As the property market continues to heat up and shortages of homes for sale in certain areas and price brackets start to develop, hopeful buyers and investors are increasingly turning to estate agents directly and paying them a fee to go out and find suitable properties.
And while there’s nothing at all wrong with that, homeowners and sellers do need to understand that any agent who introduces a buyer in these circumstances is actually working for that buyer.
The agent’s primary responsibility will thus be to act in the interests of the buyer – and that could include negotiating to try to secure the property at the best possible price.
In addition, he says, home sellers who 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.
The reason is that the agent who introduced the buyer might well claim that they were the ‘effective cause’ of the sale and thus entitled to a commission. 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.
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 – before they accept the offer from the second agent. Hopefully, the agents will also reach an agreement to share the commission.
Similarly, home sellers should 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. “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.