Shady terms in estate agents' contracts

Further to last week's article "The smart way of buying and selling property", I had such a considerable amount of positive feedback. I realised that, after all, there are many consumers out there who share my views on local estate agents.

However, I must also stress that there are decent estate agents who actually do not approve of rogue estate agents. These estate agents are in favour of regulating estate agents once and for all. Indeed, this is what we ought to have.

Unfortunately, in their attempts to ensure a sale, there are rogue estate agents who act unethically and I shall now highlight some of these shady methods. It is commonplace for rogue estate agents to pose as owners. Indeed some adverts give the impression that they were placed by an owner only for a prospective buyer to discover that, after all, it was an estate agent.

Another rogue practice stems from the fact that not all owners agree to the same commission terms. In such situations, on the basis of the agreed commission, some estate agents actively 'promote' certain properties more than others.

Moreover, what usually happens in practice is that a property is properly promoted for a few weeks but, if its sale does not seem very promising, it is usually ignored. Many owners who try to sell their property through estate agents say this. I am informed of cases where sellers see an initial keen interest from estate agents which gradually disappears totally, so that eventually they could not sell their property.

Recently, in their unethical attempts to ensure a sale, some estate agents started adopting a new shady policy whereby, besides the normal pre-sale agreement (konvenju), they insist on a "pre-konvenju agreement" involving a non-returnable deposit.

As I explained last Sunday, commissions are always paid by the consumer and in this case more directly than one thinks. It is common for owners/sellers to tell agents the amount they want for their property and instruct the agent to add on their mark-up. This means that, in such cases, the agents' intervention is affecting real estate prices in Malta.

Another shady practice is to include a specific clause in the contract, signed by the seller on having commissioned an estate agent to sell his/her property. This clause stipulates that the seller is liable to pay the dreaded five per cent commission to the estate agent even if the seller finds a buyer without any help or intervention from the estate agent. In no uncertain terms, this is unfair. Indeed, in such cases, estate agents ought to be aware that now there are laws against unfair terms in contracts.

On the other hand any sellers who were bitten by this unfair term in a contract by an estate agent should seek legal advice on this. Indeed, from a case-law point of view, it would be beneficial to other sellers should there be such a case where a court decides in favour of the seller.