Look before you leap...

Before a real estate agent can show prospective purchasers (legally) through your home there are two pieces of paperwork that you need to have in place. The first is a contract of sale, which is normally prepared by a solicitor or conveyancer – on rare occasions people opt to do their own legal work (it was Lincoln who famously said ‘He who represents himself has a fool for a client!’).

The second piece of paperwork is called an agency agreement. These agreements confirm the terms under which your agent has been appointed and legally authorize the agent to perform duties on your behalf.

But be warned. These agency agreements are designed solely for the protection of the agent, not you.

In real estate, it’s all about getting the listing. If you work as a selling agent you simply have to get listings or you will not survive. The Sydney market is one of the best in the world so it stands to reason that if you can find and secure stock (ie properties) you will make sales.  Not surprisingly, the competition amongst agents for listings is fierce.

What many sellers don’t realise is that the agreement you sign with an agent is a very powerful document. And surprisingly, many people don’t read the whole document – until it’s too late. On one hand, I’m not surprised that this happens as an average agency agreement is about four pages in small print. However, you simply must know what you are signing before you sign it!

What can go wrong? Plenty. We regularly meet consumers that signed an agreement with an agent without realising that even if their property didn’t sell they would be slugged for thousands of dollars in expenses. We also meet people who sign agreements with agents that have exclusive periods (ie only that particular agent is permitted to sell the property) that exceed four months. Which raises the obvious question: if an agent is promising you that they already have buyers and will sell your house in two weeks, why on earth are they asking you to sign a 16 week agreement?

A very well known ‘premium’ franchise signs people up from 30 days prior to the auction and then 90 days after the auction. Why? Why do they need 90 days after the auction if they’re so confident that it will sell either prior to or at the auction? Very good question…and this is where it gets interesting or sinister – depending on how you are looking at it.

No matter what you have been promised by the agent prior to signing the agreement – once you have signed the agreement, you are trapped. It’s very common to hear people say the agent was great and then the minute they signed, things changed and the agent started talking the price down.

 It’s worth asking your agent if they’d be prepared to add a dismissal clause to the agreement – stating that if you, the seller, are not happy with the service, the agent will cancel the agreement within three days of being notified in writing. If they are not prepared to add the clause, then you have to ask yourself why not?

When you sign with an agent, the high point of the relationship shouldn’t be when they get your signature, but rather when contracts are exchanged for a price you’re delighted with.

David Murphy owns an independent real estate agency in Sydney’s lower north shore – feel free to call ON 02 9968 2088 or email with questions david@davidmurphy.com.au