deleting clause from agency contract

[evand]

There is a clause in a NSW agency agreement i am considering that says "if the buyer & seller exchange contracts and then the deal falls over before settlement, the agency is still entitled to its commission." which is about $13k!

I am going to ring the agent on Monday morning and ask for this to be deleted. In the meantime has anyone had any success with asking an agent to delete this clause?

 

[BayView]

There is a clause in a NSW agency agreement i am considering that says "if the buyer & seller exchange contracts and then the deal falls over before settlement, the agency is still entitled to its commission." which is about $13k!

I am going to ring the agent on Monday morning and ask for this to be deleted. In the meantime has anyone had any success with asking an agent to delete this clause?

You can delete anything you like, or include anytting you like in Contracts.

The hard part is getting it accepted. But it's your game; it's your way or the highway.

Now lest's see Dazz tell me I'm talking through my @rse; again.

 

[evand]

I realise anything can be added or deleted from a contract but i wanted to know if anyone had actually convinced a RE agent to delete that particular clause.

As for the 2nd part of your post. I wouldn't have a clue.

 

[BayView]

Sorry Evand;

I thought my answer was self-explanatory.

Yes; I have had stuff deleted on their "standard contracts".

The other bit of the post; you'll work it out.

 

[Aimjoy]

There is a clause in a NSW agency agreement i am considering that says "if the buyer & seller exchange contracts and then the deal falls over before settlement, the agency is still entitled to its commission." which is about $13k! I am going to ring the agent on Monday morning and ask for this to be deleted. In the meantime has anyone had any success with asking an agent to delete this clause?

evand,

This does not answer your specific question but why would you want to do that anyway?...... because:
If the contracts exchange and a 10% deposit (assuming) is paid and it does not proceed to settlement then the vendor is entitled to keep the deposit. Surely the REA is entitled to his 2 - 3% commission as well for his work? The vendor is still up 7 - 8% (10% less REA comm).
AND the vendor AND agent get to sell it again.....

So I don't see the problem - or is there something else?

Aimjoy

 

[Perp]

Problem, aimjoy, is that deposits are often very much less than 10%.

I know of someone who had a property worth about $10m, from memory. He got a DA that increased its value significantly. Then he signed a contract to sell for $30M, held by a $50K deposit. The contract went unconditional, on the proviso that the vendor had to withdraw his DA because the purchaser wanted to do something different (perhaps units instead of townhouses or vice-versa, something like that), allowing the purchaser to lodge a new DA.

After months of mucking around, the vendor decided not to proceed (couldn't get the approval they wanted or something) and decided to pull out and throw their $50K deposit away. Apparently they were structured very well so there was no way to get anything more from suing them.

So this guy has a property whose value he had increased from $10M to $30M, that's now worth only $10M-ish again because now there's no DA. And he's got the $50K deposit but it's cost him perhaps $300K in holding costs waiting for the deal to finalise.

Adding insult to injury, a couple of months after the deal fell over, he got a bill for $750K commission from the RE agent... He ultimately paid it and considered it a lesson learned.

Moral(s) of the story: 1) When you're selling, make sure you have a big enough deposit to cover the deal falling over after it's gone unconditional, and 2) Change the clause such that the agent only gets their commission if the deal settles, not if it goes to unconditional contract.

 

[Jontxu]

You dont have to convince the agent, you have to have your solicitor negotiate with the vendors solicitor, the agent has no business in regards to clauses.

Jon Salvador
www.headinghome.com.au

 

[evand]

Mate, i dont think you read my post. Its the agency agreement not the sale contract.

You dont have to convince the agent, you have to have your solicitor negotiate with the vendors solicitor, the agent has no business in regards to clauses.

Jon Salvador
www.headinghome.com.au

 

[evand]

No, nothing else.

If i lost over $60k (10% deposit) for pulling out of a contract it would be lawyers at 3 paces and a pending court case.

I don't want that crap, i just want to delete the clause.

Would you accept a $65k loss if some circumstance caused you to not proceed to settlement?

evand,

This does not answer your specific question but why would you want to do that anyway?...... because:
If the contracts exchange and a 10% deposit (assuming) is paid and it does not proceed to settlement then the vendor is entitled to keep the deposit. Surely the REA is entitled to his 2 - 3% commission as well for his work? The vendor is still up 7 - 8% (10% less REA comm).
AND the vendor AND agent get to sell it again.....

So I don't see the problem - or is there something else?

Aimjoy

 

[evand]

Thats what i want but RE agents consider their job done at exchange of contract (not settlement) and therefore entitled to commission.

2) Change the clause such that the agent only gets their commission if the deal settles, not if it goes to unconditional contract.

 

[Perp]

Thats what i want but RE agents consider their job done at exchange of contract (not settlement) and therefore entitled to commission.

Sure that's what they want, but if the agent realises that you want this change purely to protect you in the unusual but unfortunate circumstance of an unconditional buyer failing to settle, then it's hard to see why they should object (unless they have an intention of scamming you with unqualified buyers).

Yes, the deal may "fall over" for reasons beyond the agent's control, but conditional contracts fall over for reasons beyond the agent's control all the time (eg purchaser doesn't get finance). Why should the fact that the purchaser has advised that conditions have been satisfied, all of a sudden change the agents' status with regard to entitlement to commission?

For example, I had a purchaser advise that the finance clause was satisfied, then cancel due to lack of finance At that stage we had a standard agency agreement, but my agent (bless him) didn't claim the commission, because he felt his job was to sell the property and he hadn't (yet) achieved that. He went on to sell the property (to the same purchaser, who ultimately somehow found finance) and get his commission, and a glowing testimonial.

If an agent objects to changing this in the agency agreement, move on to another agent!

 

[evand]

Agents bring endless unqualified prospects through properties all the time. In fact they're experts at it. Its not scamming, they mostly just don't have a clue.

(unless they have an intention of scamming you with unqualified buyers).

 

[evand]

Apparently its a standard NSW REI agreement clause. But if they don't want to delete it.

I might just put a clause in the sale contract stating that 'any costs/expenses payable by the vendor but incurred from the purchasers actions will be the responsibility of the purchaser'. Or something to that effect.

Whether or not that sends prospective purchasers running. I'll cross that bridge when i come to it.

If an agent objects to changing this in the agency agreement, move on to another agent!

 

[BayView]

Apparently its a standard NSW REI agreement clause. But if they don't want to delete it.

They always trot out that "Standard Contract" line.

It is only standard for their interests; not anyone else's.

Do as you planned; delete it with a nice thick texta and see what they say.

 

[Mrman]

How about a compromise, say 1% at signing of contract and the rest at settlement.

Sure we may not like RE agents, but they can't be expected to work for free.

George

 

[Dazz]

evand,

You give me the impression that you have been around the block a few times, and are big enough and ugly enough to handle most issues that come your way - from a real estate point of view.

If you cannot come to an agreement with a REA and their "standard terms of engagement", then my suggestion would be to market and sell the title deed yourself. It'll be the easiest 13K you'll ever make.

Discuss the wording of a sales contract with your solicitor and take it from there. Of course, the solicitor will have their own engagement agreement....which is likely to be far more onerous than the REA one.


Your question about whether anyone else has been able to negotiate a 'standard clause' from the REINSW form is neither here nor there. Seriously your not intending on using that feather duster during negotiations with the Principal of the Agency to have the clause removed "....but one of the guys on an internet site I chat with said......"

You're the Owner. You will always run the show when it comes to offloading your asset. Run the operation exactly as you see fit.