AGENCY
What is meant by Sole Agency?
What is a Joint Agency?
Why is Sole Agency the predominant type of agency given?
What does Sole Selling Rights mean?
What is Open Agency?

AUCTIONS
What should I do before attending a real property auction?
Why do auction guidelines appear to be understated?

FEES
My estate agent has not agreed any fee level with me. What is the position?
My estate agent refers to “Scale Fees”. What are these?
My estate agent has confirmed our fee arrangement but has quoted the wrong fee. What should I do?
My estate agent has suggested an incentive fee arrangement. Is this advisable?
Are there circumstances where I can become liable to pay two different estate agents a fee for selling my property?
When do I become liable to pay an estate agent’s fees?

GENERAL
The estate agent who sold me my property failed to disclose serious defects in it.
Do I have a remedy against anyone else?
What is the status of a deposit paid to an auctioneer or estate agent?

PRIVATE TREATY SALES
Why are asking prices for second hand properties never firm?
My sale seems to be taking an age to complete. Who is responsible for this?
I have just been Gazumped. How can estate agents allow this to happen?

Building Energy Rating (BER)
What is a BER?
What are the BER implementation dates in Ireland?
Who is entitled to a BER?
How is a BER Calculated?
What are the benefits of a BER?
Who carries out a BER assessment?
How long is a BER valid for?
What is a Provisional BER?

AGENCY

What is meant by Sole Agency?
This means that you have given a single firm the sole agency rights on your property, to the exclusion of other firms, during the lifetime of the agency.

What is a Joint Agency?
Where two firms (or three in exceptional cases, such as a large commercial property) are appointed to act in concert in the marketing campaign and where they will all receive a share of the agreed fee in the event of the introduction of a ready, willing and able buyer at a price acceptable to the vendor.

Why is Sole Agency the predominant type of agency given?  
Should the sole agent introduce a buyer, there is no dispute as to which agent is due the fee - in open agencies this can be a particular problem. Also with open agencies, astute buyers will approach every agent that has the property for sale and will select the one they feel will benefit them best (the weakest link in your chain, so to speak). This results in the buyer selecting the agent that ultimately will sell your property. Think about that for just a moment and you will know it cannot be in the interest of vendors.

Sole Agents are also far more certain to receive a fee than a firm working on an open agency. This naturally concentrates the firm’s efforts on your behalf.

What does Sole Selling Rights mean?
When you grant a sole, joint or open agency, you usually retain the right to sell the property yourself. Before you think this is an easy opt out, bear in mind that this can only be to someone introduced to you without ANY input from the agent. Even the buyer seeing the agent’s sign on the property and knocking on your door means that the agent introduced the buyer to you as vendor. However, if a relative, who had previously expressed an interest decided to buy and you accepted his/her offer, a liability to pay a fee may be avoided.

It is possible to grant Sole Selling Rights to an agent and this means that no matter who sells the property during the course of, or as a result of, the agency, the agent is entitled to a fee. If you receive a letter confirming you have granted Sole Selling Rights when all you have granted is a Sole, Joint or Open Agency, respond immediately in writing (retaining a copy) pointing out the error and asking the agent/s to confirm the actual position to you in writing.

What is Open Agency?

AUCTIONS

What should I do before attending a real property auction?
Let us presume that you have checked in a preliminary manner that you will have the necessary finance available to buy. Having inspected the property on more than one occasion to satisfy yourself that it is the right property for you, you should have it surveyed by a qualified Architect, Civil Engineer or Building Surveyor. Ask the surveyor to check for pending developments in the area that may impact on the property’s value and to check that no development has taken place on the property that requires planning permission without permission having been obtained.

If the house passes the survey, instruct your solicitor to obtain the Conditions of Sale and inspect the title documents to see what flaws, if any, are on the property’s title. Your solicitor should query whether any planning permissions have been complied with and what form of certification to that effect is available.

Simultaneously apply for any required mortgage and ensure that you have written detailed approval on terms acceptable to you before bidding at auction.

For the auction itself, you have two options. You can bid yourself or have a professional, such as another auctioneer or your solicitor, bid for you. There are two benefits to the latter option:
a) The professional may be more used to auctions and may be able to use one or two legitimate tactics for your benefit;
b) The professional will adhere strictly to your instructions and will not be carried away by the heat of the moment.

You purchase at auction subject only to the conditions set down in the contract. It is a cash purchase and should your mortgage fail to materialise the deposit paid at the auction will be forfeit. You cannot buy at auction subject to the sale of another property.

The auctioneer, who can refuse to accept a bid that does not accord with the flow of the auction, regulates the bidding. For example, if several successive bids have been made, each increasing the price by €5,000, the auctioneer would be correct to refuse to accept a €1,000 increase unless and until he is satisfied that the “pace” of the auction has changed.

It can often be helpful to leapfrog bids, i.e. to offer more than the expected increment, if your bid brings the bidding up to, but not above, a Stamp Duty threshold. You may find that such a move can occasionally knock one or two of your competitors out of the running.

Property Auctions are conducted under standard Law Society Conditions of Sale, which stipulate that, unless specifically stated, all auctions have a reserve price – which is not disclosed. On rare occasions, you will find a property advertised for auction with a stated reserve, which means that the highest offer on the day that matches or exceeds that reserve will secure the property. In almost all cases the vendor reserves the right to sell before auction.

highest bidder for a limited period (usually 15-20 minutes) after the withdrawal. There is therefore an advantage in being the highest bidder as, if the parties are reasonable, it gives you an opportunity to negotiate a purchase without other bidders being in the running during that brief time-spell. While this is custom, it is not a legal obligation on the auctioneer or the vendor.

Why do auction guidelines appear to be understated?
The guideline should relate to the genuinely anticipated reserve price, which will be known only to the vendor, the auctioneer and the solicitor having carriage of sale. The IAVI guidelines indicate that the reserve should be no more than 10% below the genuinely anticipated reserve. The reserve is not the price achieved at auction, but the price below which the vendor will not sell the property. By definition, this figure may vary from the outset to the day of the auction. Reserve prices that are genuinely anticipated at the outset are often adjusted, due to the vendor’s own views of the marketing experience during the auction campaign. While the auctioneer and the vendor may have genuinely anticipated a reserve of €550,000 and quoted a guideline of €500,000 for example, if offers in excess of €550,000 have been received prior to auction the vendor is likely to revise his reserve upward and again the auctioneer must act accordingly.

Auction prices can often exceed the actual reserve in a manner that results in the reserve never being disclosed. For example, just because an auctioneer declares “I am now placing the property on the market” which usually means that the highest bid thereafter will secure the property, this does not mean that the reserve has only now been reached. The reserve could have been passed in the bidding some time before. The auctioneer may be instructed to withdraw the property if the vendor believes that by so doing a greater price will be achieved. The auctioneer MUST follow his client’s instructions

When properties are withdrawn it is not at all unusual for the asking price to be inflated to allow for negotiation (unlike normal Private Treaty sales, the vendor in this situation feels his options are limited and often opts for price that allows some room for a reduction). Thus you might see a property with a guide price of €500,000 having an asking price of €600,000, after being withdrawn at €530,000. The reserve on the day of the auction could still have been in or around €550,000 and, while the vendor may now have different ambitions, he/she could well have been prepared to sell at that price at auction.

Because key instructions are private, no one is privy to them other than the vendor, the auctioneer and the solicitor having carriage of sale. Therefore it is, admittedly, difficult for a body such as the IAVI to actually prove a breach of its guidelines in a manner that would stand up to judicial review.

While there are critics of auction guidelines, we invite them to suggest alternatives that will not wreck this sales method, which has served Irish property sellers and buyers well over the decades.

FEES

My estate agent has not agreed any fee level with me. What is the position?

However, providing a court is satisfied that a contract of agency exists, the agent will still be entitled to recover a fee, even without written confirmation, should a ready, willing and able purchaser be introduced at a price acceptable to you. Thus it is in YOUR interest, as the client, that the fee arrangement is known and in writing.

A court will determine the appropriate fee, in the event of a dispute. The IAVI requires its members to agree the fee in advance and to confirm the agreement in writing to the client. This requirement is to protect both the client and the agent in the event of a dispute and, as stated, all property sellers and lessors should insist on this practice being put into effect.

My estate agent refers to “Scale Fees”. What are these?
A particular firm of estate agents may have its own individual scale of fees and a reference to that would be quite in order. However, under Competition legislation, there are no Scale or Recommended fees in the Republic of Ireland that apply to the industry generally and it would be illegal for any group of firms to collectively agree what fees they will charge. All fees are negotiable and should be agreed in advance; you should also insist on written confirmation.

My estate agent has confirmed our fee arrangement but has quoted the wrong fee. What should I do?
As soon as you receive the letter of confirmation you should write to the agent pointing out the error and asking him/her to reconfirm the correct fee structure. Your failure to do so will result in a court concluding that you accepted the terms set down in the first confirmation.

My estate agent has suggested an incentive fee arrangement. Is this advisable?
An incentive fee means that the agent will receive a base fee up to an agreed figure and a higher rate of commission on any amount over that figure. Clearly, this provides an incentive to maximise the price. However, one would expect an agent to maximise the price, regardless of the existence of an incentive fee element.

Are there circumstances where I can become liable to pay two different estate agents a fee for selling my property?
Yes. If you switch agents, it may emerge that the eventual buyer has already been in contact with the original agent about your property and may even have made an offer to buy it. Should that buyer purchase through another agent, the first agent might also have a legitimate claim to have his/her fee paid by you. The best way to avoid this is for your solicitor to ask the first agent, when cancelling his agency, for a list of all parties with whom the agent has been in discussion regarding your property, together with a summary of how far things had progressed with each.

fee and the second agent is on notice that the first agent had first contact with the buyer in this event.

Where disputes arise, see if the two agents can agree a fee share – an enhancement from the basic fee may encourage settlement if it means that each agent receives more than 50% of the basic fee.

My estate agent did not sell my house but has still billed me for advertising. Is this correct practice?

The outlay incurred by your estate agent is usually payable by you, regardless of whether a sale occurs. Irish estate agency fees are low in comparison with most other countries and agents must recoup outlay expenditure, such as that on advertising, from all clients. For agents to absorb these costs would necessitate a very substantial increase in Irish estate agency fees.

When do I become liable to pay an estate agent’s fees?
An estate agent or auctioneer has earned the agreed fee once he introduces a ready, willing and able buyer at a price acceptable to you. The fee is earned and becomes payable in such circumstances, even if you withdraw from the sale for any reason. The buyer must to be in a position to proceed unconditionally (e.g. loan approval must have been secured, if that was a condition of the sale) and evidence of his/her willingness to proceed is required (e.g. the buyer signing a contract document issued by your solicitor).

In the vast majority of sales that proceed to completion, the agent will usually account for any part of the deposit held by him on the closing of the sale, after deducting agreed fees and outlay due. Where the agent holds no deposit, it would be normal for you to instruct your solicitor to discharge the agent’s agreed fees and outlay on the closing, from the sale proceeds.

Where a deposit is taken from a ready, willing and able buyer and you, as vendor, refuse to execute the contract, the deposit is fully refundable on demand to the would-be buyer, but the agent has the right to sue you for fees on the basis that the professional task, for which you agreed to pay the agreed fee, has been performed, even if you decide not to benefit from it by refusing to proceed with the agreed sale.

GENERAL

The estate agent who sold me my property failed to disclose serious defects in it.
The applicable term is “Caveat Emptor” – “Let the Buyer beware”. An agent who voluntarily discloses detrimental information about a property he is entrusted to sell would breach his contract of agency. His legal duty is to secure the best price he can and voluntarily disclosing negative facts about the property flies in the face of that duty.

However, it is important to emphasise that we are dealing with voluntary disclosures, e.g. where you innocently ask about stains on the wallpaper and the agent tells you that not alone is the house damp, it also is affected by dry rot, subsidence and timber infestation. An agent is not able to make such disclosures voluntarily.

On the other hand, the agent should not knowingly lie to you if you were to ask “Does this house have Damp / Dry Rot / Infestation or suffer from Subsidence?” If he/she knows for a fact that such faults exist he should answer your query honestly. To do so does not breach his duty to his client. The difference is that the agent cannot volunteer the information – you must elicit it.

Do I have a remedy against anyone else?
Possibly, depending on the nature of surveys, investigations and research undertaken on your behalf. Whether you have a right of action will depend on the scope of the instructions given, whether they were followed and whether any negligence exists on the part of the surveyor, architect, lawyer or other professional involved.

Most mortgage valuations are just that – valuations undertaken to see whether the property is suitable security for a mortgage. They are not structural surveys and an estate agent who undertook a mortgage survey and who failed to spot a structural defect was found not to be at fault by an Irish court – the estate agent’s qualification did not extend to being a structural expert and the exercise he undertook was merely to value the property.

What is the status of a deposit paid to an auctioneer or estate agent?
Before paying a deposit to an auctioneer or estate agent, ask to see the firm’s current licence. IAVI members are obliged to have their current licence (these are renewed annually in July) on prominent display in their public office. You are obviously at risk if you pay a deposit to an unlicensed firm.

In respect of a property purchase, the auctioneer takes the initial deposit AS THE AGENT OF THE PERSON PAYING THE DEPOSIT (in respect of the deposit only) until the buyer executes the formal contract document. Once the contract is executed, the auctioneer becomes the Stakeholder under the contract in respect of that portion of the deposit he/she holds and the deposit will follow the contract – that is, it will be accounted for to the vendor on the completion of the transaction. Up to the time the buyer signs the contract, the initial deposit should be refundable on demand, but do allow for reasonable and logical delays (e.g. if a sole signatory is absent, or if your own cheque has not yet cleared through to the agent’s Client Account).

Deposits MUST be lodged to the agent’s Client Account and cannot be lodged to their Office Account. If you receive a refund of a deposit on an Office Account cheque you should query why this has happened. If you are not satisfied with the response you should complain to the body of which the agent is a member.

In deposits for residential lettings, it is normal for the letting agent to pass this on to the landlord (with whom, after all, you have your letting agreement) as soon as the lease is signed and the deposit must be recovered from the landlord. If you believe that a deposit is being unfairly withheld it is open to you to seek its recovery in the Small Claims Court.

Where a letting is to a group of individuals, the initial deposit having been paid to the landlord, it is usual, when one of the tenants leaves, for the incoming tenant to pay the part of the deposit attributable to them to the outgoing tenant. In this situation, the relevant portion of the original deposit held by the landlord will now be deemed held against the new tenant’s name.

A rental deposit may continue to be held by the letting agent, if that firm has also been retained by the landlord to act in the role of Managing Agent.

While it is highly unusual for an auctioneer to go out of business while retaining clients’ deposits, it can occasionally happen. In this event a claim against the auctioneer’s High Court Bond (value €12,700) is required.

Only pay a rental deposit when it is confirmed to you that you have secured the letting. An agent should not take deposits from several people simultaneously in respect of the same letting (except where in a single letting to several people, each pays a portion of a single joint deposit).

PRIVATE TREATY SALES

Why are asking prices for second hand properties never firm?
In buoyant property markets, agents and vendors frequently find that they secure more than the indicated price level for properties. As a consequence, asking prices are no longer firm. In times (not too long) past it was generally expected that one could negotiate down from an asking price. Nowadays, you will see phrases such as “Price Region” and “Offers invited in excess” etc. The price for real property, i.e. land and/or buildings, is always negotiable.

No doubt you would not want your identity to be divulged to other bidders and equally they will not want their identity disclosed to you. While trust is required, we find it is rarely misplaced. If you are in serious doubt, it is always open to you to pull out of negotiations but you must be prepared to lose the property should you do so.

We are deadlocked in negotiations and I am one of a number of buyers prepared to exceed the indicated price level for a property. The selling agents have suggested a [Best & Final Offer] resolution. What does this mean?

When negotiations become protracted the vendor and selling agent have two widely used options available to them. Suffice it to say that those who do not succeed in buying the property will always be disgruntled with whatever method is chosen. The options are to continue with the bid, counter-bid style of negotiations until only a single bidder remains, or to opt for the [Best & Final Offer] solution.

In essence, all interested parties are invited to submit their best offer in writing by a stipulated time, together, usually, with a 5% initial deposit cheque, only one of which will be lodged for clearance. The following points should be borne in mind by bidders in this situation:
a) Never offer a price greater than you are comfortable with
b) Subject to a) always offer your top price or risk losing the property;
c) Always consult with your solicitor before tendering in this manner.
d) Always remember that a property is not usually secured unless and until FORMAL contract documents are executed by both parties and exchanged.

If bidders are present when the offers are opened, there is a great temptation the defeated bidders to offer to increase their offer in order to exceed the successful bid and thus encourage the vendor to Gazump the proposed buyer. Also, the highest offer may not always be the one that is accepted – for instance, where it is conditional while other offers are not. For these reasons, bidders are rarely, if ever, invited to attend the opening of offers.

My sale seems to be taking an age to complete. Who is responsible for this?
There can be many reasons for a sale being slow in completing. Once the estate agent has introduced the buyer and instructed your solicitor, the primary responsibility for ensuring that there is no major delay from then to completion rests with your solicitor.

If your buyer has not signed the contract, it may be that your contract is on an unconditional basis (i.e. it is not subject to the sale of another property) but that he/she is nevertheless awaiting the execution of contracts on his/her own property before signing your contract. If this is the case, you must decide, in consultation with your estate agent and solicitor, how much time you will permit to elapse before you withdraw the contract and seek another buyer.

If you are the buyer, and a seller has not signed the contract you remain at risk of being gazumped and you should ask your solicitor to press for the execution and return of the contract so that you have an enforceable agreement.

matters or, at the very least, to discover the reason/s for the delay.

I have just been Gazumped. How can estate agents allow this to happen?  
It is important to remember that an agent cannot confirm an agreement in principle for the sale of any property without specific instructions from the vendor. Thus, if acceptance is confirmed to you, the agent is merely confirming the vendor’s agreement in principle. If you are subsequently Gazumped, it is the vendor, and not the agent, that is responsible.

Gazumping occurs when a vendor reneges on his/her acceptance of an offer, in favour of a higher offer received subsequently but before the vendor executes the formal contract. Gazumping may even happen after an intending buyer has paid an initial deposit and signed the formal contract, as this does not usually bind the vendor to the deal. A contract is usually either binding both ways or not at all, one of the rare exceptions being when someone secures an option to buy. Buyers correctly do not view themselves bound to purchase simply because they pay a booking deposit. It is slightly odd therefore for them to conclude that the vendor is unilaterally bound to the deal.

While cases of Gazumping have received adverse publicity, it is only fair to make two points:
1. Very many vendors stand by their acceptance of offers, even when higher offers are made;
2. Some buyers also withdraw from agreed purchases, leaving the vendor Gazundered.

The key phrase in the second paragraph above is, “when a vendor reneges.” It is vendors, not estate agents, that Gazump. Estate agents in these circumstances are merely the bearers of bad tidings and the expression “don’t shoot the messenger” applies. Estate Agents are LEGALLY obliged to place every offer received for a property before a vendor for consideration, up to the time the vendor has executed the formal contract. The agent has no option in this regard and, should the agent fail to report a meaningful offer, the vendor could sue the agent if the vendor loses the opportunity to accept a higher offer. The same courts that empathise with Gazumped prospective buyers, would condemn any agent who failed to follow established professional practice and thus prevented a vendor from having the option to do what the courts actually condemn as improper (if not, unfortunately, illegal) i.e. Gazump. Catch 22 for professionals!

The IAVI is conscious of the Agent’s legal obligation to follow his client’s instructions. Subject to those instructions, the IAVI directs its members, on taking an initial deposit, to cease marketing or showing the property, to change any sign on it to read “sale agreed” and to instruct the vendor’s solicitor to issue contract documentation. While the IAVI code of practice cannot guarantee that Gazumping will not occur, it does at least provide some safeguards aimed at minimising the frequency of a practice the IAVI would ideally like to see legally banned.

Unfortunately, Gazumping raised its ugly head in the new home sector a few years ago. Traditionally, builders had been exceptionally good in adhering to deals, even when the value of the properties had risen and the buyer was not obliged to proceed. That changed in a tiny number of incidences where some builders reneged on deals and re-offered properties (sometimes more than once) in order to secure higher prices.

entitled to withdraw and that is not Gazumping.

The Law Reform Commission (an august body comprised entirely of those in the legal professions) made recommendations to Government that seek to address this issue. However, the Commission’s recommendations do not, in the view of the IAVI, go far enough and are unlikely to have any real impact on the second hand property market.

Building Energy Rating (BER)

Sample Certificate

What is a BER?
A Building Energy Rating or BER is similar to the energy label on your fridge with a scale of A-G. A-rated homes are the most energy efficient and G the least efficient.

A BER certificate will be compulsory for almost all new homes by mid 2008. If you are buying or renting a new house or apartment now, you may already be entitled to a BER - so ask the seller/landlord or agent for it.

Along with the BER certificate, you will also receive an Advisory Report which will help you to identify how you might improve the energy performance of your home.  

What are the BER implementation dates in Ireland?
The requirement to provide a BER is being introduced on a phased basis as follows:

New Dwellings: The regulations apply to new dwellings for which planning permission was applied for on or after 1st January 2007. Transitional BER exemptions will apply to new dwellings for which planning permission is applied on or before 31st December 2006, where the new dwellings involved are substantially completed on or before 30th June 2008.

New Non-Domestic Buildings: The regulations apply to new non-domestic buildings for which planning permission was applied for on or after 1st July 2008. Transitional BER exemptions will apply to new non-domestic buildings for which planning permission is applied on or before 30th June 2008 provided the new non-domestic buildings involved are substantially completed by 30th June 2010.

Existing Buildings: (dwellings and other buildings) when offered for sale or letting on or after 1st January 2009.

Who is entitled to a BER?
A seller must provide a BER to prospective buyers or tenants when a home is constructed, sold or rented under the following circumstances:
New homes where planning permission was applied for on or after 1st January 2007.
All homes for sale or rent on or after 1st January 2009.

There are exemptions for certain categories of buildings, e.g. protected structures and certain temporary building (Ref. S.I. No. 666 of 2006).

There are fines of up to €5,000 for non-compliance with the regulations.

How is a BER Calculated?
A BER is based on the characteristics of major components of the dwelling (wall, roof and floor dimensions, window and door sizes and orientations) as well as the construction type and levels of insulation, ventilation and air tightness features, the systems for heat supply (including renewable energy) distribution and control, and the type of lighting. It covers annual energy use for space heating, water heating, ventilation, lighting and associated pumps and fans, calculated on the basis of a notional standard family with a standard pattern of occupancy.

The energy performance is expressed as:
(a) primary energy use per unit floor area per year (kWh/m²/yr) represented on an A to G scale
(see BER certificate); and
(b) associated Carbon Dioxide (CO₂) emissions in kgCO₂/m²/yr (see BER certificate)

A BER is only an indication of the energy performance of a house. Actual energy usage will depend on how the occupants operate the house. In that way it is similar to the concept of a fuel economy (miles per gallon or litres per 100 km) rating for a car.

A BER does not cover electricity used for purposes other than heating, lighting, pumps and fans, i.e. does not include for cooking. refrigeration, laundry etc.

What are the benefits of a BER?
A BER makes the energy performance of a home visible to prospective buyers and tenants and enables them to take energy performance into consideration in their next house purchase or rental decision.

Who carries out a BER assessment?
BER assessments are carried out by registered BER assessors who have been trained under the National Framework of Qualifications and have registered with Sustainable Energy Ireland (SEI). All registered assessors must adhere to the BER Assessors Code of Conduct.

How long is a BER valid for?
A BER is valid for up to 10 years provided that there is no material change to the dwelling that could affect its energy performance. The maximum term of validity of a Provisional BER is 2 years.

What is a Provisional BER?
New homes offered for sale off plans also require a BER, in these cases, a Provisional BER will be issued based upon the design drawings and building specifications. When the home is completed, a BER based on an assessment of the final drawings and building specifications, which represent the house as constructed, is required. This BER must be supplied by the builder/developer on completion of any such homes sold off plans.