2024-04-29 28Hse Editor
In a thriving property market, many owners are taking the opportunity to list their properties for sale. Whether choosing to sell or rent out the flat on their own or through a licensed real estate agent, what should owners pay attention to if they decide to entrust an agent?
Whether selling or renting out, both the owner and the agent must sign a legally binding Estate Agency Agreement. For sales, this is commonly referred to as "Form 3," and for rentals, "Form 5," which protects the rights of both parties.
The Agreement primarily clarifies the responsibilities of the real estate agent and the owner. The form clearly outlines the agent's appointment and the validity period of the agreement, the listing or rental price, agent commissions, whether to allow potential buyers or tenants to view the property, and whether the unit can be distributed for listing by others.
It is important to pay attention to the validity period of the agreement, which is typically six months to a year. The exact dates must be clearly indicated in year, month, and day format. Owners also need to check whether the start and end dates are included in the validity period. Avoid using vague terms such as "until further notice" to express the effective date and expiration date.
Furthermore, when choosing an agent, owners can choose between an exclusive agent and a non-exclusive agent. As the name implies, an exclusive agent has the sole right to sell the property during the validity period. The benefit of appointing a single agent is that they often provide additional value-added services, such as taking high-definition photos and 360-degree or 720-degree videos to achieve the best sales results.
However, if an exclusive agent is irresponsible or lacks initiative, the property may be difficult to sell or rent out. Additionally, it's important to note that if the property is sold or rented out through another agent during an exclusive agency agreement, the exclusive agent is still entitled to commission, meaning the owner might end up paying two commissions.
With a non-exclusive agreement, an owner can list the property through different real estate agencies, increasing the exposure of the property and the chances of a transaction. However, this requires the owner to spend more time communicating with multiple agents and updating property details such as listing price and status.
The agreement will clearly list the sale or rental price, and there are usually additional clauses, such as the owner agreeing to advertise the listing price within a 20% range. For example, if the agreement states HK$23.8 million, the agent may advertise it for HK$20 million, which is still within the +/- 20% range and therefore complies with the agreement.
There's no need to worry too much; additional clauses only regulate the advertised price by the agent, not the final selling price of the unit. If the owner disagrees with these terms, it is essential to communicate with the agent to negotiate an agreement that is acceptable to both parties.
Commissions are detailed in the form, specifying how much the owner must pay the agent upon the transaction of the unit. It can be a fixed fee or a certain percentage of the property's transaction price, while rental properties usually involve half a month's rent as commission, depending on the agreement between both parties.
Lastly, whether the unit can be distributed for listing by other agents is another consideration. If the owner agrees, the agent can share property details with others for distribution, including issuing advertisements. The advantage is increased exposure for the unit, but the drawback is that since the owner has not communicated with the distributing agents, updating information can be slow.
Since the Agreement is legally binding, before deciding which real estate agency to entrust, owners should inquire and compare with other agencies. Carefully review the terms before signing any agreement, and avoid making hasty decisions.
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