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Landmark ruling could affect all agents on fees

03 September 2008
Written by rosalind renshaw

Agents who introduced a buyer to a property have been told by the Ombudsman that they are not entitled to their fee.

The Ombudsman, Christopher Hamer, cited the Foxtons case earlier this year, where the courts ruled that the agents were not entitled to commission.

Although Foxtons made the initial introduction, that introduction was unsuccessful and it was another agent which went on to make the successful introduction and handle the negotiations.

It is understood that the National Association of Estate Agents subsequently took legal advice as to whether this meant that all agents should change their Terms and Conditions, but that Counsel’s Opinion was that the Foxtons case was unique.

However, the Ombudsman has now mentioned the case in a new ruling, on a transaction that pre-dated the Foxtons’ court case.

The Ombudsman also says in his ruling that it was not enough for Hunters, based in Yorkshire, to have introduced the buyer to the property. They should also have introduced the buyer to the vendor.

In the Hunters case, according to finance director Ed Jones, an applicant registered on September 1 last year. On September 3, a viewing was booked for September15. But on September 10, Hunters were distinstructed.

The buyer apparently knocked on the door of the property, asked if it was still for sale, and went on to buy it privately.

The agents were acting as sole agents for the property, which did not have a For Sale board outside it but was advertised online.

When Hunters went after their £14,000 fee, the vendor reported them to the OEA, which ruled in his favour.

Jones says the case raises important issues: “First, if we need to change our Terms and Conditions, what is the new standard? And can it be applied retrospectively?

“Secondly, surely it must also be the case that the OEA and NAEA share the same opinion.”

Hunters is planning to raise the matter further with both the NAEA and OEA.

We plan to update this story but this morning, neither Christopher Hamer nor Peter Bolton King, of the NAEA, was available.

Meanwhile, your feedback would be very useful.  Please email: rosalind.renshaw@estateagenttoday.couk

Comments

  • icon

    We are trying our best to get through some very tough times:agents, business people (with new ideas),private buyers,sellers and builders.
    But lets just be fair. Searching your own motives to see if they are decent and honest is a great way to start.
    And integrity? We need buckets of it from everyone in the process of property transactions. I am not an idealist but with many years' experience in the property industry I have come to understand that hard work and a good name are very precious! More precious than gold!
    www.surreyhousehunters.com

    • 27 January 2009 08:27 AM
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    I still see this as an old problem rearing its ugly head again!
    Agents4you? If a seller is moving to a larger home; should the vendor "sit tight" and wait for prices to increase by 10-15-20%??? I don't think so, if they did that they would be the loosers (or should that be losers?).

    • 26 January 2009 10:12 AM
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    I think rob hollinworth has misunderstood the case - foxtons had in fact taken the buyer around the house. The issue was that despite this introduction, some time later they were reintroduced by another agent who was deemed to have introduced the buyer to the purchase ie they were the effective cause. No need to panic on this as a fee was paid to an agent and it says that we can't just expect to get a fee from not actually negotiating a sale! Fair enough in my book.

    Incidently, Agents for you is plainly on a different planet to the rest of us and by the way 'looser' is in fact spelt 'loser'in this context, Looser is what happens to you after a curry.

    • 17 December 2008 17:01 PM
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    Foxtons did not introduce a buyer. They gave details of the property to an applicant.
    Generally speaking, estate agents work on a "No sale-No fee" basis.The sale was negotiated and arranged by another agent,not by Foxtons. Therefore "No sale, No fee" QED. The thorny problem is solveable by making estate agents fees payable by the purchaser as is the case in most countries in Europe. Now back to gazing out of the window!

    • 11 October 2008 12:49 PM
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    The Foxton’s case is causing estate agents a real headache in that vendors and other agents are miss understanding the essence of the ruling. If you read the Law Lord’s comments, he was quite clear as to his intention in that there were two grey areas in estate agency agreements; a reasonable length of time for which an introduction should be valid and what constituted a sale attributed to the efforts of the agent.

    Common sense says that if it were (as now many have interpreted) that whichever agent “introduced” the buyer does not necessarily mean they get the fee. This would have the effect of a vendor instructing an agent who finds a buyer and then the vendor would trawl other agents asking who could negotiate / sales chase the sale for them at the lowest cost and swap agent. This would of course undermine the whole principle of agency law including that outside estate agency. For this reason it seems quite logical:

    As an agent you must be able to show that your actions led to a sale at some point up to a reasonable period of time…so this should mean in summary; an agent must have marketed the property and a buyer actually made an OFFER through you and showed clear interest and intention to buy. On top of that there must be a “reasonable” limitation of say 1 year as there does not appear to be a statute of limitation.

    Counsel for the NAEA was correct.

    Simple but watch the courts get clogged up with agents and vendors fighting over fees as usual. www.Bounres.biz

    • 01 October 2008 11:08 AM
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    The post by agents4you is disingenuous. If we ignore the spelling and grammatical errors, the lack of education and experience is still clearly transparent in the lack of understanding of the capitalist market system ie supply and demand. If you need to sell then you can at the market level, if this figure is unacceptable DONT put your house on the market. Leaving your property on the market at an unrealistic price will only blight your home.

    Agents4you clearly have an agenda - to spell it out, all those £150 and £250 boards will add up to a nice business in these dark times - if any home owners want to buy a board off me for £150 please e-mail, I might also be able to interest you in some flats in manchester as a tidy buy to let?

    • 24 September 2008 03:06 AM
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    I feel this sort of grey advice very disturbing and destructive to the property market, however, a similar stance is adopted by some estate agents, cloaked with there best advice. In these times, agents still clamber for property on there books. After a few weeks the estate agent will call, explaining that you should look at reducing your sales price, and will continue to call each month, asking and advising you to keep reducing the price. Estate Agents, in my mind, should be advising home sellers to sit tight and not panic, as this will pass as it has done a few times, over the last 20 years.
    The only looser when a home is sold cheap is the seller! Estate Agents still make a nice profit, even if the property is reduced by 40%.

    This is the main reason we have opened our own Estate Agents, selling property from £150.00 to a maximum of ¾ of a % of the sales price. The way Estate Agents work and the way property is sold has got to change, and we are leading the way for this change. Visit www.agents4you.co.uk to see how we have started this transformation.

    • 15 September 2008 01:39 AM
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