Sole agency agreement explained.

A sole agency agreement is a type of contract that a property seller will enter into with an estate agent. It’s the most common type of estate agent contract.

When you enter a sole agency agreement with an estate agent, you agree that only that estate agent has the right to sell your property for the duration of the contract and they will receive the commission when they find a buyer.

If you end up finding a buyer yourself when you’re in a sole agency agreement, you won’t have to pay estate agent fees (although, depending on the terms of the contract, they may still be able to claim commission).

When any estate agent is appointed a sole agent, you should stick to the agreed terms. If you were to involve another agent within the specified period and this second agency arranged a sale the first agency would also be entitled to be paid.

In order to ensure an estate agent’s clients are aware of any restrictive terms in their agency agreement, and this potential for two commission claims, there are statutory regulations which specify the form of words for a warning message which has to be included in the written terms of business given to every prospective client prior to the agreement coming into force.

Where one or more estate agents are instructed on what we call a multiple agency basis, there are no statutory obligations over the specific wording to be used in the terms of business.

However, when the estate agent is appointed as the ‘sole agent’, or has ‘sole selling rights’, then specific forms of wording must be used.

In the past, confusion over the exact meaning of ‘sole selling rights’ has led to the courts construing a ‘sole selling agency’ as merely a ‘sole agency’ – therefore, when the seller had arranged his own sale, he did not have to pay the estate agency any commission.

Other types of Partnership Agreements

Sole agency

This type of agreement means that the estate agent named in the contract is the only one allowed to sell your home and they will receive all the commission once the property is sold. Under a sole agency agreement, if you find your own buyer, you do not have to pay anything to the estate agent. In today’s market, many estate agents are now opting for sole selling rights contracts due to the increased marketing of properties via social media channels.

Joint sole agency

A joint sole agent is when two agents agree to market your property together and split the commission. This agreement is often the best option, if for example, you want a national agent who focuses on expensive, luxury properties and a local agent with knowledge of the market in your local area. Generally, it isn’t advised to enter a joint sole agreement with two local agents, as they will cover the same market and target audience.

Multi-agency

A multi-agency means that you can use as many agents as you like, only paying commission to the specific estate agent who sells your property. It is widely believed that using multiple agents is the quick-sell option. Going with a multi-agency agreement can also look quite desperate to the outside world as the property will be listed multiple times by each of the different agencies on websites such as Rightmove.