Agents struggle to collect sale fees

Licensed agents are having difficulty collecting their fees from property sales, due to the economic crisis.

Some agents attribute the problem to sellers whose pubs are worth less than when they bought them, and who must repay lenders before paying agents. Others say this isn't the only reason that bad debt, where they are unlikely to recover their fees, is increasing.

GA-Select managing director Graham Allman said: "Some clients are getting professional advice to withhold agent fees, or pay in instalments. This can cause cash-flow problems."

Stephen Taylor, managing director of Guy Simmonds, said problems collecting fees were linked to sellers having bought pubs in buoyant times with bank loans of 70% or more.

"We've only had one instance in the past year, so you write it off, and have sympathy with the client.

"Most people are up-front, so you may choose not to act on their behalf."

Dunham Davey Clugston's Paul Davey said slow fee-paying or avoidance was caused by hardship from negative equity or trade creditors taking priority over agents.

"We build momentum so that the transaction moves as quickly as possible." He said this makes clients less likely to avoid fees.

Sidney Phillips managing director Robin Mence said: "It is more difficult to get paid where there is negative equity, but we aren't experiencing bad-debt increase".

Fleurets director Graeme Bunn said the firm wasn't having problems collecting fees due to negative equity.

"We decided to concentrate on corporate transactions, rather than private leasehold sales, for this reason."