Reservation Agreements provide agents with absolute certainty that both sellers and buyers are being honest.
“If they’re lying or… shall we say, looking through rose-tinted glasses to get the better of the agent, then they could be in for a nasty surprise through compensation” explains Bryan Mansell, chief executive of PropTech firm Gazeal.
“We call [a reservation agreement] a lie detector - it gets the truth out of them right at the beginning of the deal.”
Mansell also suggests that Reservation Agreements provide agents with a story to present to sellers - something which may appear a USP given that the rest of the industry has not so far taken up agreements.
Mansell makes the claims in a short video interview with Lee Dahill, sales director of Angels Media - publisher of Estate Agent Today - which you can see below.
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Can't see a downside on these, so why are they not being taken up in a wholesale manner?
Bryan, you say these agreements are "obviously legally binding" and that compensation "may be due" in cases of breach. Solicitors I have spoken to about it say that these agreements are not legally binding. Please could you explain how they are.
The procedure has been in place for years to legally bind buyers and sellers to a transaction. It is called an exclusivity or lock-in/out agreement which does legally bind both parties. Relatively easy to set up and tried and tested in the courts. For readers, one of the clearest explanations of these agreements can be found if you google "lockin/lock out agreements".
Well said Richard
Hi Richard, apologies that it took some time to respond, a very busy day. To make a slight correction to your point, I actually said in the interview that exchange is "obviously legally bound". This was said at 1:05 for your reference. Our reservation is a written commitment where both parties agree to compensate each other if they break the deal. GAzeal guarantee that if the deal is broken then we pay the compensation amount and pursue the repayment of this directly. We can enforce this is court which thankfully we have never had to.
Thanks for the clarity Bryan and my apologies too for the VERY late response! For it to be a legally binding contract some form of consideration is required which presumably is in the form of a nominal sum of say £1.
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