There is a massive subsection of the estate agency sales market which tends to go unnoticed and unpoliced, namely those completed transactions where the agent morally deserving of a commission is not paid one. Such situations are usually down to one of two scenarios – either the vendor secretly selling “privately” to a viewer introduced by the agent or a buyer and/or seller being persuaded to conduct the transaction via a different agent from the one who set up the viewing.
These situations may not be familiar to many agents, but sadly that does not mean for a moment that those agents have not suffered lost commission from such occurrences. It is frightening to reflect upon how many of those “missed sales” remain undetected forever.
So how can your agency ensure you get what you deserve? As with all challenges in business, there are two main ways to defeat this one – “prevention” and “cure”.
“Prevention” includes having a watertight agency agreement signed by your clients. This will stand you in good stead if and when disputes arise over your commission. I see a number of agents’ agency agreements which have more holes than Swiss cheese. I have seen some recently that still fail to cover the 14 day cooling off period correctly. I was advised a couple of years ago that 50% of agency agreements are potentially unenforceable as a result of shortcomings or failings such as this one or similar.
Competitor agents are less likely to try and snatch one of your sales if they know you will have a sound platform to fight the case from so look hard at your agency agreement and check it is robust.
Other preventative measures to help avoid missing out on justified commission include detailed record keeping and follow up procedures, as well as relationship building and maintenance with vendors and applicants. Those parties who are tempted to do “under the counter” transactions and cut the agent out will be less likely to do so if they recognise the fact that you have your house in order and are likely to discover their shenanigans as a result. Keeping in touch with all parties, recording all activity and conversations and making sure customers are happy in their dealings with you, all serve as practical ways of stopping unscrupulous activity.
So what of the “cure” approach? If a property does “withdraw” from the market, a letter should be sent thanking the client for their business, expressing the hope that you will be able to help them move in the future and explaining politely that as per your agreement, should any of the people introduced by your agency proceed to buy the property within the timeframe in your signed agreement, then commission will be payable. Include a list of all viewers in the letter. This simple approach will often flush out an underhand sale at the outset.
Furthermore, the best agents I work with have a system in place to marry up all their withdrawals with completed sales. A quarterly check on the Land Registry and a little further subsequent research soon reveals which “withdrawals” went on to become sales, and as importantly, who the buyers were. Dovetail that information with your precise record keeping and you may strike gold! One small independent firm secured almost &20,000 in lost commission as a result of their last round of checks.
As someone who believes strongly in a sense of fair play, I have to admit that the discovery of an agent or client who has tried to do the dirty on me is a wonderful experience. I hand-delivered an invoice to such an individual and will always remember watching her face turn an unusual shade of grey as she realised she had been caught out! Marvellous.