Wow, that is wonderful news I exude on the phone to my dental sales agent. I’ve just accepted an offer for my dental practice and feel fabulous.
I engaged an agent to find me a buyer for my dental practice and the great news is I don’t have to pay them a penny in commission as they get the buyer to pay. Couldn’t be better!
I accepted an offer of £1,100,000 and saved over £20,000 in commission – I still feel fabulous.
However, your deal has yet to complete so consider this:
The agent had a preferred list of buyers who agree to pay a fee for access to your practice – this could’ve been no more than 2-3 potential buyers. Is this likely to get the best price or could more be achieved with a wider audience?
2. The bank valuation comes in below the agreed sale price and the agent doesn’t push back hard as acutely aware the buyer is paying them a commission. A clear conflict of interest which could cost you on your final sale price.
3. If the buyer can pay your agent a fee, why not add this to the purchase price and you pay the agent? Removes all conflict of interest and the result is the same.
Ultimately you cannot serve two masters and under the Law of Agency you have a duty of care to your client. Being engaged by the vendor and taking a commission payment from the buyer creates a grey area which has left many a vendor not feeling that fabulous come the end of the transaction.
The scenario is based on a true story. This client ended up with a completed sale price of £1,425,000 which even after the commission due, end up some £300,000 better off.
(written by Andy Acton, director and shareholder at Frank Taylor & Associates)