In real estate transactions the agent’s services include at least the following:
- assessing the price of the apartment
- preparing the brokerage contract in a professional manner
- giving the seller advice and guidance on matters related to real estate transactions
- newspaper advertising and other marketing activities
- taking prospective buyers to inspect the apartment
- supplying information to prospective buyers regarding the apartment and the sale of the apartment
- receiving offers and, possibly, a down payment
- preparing the deed of sale
Using a real estate agent does not, however, free the seller from liability regarding possible defects in the property. These generally always fall within the seller’s liability.
Choosing a real estate agent
Before meeting with an agent, do some background work to estimate the realistic selling price of your apartment. This is important as some agents may suggest an unrealistically high sales price.
It is a good idea to have representatives from at least two or three agencies visit and assess your home – preferably from both large and small agencies. This also helps in setting the selling price.
In addition to traditional real estate brokerage services, the market offers services designed to help homeowners sell their apartments themselves. There are various service packages on offer, or one may opt to only use an agent to prepare the deed of sale.
Carefully familiarise yourself with the contents, contract terms and prices of the service. New supplementary services, even when quite extensive in scope, may not necessarily follow the rules and legislation governing traditional real estate brokerage services.
- the operating models of estate agents vary, so it is worth finding out, for example, whether the same agent will show people around the property, receive the offers, and seal the deal
- the cheapest agency is not necessarily the best
- the agency who ”promises” the highest selling price for your apartment is not always the best either
- you can make the brokerage contract for one to two months, whereupon you can estimate how the agency performs the assignment.
- how realistic is the price estimated by the agent. The selling price of an apartment ultimately depends on the market, not the agent’s promises
- the agent’s familiarity with the area. Agents should be familiar with, for instance, the area’s zoning
- in marketing the apartment, which media will be used, how, and with what frequency
- the commission
- call you to secure a brokerage assignment even when your sales ad says ”Not for agents”
- promises an unrealistic selling price
- tells you on the very first phone call that he has a certain buyer for the apartment
Make sure to ask the agent about anything in the contract that you do not fully understand.
The brokerage assignment is often signed somewhere else than on the agency’s premises, for example in your home.
The contract can also be made through distance selling communication method including telephone, mail order sales and online. Those are considered door-to-door selling and distance selling. This gives the consumer 14-day cancellation period, within which the consumer may cancel the purchase for no particular reason.
The real estate agent must, before the conclusion of a contract, provide you with the following documents:
- advance information of the main characteristics of the goods and the vendor’s contact details on paper or in another permanent format
- cancellation form and instructions.
Performance of the assignment may begin after the confirmation of delivery before the end of the cancellation period upon the specific request of you.
For example, you can do the request by filling a spot in the brokerage assignment to ask that the agency begins performing the service immediately. The right of cancellation exists even if service provision began upon the consumer’s request before the cancellation period ended. If service provision has begun during the cancellation period, and the service is subsequently cancelled, the consumer must pay the business a reasonable compensation for the services rendered under the agreement (for example marketing activity or obtaining the house manager’s certificate), calculated in proportion to the overall price of the agreement.
Make sure to ask the agent about anything in the contract that you do not fully understand. Only sign the contract when you have read and fully understood it.
Brokerage contracts, also known as assignments, are always made in writing or electronically. The agent may not appeal to oral agreements or discussions. The contract is important – not only for a successful relationship with the agent – but also for the success of the sales transaction itself.
According to law, the seller must supply the buyer with all information that could influence the purchase decision. When the apartment is sold by an agent, he or she must acquire the relevant information from the seller and pass this information on to prospective buyers.
This information includes, for example, information pertaining to the age of the apartment or house, construction, past repairs and renovation work, condition and any known defects. The agent must also inform the buyer of matters dealt with at the general meeting of shareholders of the housing company.
Make sure that this information, particularly information concerning material defects in the apartment or building as well as upcoming repair and renovation projects known to the housing company are noted on the brokerage contract. This will later serve as evidence, if necessary, that the agent was duly informed of said matters.
Brokerage contracts have no minimum length – they can even be valid for a single day. If an agent tells you that he or she has ”a certain buyer” for your apartment, consider making a brokerage agreement valid for only a couple of days. This will enable the agent in question to take the prospective buyer to inspect the apartment and receive an offer.
However, if you are uncertain about the agent’s expected performance in selling the apartment, it is a good idea to make a contract for a shorter time, for instance two months. This is prudent, as brokerage contracts may only be terminated for certain weighty reasons.
The maximum validity of a brokerage contract is four months. The contract can be renewed after it has expired.
Brokerage contracts may not be terminated during their validity without a weighty reason. A weighty reason may be constituted by a significant mistake made by the agency, the customer falling ill or the illness or death of a family member of the customer. Changes in circumstances may also constitute grounds for termination if the continued brokerage of the apartment could become excessively disadvantageous to the customer.
If the contract is terminated for the cause that is not related to the defect of the agency, the customer must compensate the agency for the reasonable costs of the actions performed before the termination.
In many cases, it is possible to come to a mutual agreement over the termination of the brokerage contract while it is still valid.
Obligations of the real estate agent
One of the most important tasks of the real estate agent is to receive and process purchase offers and to advise both parties in compliance with legislation and good brokerage practices.
The seller naturally has the final say in which offer to accept. One can never be forced to sell an apartment, despite having entered into a brokerage contract. Similarly, the buyer may not demand that the seller sells the apartment, even if the buyer has made a cash offer that meets the asking price. The commission must, however, be paid if a so-called full price offer has been made and the offer meets the conditions regarding price and other aspects as specified in the brokerage contract. The standard contracts used by agents usually include a clause on this. If the contract does not include such a clause, the commission only needs to be paid if the sale is concluded.
The agent must ensure that the purchase offer, its acceptance or counter-offers are made in writing. This facilitates their use as evidence in case of disputes.
The parties to the offer should ensure that they both receive signed copies of offer documents and acceptance documents. This is particularly important if concluding the sale appears time-consuming.
A down payment may be made in conjunction with the offer, which will be part of the sales price when the sale is concluded. These days, however, it is more common that a contract penalty binding on both parties is agreed upon when the offer is made.
If down payment is used, the agent may not accept other offers until the seller has decided whether or not to accept the offer in question.
- The agent must inform both the seller and the prospective buyer of the significance of a down payment or contract penalty in conjunction with a purchase offer for real estate as well as the binding nature of offers in real estate transactions.
- The agent should also advise the prospective buyer to include conditions with dissolving effect in the offer, if the buyer is uncertain of e.g. being able to secure financing.
Closing the sale and preparing the deed of sale
Many agents use the terms preliminary sale and final sale when the sales price is paid in instalments. These terms are misleading. The parties to the transaction may mistakenly think that there is still the possibility of withdrawing from the transaction after the preliminary sale.
- The ”preliminary sale” is the actual conclusion of sale, involving the signing of a binding deed of sale.
- The ”final sale” is just the time when the remainder of the sales price is paid
Preparing the deed of sale is the agent’s responsibility. The agent is responsible for preparing the deed of sale in a professional manner, with consideration of both parties’ interest. The deed of sale must include, for instance, any material defects in the apartment which the seller has informed the agent of at the time of drafting the brokerage contract.