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Estate
agents (Part 2) -
The remuneration of estate agents -
How
are estate agents remunerated?
When
a vendor approaches an estate agent for the sale of a property, he or she
will sign a mandate (‘mandat de vente’) to allow the agent to sell the
property on his or her behalf. The
agent may be the sole agent able to sell the particular property (an
exclusive mandate) or there may be multiple agents (a non-exclusive
mandate). The mandate will
provide details in relation to the property, the task that the agent will
accomplish, time period of validity and the amount that is payable to the
agent in remuneration (‘frais d’agence’).
This amount should be given inclusive of all taxes and it should be
specified whether it is the vendor or the purchaser who is responsible for
paying the fee. You are
entitled to see the sale’s mandate.
What
is the amount of the remuneration?
The
agent’s fee can be up to 10% of the purchase price of the property (much
higher than in many other countries).
The fees can vary below this amount and can drop to around 5% to 7%
for more expensive properties. The
agent should display his or her fee scale upon the premises.
Who
pays the agent’s fee?
As
mentioned above, the person responsible for paying the fee is specified in
the sale’s mandate (sometimes an agent will ask a purchaser to sign a
search mandate [‘mandat de recherche’] which provides the agent with
authorisation to find a property corresponding to certain criteria.
This document may also govern the issue of the fee and who is
responsible for paying it). If
it is for the purchaser to pay then it will be added on to the net
purchase price. If the vendor
is to pay the fee then in reality it will have been factored into the
overall purchase price. This
information will be reproduced in the first contract (‘compromis’ or
‘sous-seing privé) and the exact method of paying the fee will depend
upon these terms. When a
property is advertised, it must specify whether the price given includes
the agent’s fees (‘fai’ or ‘frais d’agence inclus’).
What
happens if I view a property through an agent and then deal with the
vendor directly?
The
mandate will govern what is to occur in this situation.
When a purchaser views with an agent, he or she is normally
required to sign a ‘bon de visite’ which records the fact that the
purchaser viewed this particular property on a given date.
It is this document which will enable the agent to pursue the
purchaser if he or she deals directly with the vendor (alternatively, the
agent may pursue the vendor depending on the conditions of the original
mandate). You should always
make sure you understand these documents prior to signing or perusing them
due to the consequences if their terms are breached.
Part
3 – The role of estate agents (next week)
24/03/2003
- Issue of the week
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