Are we liable for fee after expiry of Selling Agreement?

[Propertunity]

We are in the unfortunate position now of knowing the house we love is available but the vendors will not sell to us. Is there anything we can do in this type of situation?

One unpalatable way, is to buy thru agent 2 and also pay agent 1's commission out of your own pocket.

The other is to fight on behalf of the wimpy vendor to only have to pay one commission to the agent who was the "effective cause" of the sale. This requires more effort though.

 

[marky_mark]

We have been in a similar situation as a purchasers. We were introduced to a property by Agent 1, we were not in a position to make an offer at the time. House did not sell and vendor listed with agent 2. We inspected the property again with agent 2 and disclosed to her that agent 1 had introduced us to the property. We indicated we wanted to make an offer. She came back to us stating the vendors will not consider a sale to us because Agent 1 was contacted and would not negotiate a part commission with agent 2 and the vendors were frightened of having to pay two commissions. As far as we are concerned, agent 2 should not be entitled to any commission as Agent 1 introduced us to the property. We are in the unfortunate position now of knowing the house we love is available but the vendors will not sell to us. Is there anything we can do in this type of situation?

I believe you will find that in many instances the first agent is only due a fee if you had put forward an offer when you viewed the property with them.

If you want to buy the house and are worried about any problems that may arise then talk to agent 2 and see if they are willing to split the commission with agent 1. This way they will both get paid something, you will get the house and the seller can move on with their plans.

 

[Perp]

I believe you will find that in many instances the first agent is only due a fee if you had put forward an offer when you viewed the property with them.

That's the subject of this whole thread. Many of us believe that the first agent is due a fee regardless of when the offer is made. Did you read it?

If you want to buy the house and are worried about any problems that may arise then talk to agent 2 and see if they are willing to split the commission with agent 1.

She came back to us stating the vendors will not consider a sale to us because Agent 1 was contacted and would not negotiate a part commission with agent 2

You didn't read it, did you?

 

[marky_mark]

That's the subject of this whole thread. Many of us believe that the first agent is due a fee regardless of when the offer is made. Did you read it?

Yes, I read it which is why I replied. I believe the question is should I pay a fee? My answer was no. Was late at night and typing on phone so maybe it didn't come across that way but basically if they didn't bring you an offer then they're not entitled the fee. This is why all offers should be in writing so that the agent has proof off all offers.

 

[Perp]

I believe you will find that in many instances the first agent is only due a fee if you had put forward an offer when you viewed the property with them.

Are you a real estate agent or property lawyer? In which instances or states is this usually the case?

My understanding is that most agency agreements have a clause similar to this one: "The agent shall be entitled to a fee at the agreed amount if at any time following the expiration of the exclusive agency period the principal enters into a contract for the sale of the property to a purchaser effectively introduced to the principal or the property during the exclusive agency period by the agent, by another agent or by the principal."

In other words, it's introducing the buyer that entitles them to a commission, or part-commission, irrespective of "presenting an offer". What is your authority or reference, please? (I'm not trying to be a smart-***; if you know more about it than I do, I want to learn. )

 

[marky_mark]

Are you a real estate agent or property lawyer? In which instances or states is this usually the case?

Hi Ozperp,

I'm an agent not a lawyer so am speaking from past experiences. Recently I took on a property in New South Wales which was previously for sale with 2 other agents over the course of about 9 months. I sold the property to a buyer who had initially viewed the property with the first agent but wasn't in a position to buy the home. The buyer wasn't in a position to purchase the property initially so didn't put forward an offer. When I sold it to the buyer 9 months later this was the start of negotiations and therefore I was paid the fee not the original agent.

In another instance (also in NSW) one of my colleagues received an offer from a buyer on a property he had for sale. The offer was rejected by the vendor and they later terminated the agency agreement with our company and listed with another agency in the area. A couple of weeks later the same buyer put forward the same offer and the vendor accepted it. The owner of our company contacted his lawyer who said that he would be payable a fee from the seller as he had introduced the buyer and also put forward an offer to buy the property from the buyer. Although this was the case, rather than asking the vendor to pay 2 fee's (which he could have) he went to the other agent and they agreed to split the commission.

Hope this helps. BTW, most real estate agents have different agency agreements for the vendor to sign. Each and every one of these may have different nuances depending on the solicitor who has written it.

 

[wylie]

In Queensland it doesn't matter if an agent has brought a contract, it comes down to who initially showed the property to the buyer.

My our case, we didn't even entertain putting in an offer the year before with a different agent. We simply attended an open house. When we bought it a year later, when the price was more realistic, with a completely different agent from a different company, he split the commission with the first agent.

My mother sold for many years, and this was always my understanding. When it actually happened to me, it was as I had always believed it would be.

Also, the vendors of the first home we owned as a couple sold the house to purchases who had been introduced by an agent, but who decided to wait for the agency agreement to lapse and negotiate privately with the vendors. They sold to my parents and we bought from them. The couple who sold to my parents were chased by private detectives (they came looking for the purchasers when we first moved in) chasing the commission. It was a higher than average purchase price, so the commission was probably worth chasing.

Maybe the rules differ between states?

 

[Perp]

Recently I took on a property in New South Wales which was previously for sale with 2 other agents over the course of about 9 months. I sold the property to a buyer who had initially viewed the property with the first agent but wasn't in a position to buy the home. The buyer wasn't in a position to purchase the property initially so didn't put forward an offer. When I sold it to the buyer 9 months later this was the start of negotiations and therefore I was paid the fee not the original agent.

But have you seen the agency agreement with the first agent? If that agreement contained a clause similar to the one I quoted, shouldn't you have split the commission? Or, if your own agency agreement has an indemnity clause (ie requires the vendor to indemnify you against claims against previous agents, which would be wise), aren't the vendors now potentially liable for a second commission if the first agent notices the transaction?

It seems that you're making a distinction between simply "introducing" the buyer, and "presenting an offer", but I'm not aware of this as a general principle, notwithstanding that your own agency agreement may make this distinction. I'm quite sure that I've heard of situations where agent 1 has claimed a part-commission from agent 2 solely on the basis that the ultimate buyer was registered at an OFI hosted by agent 1.

Obviously if you scrutinised the first agency agreement and it specifically negated any claim subsequent to expiration to the agreement, or said that agent 1 was only entitled to a commission if they presented an offer (as opposed to simply "introducing" a buyer), you don't have any problems.

 

[wylie]

I'm quite sure that I've heard of situations where agent 1 has claimed a part-commission from agent 2 solely on the basis that the ultimate buyer was registered at an OFI hosted by agent 1.

This is EXACTLY the case with our last purchase.

 

[trinar]

Hello again, this is the update I promised. I couldn't stand to wait any longer so with heart pounding and contract in hand I went to the agents office and asked to speak to the Principle of the agency. I explained that we no longer wanted our property on the market, even adding that originally we wanted to list privately but went with them because a property came up that we were keen on (listed with them) at the time and thought it would be simpler this way.
Then I asked him if were to sell privately in the future would we be liable for the fee, even to someone they introduced, he simply said "no, once the Selling Agency Agreement term was up they didnt come after the fee later". " we don't operate like that" he said.
Keep in mind, this is a small town and word of mouth is well used. Nice guy, so I will tell people that.
I still wish I had recorded the conversation.
What I've learnt from this is, NEVER sign a contract/agreement without taking it home and reading the entire thing. Several times over. Also, a contract is not a one way agreement. ( some people, including us forget this) If you don't like what you see in the contract, then come to an "Agreement" on what is a good compromise and re-write it.
And finally just ask them if you're still unsure.

 

[Amadio]

We were involved in a real mess many years ago with competing agents. It was infuriating.

Ever since then we give a false surname at all opens and in all dealings with real estate agents.

 

[wylie]

We were involved in a real mess many years ago with competing agents. It was infuriating.

Ever since then we give a false surname at all opens and in all dealings with real estate agents.

I gave my friend's name at an open once because it was a house owned by someone I knew and had wanted to see it but I didn't want them to know I had been "sticky beaking".

I forgot to tell my friend and her husband took the call from the agent saying "Just ringing to see what you thought of the house you looked at on Saturday". He said "we were camping".

It went on like this, agent insisting he had been through the open, and him insisting he was camping. They couldn't figure out what was going on.

When I called my friend a few days later, we worked it out. It was rather funny.

 

[Perp]

Good work, trinar. It's always best to be open and up-front; people often surprise you and where you anticipate dramas, none exist. Well done!

 

[marky_mark]

Good work, trinar. It's always best to be open and up-front; people often surprise you and where you anticipate dramas, none exist. Well done!

Well said, at the end of the day all a businessman has is his reputation. If that goes then so will all prospects for future referrals.

 

[BV]

trinar

did you end up selling it privately in the end
or you took it off the market for now?