The Different Estate Agency Contracts – Tortoise Property Blog

Key Differences

The primary difference between Sole Agency, Multi-Agency and Single Viewing contracts lies in the exclusivity, cost, and the nature of agency involvement.

Sole Agency Contracts

A sole agency contract in the UK real estate market involves an exclusive agreement between a seller and one estate agency, which is given the exclusive right to sell a property. Under this contract, the seller is obligated to pay a commission to the agency if the property sells during the term of the agreement, irrespective of who finds the buyer. However, if the seller independently finds the buyer without any help from the agency and is noted on the agreement, no commission is due.

One significant advantage of a sole agency contract is that it often leads to more substantial marketing efforts from the agency. Since the risk for the agent is lower compared to non-exclusive arrangements, they are typically more willing to invest both time and money into the marketing mix. This investment can include a broader range of advertising channels, personalised selling strategies, and enhanced promotional activities, aimed at securing the best possible sale outcome. This type of contract encourages a dedicated partnership between the seller and the agent, often resulting in effective and efficient property marketing and sales processes.

Multi-agency contracts

While maximising exposure by involving multiple agents, may not necessarily broaden the potential buyer pool significantly. This is because many agents on a multi-agency agreement will use similar fixed cost marketing channels, leading to redundant exposure to the same set of potential buyers. Additionally, the commission rates under multi-agency contracts are usually higher, reflecting the increased competition and effort from the agencies’ perspectives. There’s also a risk of attracting less qualified or riskier potential buyers, as agents rush to secure a sale in what can become a frantic race to close the deal. This scenario is reminiscent of the infamous sprint by Ben Johnson, where the desperate push to win at all costs led to notorious consequences.

Single viewing/named buyer contracts

These contracts are highly specific and usually involve minimal marketing or broad exposure, focusing solely on one prospective buyer. This contract type is ideal for situations where the seller aims for a quick, streamlined process, perhaps with either the agency or seller already having a willing buyer in line.

By understanding these distinctions and potential drawbacks, sellers can more effectively choose a contract that aligns with their sales strategy, whether that involves minimising costs, maximising exposure, or expediting the sale process with a particular buyer in mind.