The property market can seem a little daunting even to the most experienced person. Our friendly team of experts are on hand to help guide you through the whole process from start to finish. To get you started we’ve looked at the pros and cons of the 4 types of estate agency agreements available in Gibraltar.
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. A sole agency agreement will include sole selling rights meaning the agent's fee will stand, even if the buyer knocks on your door directly. 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.
Benefits of a sole agent
- Having a sole agent will save you money as you will only have to pay one fee and one set of commission.
- You will have one point of contact and will be able to build up a relationship with your estate agent.
- The agent you choose will have the whole market picture and may be better placed to offer advice.
Cons of a sole agent
- If you agree to sell your property through one agent you cannot market it with any other agent during the term of that agreement.
Joint-Sole Agency (aka 'split')
A joint sole agent is when two agents agree to market your property together and split the commission. This agreement is sometimes the best option, if for example, you are selling a houseboat or piece of land; you could have one niche agent that specialises in that type of asset and a local agent that knows local market conditions. 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. You may find one agent pulls the weight, while the other one just waits for their fee.
Benefits of joint sole agreements
- With two specialist agents, you will cover a larger market area which will attract more potential buyers.
- You will have two agencies working on your behalf, which may mean different marketing channels used to promote your property to a wider audience.
Cons of joint sole agreements
- Joint sole agreements involve higher fees.
- If you sell the house through a third agent, you are then in breach of the contract and will still have to pay the joint sole agency fees.
- You will have to deal with more than one company at a time, which could potentially mean more stress for you.
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 propertygibraltar.com. It may be possible to ask for a reduced multi-agency fee if you agree to stick to a set number of agents.
Benefits of a multi-agency agreement
- The more agents you have working for you, the more potential buyers it will reach but this also has its downfalls
Cons of a multi-agency agreement
- Only the agency who makes the sale gets the commission, so they are competing against one another which can make the sales process quite frantic.
- With several pushy, rival agents, the viewing process can be more intrusive.
- With this type of agreement, fees will often be higher.
Sub Agency
This is a practice that could be implemented by inefective agents that are unable to get the job done. You instruct one 'head' agency who then goes onto 'sub-instruct' one or more agents to sell the property for them. The agent that successfully completes the sale receives half the fee, while the 'head' agent (the one you intially instructed) receives half the fee regardless which agent sells it. We would never suggest that any of our industry colleagues would use this due to their own inneficiency, and this ought to be done with your consent, but often the 'head' agent does this without your knowledge.
Benefits of a sub agency agreement
- The more agents you have working for you, the more potential buyers it will reach but this also has its downfalls
Cons of a sub agency agreement
- The 'head' agent (the one you initially put your trust and faith in) no longer has any incentive to sell your property, they can just sit back and wait for others to do the work.
- Your property will be advertised by many agents on web portals, making it look like a Multi Instruction and begging the question 'why' your property won't sell.
- The effective agents who can actually sell your property are only getting half a fee, meaning they have less resourses to put into marketing the property properly.
- It leads to a lack of competition in the market place with no agent really being bothered about whether your home sells or not as there is less invested interest from agents collecting lower fees.
Overall, the type of estate agent agreement you choose is down to you, your property and the state of the market. It’s a big decision to make, so we always recommend you take your time, do your research and seek advice so you can make an informed decision.
Generally speaking, in a residential market, you are better off putting your faith in one agent with a Sole Agency agreement. You can then demand they do things properly with the knowledge you can disinstruct them if they don't. The agent can then update you regularly on how your property is performing on the local market and act accordingly.
If you are currently on the market with an agent that you feel is doing their best but not getting the results, then speak to them about moving to a multiple agency agreement. This may be a good way of increasing your chance of getting the result you need without causing offence. We're always on hand to discuss the pros and cons of each agreement and what may work for you, feel free to get in contact for some free, no-obligation advice.
To discuss our agency agreements and see how we can help you, call our team today.
