Buying Agent Fees
Complaint
In this case, the potential Buyer argued that the Buying Agent she had instructed, charged her an excessive abortive fee when she withdrew an offer that she had made for a property on the same day it had been made and accepted by the Seller. The Agent maintained their entitlement to charge the fee, given that it was detailed in the terms and conditions of their agreement.
Investigation
The Buyer explained that she made her offer on the morning and was notified that afternoon by her Agent that her offer had been accepted by the Seller. However, she then had second thoughts regarding the location of the property and its desirability as a buy-to-let investment, and withdrew her offer at approximately 5.30pm the same day. Subsequently the Agent issued an invoice for an abortive fee of £2,625 (plus VAT) which she considered to be excessive given the timescale of her withdrawal, and the fact that it was her who had provided the details of the property to the Agent. I noted that the Agent later agreed to reduce that fee, and that an agreed payment of £2,000 (incl. VAT) was made by the Buyer. The payment, however, was made on a without prejudice basis. In determining whether a fee was payable, I had regard to what was fair and reasonable in the circumstances of this case. The Buyer had expressed interest in the property having identified the same through her own research and had withdrawn her offer on the same day it was made and accepted by the Seller. The work carried out by the Agent in that day was understandably minimal, and in the case of their contacting a solicitor and surveyor on the Buyer’s behalf, was either unnecessary (the Buyer had her own solicitor and the Agent was aware of this) or without instruction. Furthermore, the terms of business referred to the abortive fee being payable upon a ‘failed exchange’, which indicated that the intention was for such a fee entitlement to arise only in circumstances in which a proposed purchase was well progressed, but failed to proceed to exchange of contracts due to the withdrawal of the proposed buyer, where that withdrawal had not been necessitated by problems with the property in question.
Outcome
I considered the fee to apply only when a proposed purchase was well progressed; such circumstances largely being reliant upon a notable degree of work having been done in preparation for the proposed transaction. This had not occurred in this case, therefore, I did not consider it fair or reasonable for such a fee to be charged in the specific circumstances. Accordingly, I upheld this complaint, and directed the Agent to refund the Buyer the sum of £2,000 (incl. VAT).
Learning
The TPO Code of Practice for Buying Agents (Paragraph 3l) requires termination (or abortive) fees to be stated clearly and their purpose explained. Using ambiguous terms such as ‘failed exchange’ will cause consumer confusion as to precisely when a fee is likely to become due. Such terms should be set out clearly to ensure the consumer is fully aware of their liabilities.