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News: Estate Agents Given Fixed Fee Warning

Wed, 16 Jul 08

Estate agents have been warned over charging sellers a fixed fee based on an initial asking price rather than a percentage of the actual sale price.

In his latest quarterly report  the Ombudsman for Estate Agents, Christoper Hamer, said agents often do not explain fully the fixed fee approach, which can leave sellers out of pocket when asking prices drop.

He said: “If a Seller has signed a contract on a fixed fee basis I will not rewrite that contract but if there is evidence that some confusion has been built into the process by the agent I am likely to make an award of compensation against the agent.”

He says that the fixed fee approach is also open to abuse, with agents “either deliberately or carelessly” overvaluing properties.

“The effect of this is to give a huge advantage to the agent in terms of the fee received – particularly so in today’s market conditions,” he added.

To avoid confusion he recommends estate agents clearly explain that such a fee structure is, “openly described as fixed irrespective of the price finally achieved for the property.”

His quarterly report also shows that new disputes decreased during the first quarter of 2008 (April – June) by 12%.

During the period 255 disputes were referred to him, 182 of which related to sales and 73 to lettings.

As of the end of June 2008, 5,812 agents, operating out of 12,693 offices, were registered to the Ombudsman scheme.

 

 

 

 

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