Chapters of the article
What is the mediation of the sale or purchase of real estate
Brokerage consists of a person choosing a broker on his or her behalf, who is put in charge of concluding a contract with a third party. The intermediary is then paid a commission for this task. The intermediary is usually responsible not only for arranging the signing of the contract, but often also for other related activities.
In the real estate market, the role of the intermediary is most often played by a real estate agent who handles all the activities related to the sale of the property on behalf of the property owner and in return takes a commission for his services. This will most often be a percentage amount ranging between 3-6% of the total sale price. Often, however, real estate agents will also ask for bonuses if they manage to sell the property for more than the original price.
Are you about to sign a brokerage agreement?
Better have it checked by a lawyer. This is the only way to make sure you really know what you’re signing and won’t be fooled.
Contract for mediation of sale or purchase of real estate
The brokerage relationship is established by a contract for the mediation of the sale of real estate. It must be in writing and contain some basic information:
- Information about the intermediary and the seller: The contract must first of all contain the identification data of the real estate agency, which is usually represented in this relationship by a specific real estate agent. On the seller’s side, all owners of the property being sold must be listed.
- Details of the property to be sold: The property to be sold must be specified and, where applicable, any other objects of the sale (e.g. fixtures and fittings of the property or rights of way to driveways)
- Price: This must specify the price at which the property will be sold, including the estate agent’s commission. In addition, it must also be specified under what conditions it will be paid and whether the estate agent is entitled to bonuses e.g. in the event of a sale at a higher price.
- Sales strategy: The brokerage contract should also include a sales strategy. That is, how the sale will proceed and what will happen, for example, in the event of significant changes in the property market or in the event that the property fails to sell.
- Rights and obligations: finally, the rights and obligations of both parties should not be missing from the contract.
Tip: If the real estate agent leaves the brokerage contract up to you, don’t turn to templates that you can find for free on the internet. They may be outdated or contain errors that can invalidate the entire contract. Instead, contact our attorneys who will draft a contract exactly to your liking.
What services are paid for
The right estate agent should offer a wide range of services related to the sale of a property, from the very beginning to the signing of the purchase contract. These services should include:
- Preparation for the sale of the property. This includes all the information available at the land registry, where they will find out the legal encumbrances, e.g. in the form of easements. Next, they should invite an expert to draw up a floor plan of the property and measure the total area. According to the information obtained, she should then determine a realistic price at which the property can be sold.
- Advertisement: The following is the creation of the advertisement. To do this, the property needs to be photographed and, in the best case, filmed. For example, drone footage or photos offering a 360-degree view are becoming popular nowadays. Before the actual photo shoot, the right realtor should arrange the rooms so that they look as good as possible in the photos. As well as good quality photos, the advert should not be missing all the essential information and should highlight the assets the property has to offer.
- Marketing. This consists mainly of sharing the offer on various property portals, social networks or perhaps creating banners and placing them in important places. In addition, it should not forget about paid advertising on online platforms or advertising in the local press.
- Viewings: once the first serious interested parties have come forward, it’s time for viewings. The real estate agency should be able to arrange these without you being present and in the highest possible quality. In short, the real estate agent should be able to sell your property without concealing any shortcomings.
- Selecting the buyer: The real estate agent should select a buyer who is willing to pay the highest price. But at the same time, it should be sure that the purchase will actually happen and that he will be able to pay the price.
- Financing: Many real estate agencies offer prospective buyers the services of their financial advisors who can arrange a mortgage or help with the prospective buyer’s overall financial goals. In fact, such services further help to ensure that your property sells as quickly as possible and for the highest price.
- Legal services: the right real estate agency works with attorneys who will take care of the drafting of the purchase contract and all other legal matters so that neither you nor the buyer have to worry about anything. It should therefore draw up and arrange for the signing of the reservation agreement and the purchase contract. However, in addition to this, they should also arrange for the escrow of the purchase price and file the application for registration in the Land Registry.
- After-sales services: the involvement of the real estate agent should not completely cease even after the successful completion of the sale. The right real estate agency should help you and the new owner of the property with e.g. property taxes, utilities and services transfer or property insurance.
Tip: Real estate agents often offer escrow of the purchase price in their own accounts. However, a safer option is to choose a third party in the form of a notary or lawyer. At Affordable Lawyer, we charge for escrow regardless of the amount. Although professional indemnity insurance must be taken out for a minimum of CZK 7 million, we are insured for CZK 50,000,000.
What to look out for when choosing a real estate agent
Not all estate agents and real estate brokers are created equal, so you need to choose carefully. In particular, beware of whether the estate agency employs experienced estate agents who have a track record of successful sales. You should also choose a realtor that uses new technology and adapts to trends in the real estate market so that they are able to keep up with other offers.
The right real estate agent should employ or work with other professionals such as financial advisors or lawyers, among others. Only by doing this can it offer you a truly broad portfolio of services and save you a lot of hassle.
It is also worth choosing a real estate agency that operates directly in the area where you are selling the property. This way, you can be more confident that they know the local property market and can adapt their sales strategy to it.
It is also worth remembering that you should not sign anything you do not understand or are not 100% sure about. It is better to have all contracts checked and explained by a professional.
However, in addition to poor service, you should also be wary of scams from estate agents. An example of such a scam might be the old trick of the rich buyer who is actually set up by the estate agent and does not buy the property. But before that, the real estate agent gets you to sign an exclusive contract and you are on the hook.
Try it yourself
If you don’t want to use the services of a real estate agent, you can take the sale of the property into your own hands. To do this, you’ll need to take the steps we’ve outlined above – i.e. find out all the information about the property you’re selling, create an advert and promote it well. In this step, be sure not to underestimate the importance of professional photos and preferably a video. After all, we choose with our eyes. Likewise, it will be up to you to follow up with interested parties and viewings. However, for the actual reservation contract and the subsequent purchase contract, we would already strongly recommend you to invite the help of a lawyer.
If you choose an Affordable Solicitor, we will prepare the perfect package for you of all the necessary contracts (especially the reservation, purchase and future contract) without any legal flaws. We won’t let you sign a contract that will harm you. Thanks to our services , you will be able to save up to tens of thousands in real estate agent commission.