As mentioned sometime ago, I've signed an agreement with an estate agent (a real estate agent or realtor to my American friends) to develop and sell my plot of land in Shropshire. It's a ten-year deal I've signed up to though I very much hope the land will be sold with planning permission within at most two years. I may be dead in ten years' time!
It's in the estate agent's interests to sell the land quick as they'll get their money (about £80,000) they're spending to secure planning permission back sooner rather than later. So I'm quite relaxed about the length of the agreement. Also it's in the estate agent's interests to sell the land for as much as possible. Our financial interests seem aligned, though time will tell!
Because I've had no experience in selling land, unlike that of buying and selling property, my strategy was to approach many estate agents operating in Shropshire and neighbouring Cheshire for advice on how to market the land.
Nearly all estate agents I approached were keen to sell the land on my behalf. However, I wanted an estate agent who had experience of selling land for development and who had links with potential buyers (namely, property developers and investors). This ruled out quite a few estate agents.
Perhaps not surprisingly, I received conflicting advice on how to sell the land. A few suggested I sell the land via an auction. This had the advantage of a quick sale but the disadvantage of being less in control of the sale (and in particular the purchase price of the land as the auction price is very much determined by the number of interested buyers bidding).
I decided not to sell the land by auction, though it would be a fallback option if all else failed. I decided to sell the land by private treaty. This had the advantage of maximising the monies I receive for the land but the disadvantage of taking longer than a sale by auction, a couple of years rather than a few months.
All estate agents were prepared to market the land on a 'no sale, no fee' basis. The reason why I chose the estate agent I signed an agreement with was simple. It was prepared to pay for the costs of seeking to secure planning permission. Land is worth far more with than without planning permission. The costs were borne by them and not by me - I don't have £80,000 readily at hand to spend on planning consultants, ecologists, architects, etc unless I mortgaged my home.
I felt I negotiated a good deal. Even my solicitor was impressed. Prior to this deal, my solicitor, the family solicitor, had negotiated a ten-year deal with a property developer to develop the land. Her deal wasn't a good one as I bore all the risks and costs of the deal with the property developer bearing no risk and cost. (Perhaps my solicitor should have read Donald Trump's The Art of the Deal book before committing me to the deal!) That ten-year episode with the property developer is a long story and I won't bore you with the detail.
Feeling slightly smug with myself, always a fatal feeling, my smugness was somewhat shattered after receiving an email from another estate agent this week. This estate agent mentioned in a phone conversation two months ago that he knows a house building company, with serious money behind them (we're talking bet365, owned by Denise Coates, the richest businesswoman here who also owns Stoke City football club ). I asked him to pursue that line of enquiry. At the time he tried to get me to sign an agreement with the estate agent meaning I couldn't talk to other estate agents about the land. I refused to sign such an agreement.
After two months of this phone conversation, during which I signed an agreement with another estate agent, he comes back to me saying that the house building company is prepared to buy the land with an overage/clawback agreement. (Overage/clawback means that as well as getting paid the market value of the land (which is agricultural at the moment), I will get a share of so-called uplift monies if the land gets planning permission and homes are built on the land. Uplift is the difference between the value of the land sold without planning permission and the land sold with planning permission on which homes are built.
I replied to the estate agent that I have signed an agreement with another estate agent to market the land. There's been ping-pong email between us, though I now have stopped engaging with him. He claims that I entered into a verbal contract with him and have therefore breached the contract by going with another estate agent.
Now I'm no lawyer but I realise contracts can be implied and not written. For example, custom and practice is often regarded as an implied contract of employment here. But in my book, contracts, whether written or unwritten and whether expressed or implied, require terms and conditions to be agreed upon.
This estate agent is claiming that a phone conversation with him is a contract even though no terms and conditions were discussed over the phone. There was no discussion of fees, duration of the contract, purchase price of the land, and the percentage of uplift monies due to me. All he did over the phone was mention the name of one potential buyer who he hadn't approached at the time. That is no introduction and certainly no contract in my book.
My guess is that the estate agent got a bollocking from the house-building company for wasting its time. The company had clearly visited the land and were prepared to make me an offer. But why did the estate agent wait two months to convey me of this interest? I had, I think quite reasonably, assumed after two months that nothing was happening.
Selling land is at best eye-opening but certainly no fun. I'm half-expecting threatened legal action. Never phone an estate agent without at least insisting that the phone conversation isn't contractual!
What's been your experiences of estate agents (or real estate agents and realtors)?
How good (or bad) are your negotiating skills?
My experiences with estate agents have been mixed at best. I realise when it comes to selling property (or land), estate agents will promise the world but once you sign an agreement with them they stop acting in your interests and they start acting in their interests.
When I sold my house in Portsmouth because of my move to Nottingham, I had to pay two commissions to two estate agents for selling my house. My first estate agent was rubbish so I served them notice to end the agreement to switch to another estate agent. The problem was that one interested buyer who viewed my house was organised by my first estate agent. The interested buyer came round for a second viewing, which is quite normal, via my second estate agent. That interested buyer ended up buying my house, but the first estate agent insisted that they had introduced me to the buyer and therefore it was due its commission. (Again this is another quite long story which I won't bore you with the detail). But two commissions, running into thousands of pounds, were paid to two estate agents. Never trust an estate agent!
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On the sale of the house - Once I bought my way out of the contract, my obligation ends. But thats my opinion. I have no idea of the laws in your area.
Verbal contracts are one persons words versus another. I think you are right. No conditions, or guidelines were discussed. Just ideas bounced around. Dude is out of luck.
I have bought and sold several houses. There is no contract or deal until it is inked and signed. Thankfully details have been mostly smooth.
Hugs!
That seems to be the unanimous opinion here that my telephone conversation with the estate agent doesn't constitute a contract.
@spunkycumfun It was certainly the case that any legal contract agreed to came with a "cooling off period" under EU law - no verbal contract could be entered into under such a situation. As they say, a verbal contract isn't worth the paper its printed on!
@RavenGB Thanks. The estate agent's just lashing out because he messed up for his client.
I agree with Jamie that realtors can be helpful, but don't truly earn the very large commissions that they get for selling high value properties. Especially with listings being available online - buyers end up doing a lot of their own searches and research as opposed to relying on the agent.
Here in the US it was always the norm that sellers had to pay a 6% commission, which was then split between the buying and selling agents. A year ago there was a court ruling that basically said this was price fixing and that sellers should be able to negotiate commissions. It only makes sense that a realtor should get less of a commission for a great turnkey property that practically sells itself; vs. a property that requires staging help or additional marketing to attract buyers.
At the time of the court case, press coverage made it sound like it would be a real game changer and could possibly even end up making homes more affordable. In practice, the agents are sticking with the 6% norm, refusing to negotiate and making it very difficult for anyone who might want to try to sell their home without the services of an agent.
So yeah...I'm not fond of the profession either, even though I have a couple of friends who are realtors.
The average commission of an estate agent here ranges from one to three per cent, a lot depends whether they're given exclusive rights or not to sell the property. If exclusive, the lower their commission.
That's quite a story and no you don't have a contract about any kind of land by phone you must always have a signed agreement for anything to be valid. Just a bit of information I have learned over the past several years.
I have only bought one house and that was with my first husband and it went smoothly but the house was never what I wanted as I felt it was way to small for us. And well the hubby got hurt and the house went back to the bank.
I hope all ends the way you want it too and you get more than your land is worth my friend. I hope your enjoying your weekend..
That estate agent is talking rubbish because he lost a sale on behalf of his client.
Hi S,
I guess it won’t surprise you to hear I’ve had plenty of experience with real estate agents... and I mean fucking them, sometimes literally, sometimes just in the figurative sense
One thing I’ve learned? They all lie.
Well… they call it “doing business.â€
They’re not bad people, really... they just want quick money. Now!
So my only advice is: patience and caution.
I’ve pulled off a few really good property deals in my life, and in my case, those were the keys.
Good luck, my friend!
Aura
It's all down to the estate agent. I can only just watch from the sidelines.
I hope you get your Land sold at a good price.
Many thanks.