Commission situation when exclusive listing goes from Agent A to Agent B

Here's another commission-related question...

We have a house listed for sale with Agent A. We've had a few inspections, but no offers although a few people are "still thinking about it."

Agent A's (exclusive) listing period is about to expire. For a few different reasons we weren't particularly happy with him, so when the listing period expires our intention is to take the house off the market until after the holidays, then re-list it with an exclusive listing with another agent, who we'll call Agent B. (I don't really want to do an open listing, as in my opinion they tend to get fairly poor service from agents.)

My question is - what happens if one of the people who initially inspected the home with Agent A, decides to make an offer on it later when it's listed with Agent B? Who gets the commission?

Given that there's every possibility that this could happen, how should I allow for this when signing the listing agreement with Agent B? I'll have a list from Agent A of all people who were introduced to the property by him, but I'm not sure exactly what to do with it, in terms of making Agent B aware that there may be a commission conflict if any of these people make an offer on the place.

Any ideas/thoughts/suggestions/advice?
 
answer to the other thread more or less covers this...

Nowdays, if it ever went to court. It tends to be the agent that effects the sale as opposed to the agent that first introduces the property that is entitled to the commission.

Check with your local fair trading office for specifics.
 
answer to the other thread more or less covers this...

Actually the situations are quite different, with the only similarity being they involve potential commission conflicts.

In the first situation, a property is open-listed with multiple agents, and a buyer makes a nuisance of herself by using all the agents to take her through the property at different times, without telling them she's already dealing with other agents.

In the second (hypothetical) scenario, the buyer hasn't done anything wrong and has no choice in the matter. They first viewed the property with Agent A, but weren't in a position to make an offer at the time. A few months later they're able to make an offer, but the property is no longer listed with Agent A, but has been exclusively listed with Agent B.

This must be a very common scenario, so I'm wondering if there's an easy way to adjust Agent B's listing agreement to recognise the fact that there are a small list of prospects who originally viewed the property with Agent A and who may yet make an offer on it, and to clearly state what happens with the commission if this occurs. The idea is to get all this sorted out up front, rather than waiting for conflict to occur later.

Of course I can put this question to my solicitor for his advice, but I'm just wondering if anyone on here has any thoughts on it. I imagine this has been the source of some nasty commission conflicts in the past, including the possibility of a seller having to pay double commissions on one sale.
 
In the second (hypothetical) scenario, the buyer hasn't done anything wrong and has no choice in the matter. They first viewed the property with Agent A, but weren't in a position to make an offer at the time. A few months later they're able to make an offer, but the property is no longer listed with Agent A, but has been exclusively listed with Agent B.

This must be a very common scenario, so I'm wondering if there's an easy way to adjust Agent B's listing agreement to recognise the fact that there are a small list of prospects who originally viewed the property with Agent A and who may yet make an offer on it, and to clearly state what happens with the commission if this occurs. The idea is to get all this sorted out up front, rather than waiting for conflict to occur later.

Of course I can put this question to my solicitor for his advice, but I'm just wondering if anyone on here has any thoughts on it. I imagine this has been the source of some nasty commission conflicts in the past, including the possibility of a seller having to pay double commissions on one sale.

This is exactly the circumstances under which we bought our last IP. Once we signed the contract and before settlement, the first agent called me (more than a year after we first viewed it with her at a ridiculously inflated price) saying we could be pursued for a second commission.

It put the wind up me and I called the agent we bought through. He assured me that he had already spoken to the first agent and assured her that she would get a portion of the commission. She obviously was just making sure that I was aware that she was owed something.

I was shocked to learn that it was remotely possible that we as buyers could have been pursued for something that was completely out of our control. I did tell the second agent that I looked at this house a year ago with the first agent, and he was honourable and made sure that she got a cut.

We didn't ever hear any more, as there was paperwork detailing the commission split, but I am curious as to whether the purchaser is very often pursued in similar circumstances.
 
Wouldn't some sort of conjunction agreement need to be made?

I'm not sure. It could be a bit problematic to have to deal with the original agent again if, say, a long time period has passed or your parting of the ways with him was not amicable (for example, he's annoyed that you re-listed with another agent rather than extending his listing.) Again, just talking hypotheticals here.

The double-commission risk arises because, in my understanding, a real estate agent may have the right to claim a commission on a sale long after the listing period has expired, if they were the one who originally introduced the buyer to the property. Presumably this is to stop buyers & sellers colluding to do an agent out of his commission by just signing the contract a few days after the listing period expires.
 
This is exactly the circumstances under which we bought our last IP. Once we signed the contract and before settlement, the first agent called me (more than a year after we first viewed it with her at a ridiculously inflated price) saying we could be pursued for a second commission....I was shocked to learn that it was remotely possible that we as buyers could have been pursued for something that was completely out of our control.

That must have been an unpleasant phone call to get.

I don't really understand why the original agent (from a year ago) would have called you - the buyer - and threatened you with a commission claim, as you haven't done anything wrong and aren't a party to any commission/listing agreements on the property you bought.

If the agent felt she had a claim, I would have thought she should have called the seller of the property you bought and threatened him, not you. Anyway, I'm glad it worked out for you in the end.

It highlights the need to find a way to prevent these problems occurring. Otherwise, every seller who doesn't achieve a sale with their original agent and who subsequently lists with another agent could be at risk of a double commission claim.
 
Actually the situations are quite different, with the only similarity being they involve potential commission conflicts.


take all your situations out of it and it boils down to the same thing - two agents, one buyer. The answer is the same - the agent that effects the sale (as opposed to the agent that necessarily introduces the property) would most often be the one that gets the commission. There are always exceptions, but it is no longer considered enough to simply introduce someone to a property to secure the commission - you must be the CAUSE of the sale.

from the Form 22A conditions part 2.1:

The Client agrees to pay the Agent commission as
specified in the Appointment if a Contract of Sale of the
Property is entered into with a buyer, whether within the
Term or after the Term, where the Relevant Person is the
effective cause of the sale within the Term, provided that:

(1 ) the Contract of Sale of the Property is completed; or

(2) the Client defaults under the Contract of Sale and
that Contract is terminated by reason of or following that
default; or

(3) the Contract of Sale not completed and the whole or
part of the deposit paid is liable to be forfeited; or

(4) the Contract of Sale is terminated by mutual agreement of
the Client and the buyer


Even Wylie's scenario doesn't tend to happen any more - the selling agent can tell the original where to go. The original could try to go to the Tribunal or sue, but given the judgement there is now case law and you'd want to be pretty sure of your chances to waste time and money chasing it.
 
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take all your situations out of it and it boils down to the same thing - two agents, one buyer. The answer is the same - the agent that effects the sale (as opposed to the agent that necessarily introduces the property) would most often be the one that gets the commission. There are always exceptions, but it is no longer considered enough to simply introduce someone to a property to secure the commission - you must be the CAUSE of the sale.

from the Form 22A conditions part 2.1:

The Client agrees to pay the Agent commission as
specified in the Appointment if a Contract of Sale of the
Property is entered into with a buyer, whether within the
Term or after the Term, where the Relevant Person is the
effective cause of the sale within the Term, provided that:

(1 ) the Contract of Sale of the Property is completed; or

(2) the Client defaults under the Contract of Sale and
that Contract is terminated by reason of or following that
default; or

(3) the Contract of Sale not completed and the whole or
part of the deposit paid is liable to be forfeited; or

(4) the Contract of Sale is terminated by mutual agreement of
the Client and the buyer


Even Wylie's scenario doesn't tend to happen any more - the selling agent can tell the original where to go. The original could try to go to the Tribunal or sue, but given the judgement there is now case law and you'd want to be pretty sure of your chances to waste time and money chasing it.

As a matter of policy I delete clauses 2, 3 and 4 in every agency agreement coming accross my desk. The agents will wail and squeal like stuck pigs but if they want they listing they'll agree to it.

As for the buyer being responsible for commission- then in the absence of a buyers agent I say rack off pal. The agent made the call because they knew the buyer draws the settlement cheques and they had to get in early to ensure payment.

I would ask how can the 1st agent be the effective cause of sale when they misled you as to price when you purchased at a substantially reduced rate subsequently. Put it back on them I say!
 
As far as the ethics issue raised in the other thread, it is common, and good practice to get several quotes as a purchaser of goods or services, isn't it ?

Therefore is it also unethical, and depriving the unsuccessful candidates of renumeration, to get more than one quote, as not all tenderers can be successful?

Why should an estate agent who has failed to make a sale within the agreed time be able to make a claim when another agent completes the deal?
 
The answer is as simple as the original agent does not have a valid and binding appointment to act. Therefore he is entitled to diddly squat.

Agent A will receive no commission and is entitled to no commission. The seller will be required to pay 1 commission which is to Agent B who has a valid appointment under the legislation.

Kev
www.reas.com.au
 
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