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TODAY'S OTHER NEWS

Fees row: Spotlight on Ombudsman after court case decision

The couple at the centre of a court case about agents’ fees say the issue could have been resolved earlier had their complaint to The Property Ombudsman been upheld. 

George and Hilary Wood, from Dorset, were taken to a county court by a firm acting for Palmer Snell, a Countrywide brand trading in Lyme Regis.

The Woods marketed their property initially through Palmer Snell, asking £575,000; amongst the interested prospective buyers was a couple who were not able to meet the vendors’ timetable.

The Woods terminated their deal with the Countrywide agency and then marketed their property with a rival agency - Fortnam, Smith and Banwell - at a lower £525,000 asking price; the same prospective buyers, whose circumstances had changed, expressed an interest in the Woods’ home again and went on to purchase it for £529,000. 

However, Palmer Snell then sought payment of £7,935 in fees from the Woods, who rejected the request. 

The couple went to The Property Ombudsman, which rejected their complaint.

The Woods were then issued with legal proceedings but at a court case earlier this month the Palmer Snell claim was dismissed, wth the judgement suggesting that the agent must prove it was the effective cause of the transaction - not merely an introduction.

The court judgement referred to a previous case, Foxtons Ltd v Bicknell & Anr, 2008,  in the Court of Appeal where it was ruled that to claim a commission, the agent must have introduced the buyer to the purchase, rather than to the property.

In a note sent to Estate Agent Today, George Wood says: “We felt that the TPO decision was legally and morally wrong so in August 2016 we sought legal advice. We felt that as consumers it was wrong that we should be expected to pay two fees on the basis of a word introduction which was not clearly defined in the agent's contract.”

Later in his note, Wood goes on to say: “We would look to The Property Ombudsman to rectify this glaring anomaly. Who knows how many people may have been bullied into paying dual commissions when they didn't have to.”

Yesterday evening Jane Erskine, deputy ombudsman at The Property Ombudsman, told Estate Agent Today: “While we cannot comment on the details of a specific case or the reasons why the court came to their decision, not having seen a transcript of the case, TPO seeks to come to a decision on all cases referred to them having considered all the evidence.  

“That is the terms of the contract, the agent’s obligations under the TPO Code of Practice and what is fair and reasonable in the circumstances.

“TPO continues to receive comment on the ‘Foxtons case’ concerning an agent’s entitlement to a commission fee. The cases that are brought to TPO reflect ongoing confusion, among both sellers and agents, as to what an agent is required to show to justify their commission fee entitlement.  

“If an agent is basing their contractual entitlement to the fee on the fact that they introduced the buyer, the Ombudsman will expect to see documentary evidence that the agent was indeed the ‘effective’ cause of introduction.  

“Merely handing property particulars to a prospective buyer, or conducting a viewing where the viewer expressed no interest in the property and did not, at that time, make an offer, will not be considered by the Ombudsman sufficient to establish that the agent’s actions resulted in the sale of the property. 

“However, if the agent can provide detailed progress notes showing that the potential buyer was interested in the property and wanted to go ahead but was unable at the time, for whatever reason, but the agent kept in contact, trying to establish the sale, then it is likely that the Ombudsman may conclude that the agent was the effective introducer, even if that buyer subsequently made an offer through another agent.” 

  • Andrew Hill

    Imagine if Tesco took a customer to court because they found a microwave they like and bought it off Amazon instead.

    Are agents really that desperate to claw fees from consumers that they'll try and charge a vendor even when they didn't sell the property? What an absolute joke. This is exactly why the government are clamping down on our industry...

    Why do some estate agencies think they're mafia bosses? Are all Countrywide brands that desperate for their fee they'll sue you even if they fail to deliver?

  • Ben Hollis

    Andrew Hill - I agree with your sentiment, but there does need to be balance.

    For example we had a case a couple of years ago where we showed a lady round a property and she was “considering making an offer”, but never did as on the third viewing she recognised the owner from a photograph in the wall. She then went quiet and two days later we received notice to quit from the vendor. Small town grapevine suggested she had approached him privately to save agent fees and get a better deal. 6 months later we did a land reg check and she had bought it.

    We certainly introduced the buyer (more than once) but didn’t receive a formal offer. Should all of our marketing, viewings and negotiations with the eventual buyer been for nothing?

    We did not pursue it because of the grey area surrounding such cases, but felt we should have been entitled to something.

    Peoples thoughts?

  • Ben Hollis

  • James Robinson

    Quite right Ben, this is exactly why we have sole selling rights. If we didn't every buyer would find properties on the portals, drive to the property, knock on the door and cut the agent out. Or actually view the property via the agent then go back later and make an offer directly. A layman would ask that if this is how easy it is to sell houses then why are estate agents worth their fee. The answer is that a good agent will normally be able to negotiate a higher sale price than the vendor, normally more than their fee, through their experience, ability to affect a buyers perception of value and/or by introducing more than one buyer. What is not recognised here is the work the first agent had to do to educate the vendor, through the feedback from viewings, that he had to drop his price which gave the second agent a lap-fall house at the right price.

    Either way it was foolish for the first agent not to write a dis-instruction letter listing the buyers who they introduced. Then, if one of them bought it their fee would be far easier to argue. I thought this was industry standard these days

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