Wondering if I can save a few bob on a housing deal

June 14, 2009 2:46 PM

You are not my lawyer filter. Can I avoid estate agent commission and fees by approaching a seller directly (in the UK)?

My wife, kid and I are currently renting a 3-bed house in a small town in Wiltshire. My next-door-neighbour-but-one has put their house on the market. Can I approach them and ask if they would sell it to me under the counter, as it were? I do not know these people except to say "good morning" to, but it is totally plausible that I had heard about their upcoming house sale before the massive "FOR SALE" sign appeared in their garden.

It seems like it could save us both a few 000s of pounds, as typical estate-agency fees are 2-5%, I think.

Specifically:
1/ Am I breaking any laws by asking them to do that?
2/ Am I asking them to break any laws?
3/ Would doing this affect my ability to get a mortgage from my bank?
4/ Is there some other reason why I don't want to do this?

Perhaps it is relevant to say that this is definitely the cheap end of the housing market...

posted by mjg123 to home & garden (9 comments total)

I doubt you'd break any laws.

However, you'd likely be asking them to break the contract they've formed with their real estate agent. Or, it's possible that their contract states that they pay the commission regardless of who makes the deal. Either way, it's very likely not worth it to them. In other words, they probably can't avoid the commission.
posted by Netzapper at 3:16 PM on June 14

Oh. I'm not a lawyer or a real estate agent. And I am a Yank.
posted by Netzapper at 3:17 PM on June 14

Well, without seeing your specific contract with the estate agent, we can't tell definitively.

However unless this contract specified an exclusion that named specific parties you could sell the property to, you're contractually obliged to pay the estate agent when the sale closes.

Base case: if the estate agent had introduced buyer and seller and if a sale ultimately took place the obligation to pay would be clear cut. Supporting evidence would be any paper trail indicating viewings or appointments, and any court action would be summarily found in their favour (legal costs awarded as well). In fact your solicitor would no doubt advise against challenging this action. Even if you sold the propery a year or more after the contract expired to someone who was introduced to you by the agent they would still be entitled to their fee.

So concerns one / two / three are non events, and number four would catch you.

Not a solicitor or estate agent either, but I am American. And I currently own, as well as have bought and sold property in London.

Personally, I'd put more energy into minimising stamp tax.
posted by Mutant at 3:35 PM on June 14

Well, I think I can see the direction this is heading, I mean, if it was that easy then everybody'd be doing it. In light of Mutant & Netzapper's answers it seems like a nonstarter.
I have not yet made any move, just speculating really. I guess the (agency's) sign in the front garden means that anyone approaching the house is de facto considered to have been introduced by the agency, so they are entitled to their commission.
BTW this is below the stamp-duty threshold, but I don't suppose that's relevant to the concern at hand.
posted by mjg123 at 3:46 PM on June 14

Or, it's possible that their contract states that they pay the commission regardless of who makes the deal.

A recent experience of mine, in the U.S., dealing with a real estate agent, was that the contract required us to give them the commission regardless of who introduced whom to the property. The contract was drafted precisely to protect the agent from getting burned by the kind of shenanigans you are contemplating.
posted by jayder at 5:09 PM on June 14

The contract your neighbours ("the vendors") made with the agent will, if it is a standard one, say something like "you will pay us a commission on the sale if it is sold within the next X months, or if it is sold to someone introduced to you by us." So any deal you could make with the vendors is not only asking them to break a contract, but to hold off on the sale for X months.

However, what you might be able to do is say "Here's my offer which is valid for the next week. If you take it you'll save on any advertising costs that you haven't made yet." You can also offer faster payment and so forth. Go through the agent, not the vendor: agents like quick sales because they get paid without having to do much work. They're often more realistic than vendors, too: vendors get sentimentally attached to particular prices, and a good agent will help them realise whether an offer is a good one.
posted by Joe in Australia at 5:12 PM on June 14

The agent contract should have a time limit, after which they can sell the house any way they like and not owe money to the estate agent. In the current housing market, you could gamble that the house won't sell during that period, and tell the neighbours that you'd be interested once the contract is off the table.
posted by emilyw at 11:53 PM on June 14

This is a longshot, but when we sold our house last year we suspected/hoped that neighbors would have interest when it went on the market, such that the real estate agent's work would not be the cause of the sale. We built in a sentence to the contract that said that in the event the buyer came from our block, we would owe a flat commission of only $200 or so (to cover their listing fee, etc.) You'll never know what the contract may provide until you ask.
posted by AgentRocket at 2:43 PM on June 15

Well thank you everyone. But sadly they sold it before we even got a viewing :o(
posted by mjg123 at 4:03 PM on June 19