Many buyers in Yorkshire have been wondering, do estate agents in Leeds get paid on exchange or completion? Well, typically the difference between exchange and completion is around a few weeks or so, so the timeline is not too long. However, most estate agents will point out that completion and exchange mean two completely different things which is why it is always better to ask your estate agent whether they take their fee on exchange or completion. With that being said, the norm in the property market is that the estate agent is paid on completion, not on exchange.
First and foremost, when you hire an estate agent, you should always discuss the fees or the commission percentage beforehand. This way, there will be no confusion or discussion regarding the estate agent’s payment in the later stages. Now, once the sale is complete, the estate agent will submit his or her invoice to your solicitor who will ensure that the fee or commission percentage is correct. However, the payment is not required to be made until the sale is actually complete. To understand this further, let’s talk about what exchange and completion mean and exactly when estate agents get paid.
Exchanging contracts
Exchanging contracts means that both the buyer and the seller have all the paperwork that is required for the final sale and that each party owns a signed contract. Essentially, this means that the seller or the seller’s solicitor has a signed transfer deed agreement whereas the buyer or the buyer’s solicitor has a mortgage offer as well as the required funds ready to be deposited. Also, the contract will mention the completion date that has been agreed upon by the buyer and seller. Exchanging contracts means that both parties, that is the buyer and the seller, are legally bound to the contract and have to complete the transaction. If either party decides to back out at the last minute, then they will have to pay a penalty.
Completion
Completion, as the name might suggest, is the final stage. At the time of completion, the ownership is transferred from the seller to the buyer along with the keys so that the buyer is free to move in as and when he or she wishes. In legal terms, completion is when the seller’s solicitor has confirmed the transfer of funds from the buyer. Once the seller has transferred the property to the buyer, the buyer is now the owner of the property and he or she is fully responsible for the property. Usually, the estate agent is paid his or her fee on completion as the process is now ‘complete’.
Paying the estate agent fee
Some estate agents ask for their fees upfront while others ask for a certain percentage of their fee upfront. Usually, with high-end estate agents, the fee or commission is due once the contracts have been exchanged. However, the estate agent is required to submit his or her invoice to the solicitor who will then make the payment only once the sale is complete. Since there are a few weeks between the contract exchange and the date of completion, it is always better to pay the estate agent after completion just in case the deal falls through.
With that being said, there are three important conditions that the estate agent needs to meet to claim their fee. First and foremost, the estate agent should be the one who introduces the buyer and the seller who are now in a binding contract. Secondly, the buyer must be able and willing to complete the transaction. And lastly, the agent has to show that the contract of sale or the exchange of contracts has taken place between the buyer and the seller due to the estate agent introducing the two parties. Remember, an estate agent is only paid the fee once the transaction has been successful, which is why most sellers wait until the date of completion to make the payment.
While it is not too common, it is possible to exchange contracts and complete on the same day. Usually, this is done with cash buyers as no transaction chain needs to be checked by the solicitors. Alternatively, exchange and completion can be done on the same day if the buyer or seller is in a hurry. In this case, the estate agent is paid his or her fee on the same day itself.