When is a private buyer, not a private buyer?
It’s a question often asked by agents and house sellers alike but what, in fact, is a private buyer?
To answer that question, a great deal will depend on how the buyer found out the property was for sale and, the wording of the agents’ contract.
Agents trying to claim they are entitled to a fee when they are not can, rightly, land them in a lot of hot water. However; what many sellers may not realise, is that by deliberately trying to avoid paying an agents fee by claiming a buyer is a private buyer when they are not, could land them in front of the police under section 11 of the Fraud Act!
The acid test is usually how the buyer became aware that the property was for sale and whether the agents’ contract covers that form of introduction. For example; a buyer knocks on a seller’s door because they see the property via the agents’ website without going through the agent.
In the example above, the agent will be able to claim a commission if his contract shows that he is entitled to a fee if he introduces a buyer through his actions. His ‘actions’, in this case, being the advert on the website.
Many agents’ sole agency agreements allow for genuine private sales (to a family member for example) and do not charge. However, many also have contracts which allow them to charge no matter how the buyer is introduced. These contracts are often referred to as ‘sole selling rights’ as opposed to ‘sole agency’.
Fee disputes (such as private buyers) are, in fact, relatively rare in most good agents’ offices but they can almost be eliminated entirely if the agents’ contract terms are explained and easily understood by the customer.
Agents are obliged under TPOS code of conduct to write their contracts in plain and intelligible English but; I have read many other agents contracts in my time and it is clear that many of the solicitors who draw these contracts up clearly struggle with that concept. It also has to be said that a large minority of agents also happily hide behind small print and pages of gobbledygook in the hope that customers won’t bother reading just what they are signing up to.
Introduced – anyone who has been made aware of your property being for sale through:
- advertising (newspapers, window displays, websites and so on);
- promotional literature (trade leaflets and so on);
- ‘For sale’ boards;
- press coverage;
- electronic advertising (text messages, e-mails, websites and so on); or
- another person (for example, your neighbour sees your property in our newspaper advert and tells her friend that your home is for sale).
A very simplistic definition of what a private buyer is from my company’s viewpoint is as follows: If you are one of my customers and your Aunty Betty rings you up, out of the blue and asks if there are any nice places for sale in your town as she is thinking of moving and you tell her that yours is then; that is a private sale under the terms of my contract and I would not charge you. BUT, if Aunty Betty had rung me first and I had told her about your property then a bill would definitely be heading your way on exchange of contracts.
From an agent’s standpoint; proving that you are entitled to a commission when you believe a seller is apparently fraudulently claiming a private sale might seem, on the face of it, an uphill struggle. However, it needn’t be so. If you genuinely believe you are entitled to a fee and, the seller is simply trying to pull a fast one; your first port of call is to the buyer. Talk to them. Nicely. Most just want to buy the property and don’t want to become involved in a fee dispute. Ask how they became aware of the property in the first place and make notes of what they say. Next, chat to the seller. Explain the facts as you know them and ask the seller to see things from your point of view. You are entitled to earn your living and they employed you to do a job. It’s pretty much guaranteed that they would not like someone trying to do them out of their livelihood and a little nudge that this is exactly what they appear to be trying to do to you may just prick their conscience and lead to a swift, peaceful and honourable resolution.
If the buyer has been offered a discount to ‘keep quiet’ by the owner (or vice versa), it does make things more difficult but, in doing so, they too are party to an attempted fraud and, in my experience, the mere combination of the words ‘police’ and ‘fraud’ in a sentence to buyer and seller has always had the desired effect. Yes, it is a nuclear option and you won’t see those customers come back to you in a hurry but; do you really want people like that back as your customers? I don’t and, for the record, it works.
Sellers: Good agents won’t try and rip you off. They will have worked very hard to build a good reputation around town and won’t want to spoil it for the sake of one sale. If you think you have a private buyer, talk it through with your agent to avoid any problems at the earliest opportunity. It will avoid complications and may even work to your advantage in the long run.
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About Chris Wood: Chris is an estate agent with over 25 years of property experience. His business, PDQ Estates Ltd is based in Penzance and Helston, West Cornwall. He has worked with all sizes and types of businesses from single office independents to the management team and board of RBS and Tesco. A former President Elect of the NAEA and board member of NFoPP until he resigned in 2009, Chris has always championed the highest professional standards forestate agents in the UK. No stranger to the media, he has appeared on various programs including BBC, News 24, ITV, independent and BBC radio and is a regular contributor to trade journals, local and national Newspapers. Chris is on KloutLinkedIn Ecademy Facebook and Twitter Married to Amanda, they live in Penzance with their children who are slowly flying the nest, along with their three spaniels. In his spare time; Chris likes to keep fit and is a long-standing member of the Territorial Army. In 2010 he mobilised for a tour of duty in Afghanistan with 1 Rifles as part of 3 Commando Brigade.
Please support the men and women in my unit, The 1st Battalion The Rifles, who become casualties in the line of service during their tour of Afghanistan by making a donation here www.swiftandbold.org