Estate agents adopting a fixed fee approach to commissions rather than the more recognised percentage of the sale price should take care, warns the Ombudsman for Estate Agents.

The Ombudsman, Christopher Hamer, says in his latest quarterly report: "I have seen many cases recently where an agent has employed a fixed fee basis, generally arrived at by calculating a percentage of the asking price but then described as a cash amount, which has clearly not been explained fully or where some ambiguity has crept in as to whether that fee is a percentage or a fixed monetary amount.

"If a Seller has signed a contract on a fixed fee basis I will not rewrite that contract but if there is evidence that some confusion has been built into the process by the agent I am likely to make an award of compensation against the agent.

"This fixed fee issue is particularly serious where the property has been overvalued either deliberately or carelessly and sells for significantly less than the asking price and where there were no supporting valuation comparables. The effect of this is to give a huge advantage to the agent in terms of the fee received - particularly so in today's market conditions.

"To avoid disputes and dissatisfied clients in relation to this matter, my message is that the property valuation must always be supportable but reflect the market situation and the fee must be openly described as fixed irrespective of the price finally achieved for the property."

In his report, he cites the case of a complainant who was clearly confused over the fee arrangement and he awarded a full refund of £235, the difference between the fixed fee commission and what it would have been if decided by the final selling price.

Of the 402 disputes reviewed, the least number emanated from Northern Ireland, with just one per cent of the total. The south east fared worst, generating 21.5 per cent, with Greater London contributing 14 per cent. For Eastern England, the figure was 12 per cent, the West Midlands and South West were both on nine per cent, the North West on 8.5 per cent, Yorkshire on seven per cent, the North East on six per cent, Scotland five per cent, the East Midlands four per cent, and Wales three per cent.