Commercial Sales: Instructions, Marketing and Heads of Terms
Core concepts
Commercial sales work is built on agency law and instruction discipline. A candidate must understand: types of agency (sole agency, joint agency, sole selling rights, ready, willing and able purchaser clauses); the difference between a sole agency and sole selling rights (the latter can entitle the agent to a fee even if the client finds the buyer, or after the agency ends); commission terms and when the fee becomes payable; disclosure of commission and conflicts of interest; and the anti-money-laundering identity checks required before a sale completes.
You should also know the difference between a non-binding heads of terms document and a contract, and the basic stages of a transaction: marketing, offers, heads of terms, due diligence (searches, surveys, environmental and planning checks), contract exchange and completion.
Traps in questions
- Confusing sole agency with sole selling rights - the trigger for payment differs.
- Assuming a fee is earned when an offer is accepted; usually it is earned on completion or on exchange, depending on the terms.
- Forgetting that a memorandum of sale is not legally binding.
- Ignoring that the agent acts for the seller and must not give legal advice.
Rule of thumb
Always read the agency agreement before advising the client on fee liability: the wording - not the label - determines when commission is due.
Worked example
A client signs a sole agency agreement with a 2% fee. The client later sells directly to a buyer introduced by the agent. Under a typical sole agency clause the fee remains payable, because the agent introduced the purchaser during the agency period. Under sole selling rights the outcome can differ, so check the clause wording.