A row over a commission fee on a multi-listed property has led to an agent threatening to take legal action against a “subbing” third party.
The affair highlights the extraordinary role of the National Federation of Independent Estate Agents.
Active across north Kent and south London, the man behind the NFIEA – Roy Tree – says he believes it to be unique.
He has, he says, some 15 active members. He finds properties and offers them across the network.
Any agent in the network can take on a property and market it. They pay the NFIEA a monthly subscription and a cut of the commission.
In the case of the disputed property, two agents in Strood, Kent, became involved – 2-Move, and O’Sullivans.
Tony Szabo FNAEA, managing partner of 2-Move, said: “When I came into this business a couple of years ago, I was surprised to find Roy Tree was somehow a part of the local market landscape. We were paying him £25 a month and then 30% of any commission we earned.
“I was never entirely comfortable with it. However, my new staff assured me that it was a worthwhile arrangement that generated a handful of transactions each year.
“As I have now found to my cost, the lack of clarity in his terms in regards to both the agents instructed and importantly the vendor client, leaves his entire proposition flawed.”
The property in question received interest from a purchaser registered with O’Sullivans and, through them, went to do a viewing on a Saturday afternoon.
According to Szabo, the purchaser then went into his office on a Sunday – when, he says, O’Sullivans was not open – and insisted they wanted to go through 2-Move, having dealt with a member of his staff before.
He maintains that O’Sullivans did not follow up on the viewing for three weeks, speaking to neither vendor nor purchaser, a point subsequently corroborated in an email by the buyer.
By then, the offer had been made, negotiated and accepted, and the deal was progressing through 2-Move.
Szabo says the vendor was warned that there was a potential for both agents to claim a fee.
However, says Szabo, it subsequently became clear to him that it was the “subbing” agent who ought to arbitrate any dispute and not the vendor.
In the event, O’Sullivans say they are entitled to the full fee, 2-Move has offered to split the fee and go to arbitration, and Tree has sided with O’Sullivans, having first proposed an amicable split of commission.
Szabo says the position is made more complicated by the fact that Tree is not an estate agent and does not belong to any of the industry bodies, making any third party arbitration impossible.
Szabo said that his firm had no contract with the vendor, only an arrangement with the NFIEA, and believes that the NFIEA should be paying at least some of the commission.
He has written to Tree, saying: “From the outset I made our position clear in that we would not pursue the sellers for the fee, as like us, their contract is with you.
“Please therefore take this correspondence as notice of the fact that as soon as we confirm that contracts have exchanged we shall be instructing our solicitors to pursue a claim against you and your firm separately.”
Tree told Eye: “The position is quite straightforward. The firm that introduces the buyer is entitled to the fee.”
Vicky Preston, of O’Sullivans, said: “O’Sullivans Estate Agents had introduced the buyer and organised the first viewing which then led to an offer being put forward and accepted by the vendor.
“2-Move were made aware by the prospective purchaser that they had viewed via another agent but still chose to put forward the offer to the vendors.”
Szabo, however, says the property was effectively multi-listed. He says he has never disputed O’Sullivans’ initial involvement but insists that the sale would simply not exist had his staff not put the transaction together and progressed it.
Comments (32)
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Where are you Tony Szabo
Tony Szabo…. Am I talking to myself….. Even your staff don't have a contact number for you…..Are you higher than the Queen or Winston Churchill????
Still waitin for a reply from the idiots you got working for you Tony Szabo……….
Tony Szabo…. Where are you….. You're Imcompetant and your staff are blubbering fools !!! Please take time out to call me…..joe
Tony Szabo…. Am I talking to myself….. Even your staff don't have a contact number for you…..Are you higher than the Queen or Winston Churchill????
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An intelligent, articulate and considered response.
You would expect me to say that I agree 100%.
Thank you for taking the time to do so.
Tony Szabo
'Whoever introduces the Applicant to the property though is entitled to the fee'
It is not enough to claim a fee based solely on a viewing, the agent must show an effective cause to the sale. The basis of the fee is now established as an introduction to the sale and not the property. Foxtons Limited v Pelkey Bicknell [2008] EWCA Civ 419 sets this out and given that O'Sullivans did not follow up the viewing then its difficult to see how they can justify their statement – “O’Sullivans Estate Agents had introduced the buyer and organised the first viewing which then led to an offer being put forward and accepted by the vendor”. To declare ‘led to an offer’ flatters to deceive when they had no input in that process.
Clearly we can no longer rely on contract terms regarding ‘introduction’ but instead must show an active participation in securing a purchase but shouldn’t we be doing that anyway?
Now that made me laugh out loud…
"affair highlights curios role" said the headline?
When I realised it wasn't that sort of affair I switched off!
Interpretations of effective cause of sale may vary and, in any dispute, the chances of one side convincing the other of the validity of there position are small. Agreeing a compromise would have seemed the most amicable solution but in the absence of the ability to have a deciding arbitrator, here we sit. I appreciate your comments but can not agree as can not intelligently comment on what would or could have happened if the prospective buyer had not been contacted for 3 weeks after their initial viewing…
I had a situation with a very proactive company in Kent – Miles and Barr – a few years ago. It was a multi-agency contract. I arranged a viewer with a buyer who then offered and soon after received a letter from M & B stating the buyer had been introduced by them previously to that property and had viewed via them. The applicant had not advised me of this. When I challenged them they stated they had viewed with M & B but were not in a position to offer on it at that time. They also, for other reasons, did not wish to go back to them for this property and then came to me instead. M & B were very aggressive in ensuring the buyer purchased through them, as they had introduced the buyer to the property. So, despite what the buyer may wish to achieve in such circumstances, the law is the law and an introduction is an introduction, no matter what efforts others may employ on the same property after that fact I am afraid.
JM
Many thanks for your views and comments but I would suggest that you read the article again.
I find this matter to be quite strange to be honest. I do not understand why the other agent, aware the person had viewed the house through another estate agents, proceeded with showing them the house for a second time? That is just asking for trouble over commissions and the fees and the managing partner should have expected this. I apologize for speculating, but from this article it appears to me that Mr Szabo has tried to take the buyer from the other company and asked for a half commission as a resolution. This may seem like a fair solution but as the buyer had wanted to see the house again, perhaps the first agent had done the necessary work to eventually get an offer and Mr Szabo, like other commenters have mentioned, has created this situation to benefit himself, laying the blame on Mr Tree when it has ultimately not gone in his favour. Estate Agents should act wiser in these situations as it is only the sellers and buyers that suffer in these matters.
From their "Latest Instructions and Price Reductions" download (interestingly, EPCs are all dated October 2013 or earlier – LATEST??):
"Any perspective buyers are advised to check and confirm the validity of measurements…"
PERSPECTIVE buyers? Well… I suppose a decent perspective is ONE of the things that homebuyers may have on their wish list – but not EVERYTHING, surely?
I know, to be honest I'm embarrassed to have had any association with them at all. The only saving grace is that one would assume that the traffic to their website is minimal, in fact your visit has probably increased it by 100%!
This is the sort of squabbling that destroys affinty groups of Estate Agents. The original Devon team consisted many of the county's best independant Agents, all good entreprenuers. Entrepreneurs by their nature are not team players!
The comment by Mr Szabo is a bit of a puzzle how on earth does any good businessman get involved and remain involved with any scheme he doesn't comprehend? There was a time when an FNAEA was required to have 10 years experience in the industry surely that ought to give some experience and caution of these sorts of arrangements and his cash would have been better spent with the solicitor 2 years ago buying a legal eye over that particular arrangement (contract?????)
WELCOME TO 'THE DARK SIDE' matey! ;o)
and I thought the other one was the 'Dark side' 😉
Hound – I expect "the other one" to become a VERY 'Dark Side' when no-one is logging in to their propaganda machine… ;o)
Many thanks. Hindsight is a wonderful thing and whilst the requirement to seek legal advice at the time would have been somewhat extreme, my gut reaction of not continuing membership with Mr Trees operation is one I regret not following though on.
In regards to experience and comprehension, I only have the best part of 30 years experience but continue to learn every day. This most recent challenge is another that will be chalked up and learned from. My naivety stemmed from not expecting a problem to ever arise, not thoroughly checking the validity of other agents within the scheme and not, as was my original view, insisting that we have our own multi agency contract signed with each referred client. The matter now is a point of principle and has only become escalated by the lack of clarity from Tree, first accepting (in writing) the fact that an amicable split was the fairest way forward only to renege on it.
My thanks to you and all those who have posted their views.
Tony Szabo
From my Google search – "The National Federation of Independent Estate Agents is a network of estate agents based across North Kent and South London"
EHHH???
46 Branches – covering a patch about as big as a reasonable field here 'oop North.
HOW does that qualify to claim to be a "National" ANYTHING??
It seems to me 2-Move knowingly created this situation. Has anyone actually spoken with the seller to ask their opinion?
Yes, the seller and buyer were well aware of the position.
I don't think it's as cut & dried as that. There are examples of agents not being paid as, although they introduced the buyer to the property, they did not extract an offer from them. Agents need to be proactive and in my mind it's not enough to open the door let the buyer in and expect to be paid. Pressing for an offer is part of that initial process that puts you in to the position of warranting your fee. Anyone can make a viewing. it's sometimes much harder to create a meeting of minds over price.
As you would expect, I couldn't agree more with your position. We were not looking for something for nothing but certainly believe it fair to be paid for what we did do, should the transaction proceed to completion. Can you imagine one of your own f not chasing a viewing or giving a client feed back for over 3 weeks…
That said, you knew that you were entering a grey area and can't, I suspect, have been altogether surprised when the initial agent held out their hands for recompense. When in this situation you are always looking over your shoulder and perhaps, the option of contacting the initial agent and offering a split of the fee (which would have gone three ways) would have been the simpler, if less profitable route.
Great example not just of using sub'ing but any multi-listed property. Whoever introduces the Applicant to the property though is entitled to the fee.