Selling Agent Terms and Conditions

[Ralph]

Hi,

If anyone has experience in the selling process in Victoria, I'd greatly appreciate advice on t's and c's with the selling agent.

We've been given the REIV Code 002 Exclusive Sale Authority form which has standard t's and c's on the back. It's clear the commission, outgoings, periods are negotiable, but I'm not as clear on the rest of the terms.

Examples:

- the period (after the exclusivity period) that the Agent can claim a commission if someone they 'introduced' to the property purchases it. The provision is reasonable, but question whether things like the period (4 months), and definition of 'Introduced' are normally negotiated.

- the Agent is entitled to receive professional fee's (including commission) from the deposit if a purchaser does not complete a sale. Often the deposit will only be around the size of the commission (in this case 10k) so the agent gets covered but not the vendor who has lost time and money.

Do people normally accept or negotiate terms such as these?

Any other 'standard terms' people would not normally accept? e.g. giving your agent POA to get deposit money from your solicitor or conveyancer for the agents professional fees etc.

Thanks for any advice.

 

[Propertunity]

- the period (after the exclusivity period) that the Agent can claim a commission if someone they 'introduced' to the property purchases it. The provision is reasonable, but question whether things like the period (4 months), and definition of 'Introduced' are normally negotiated.

This agreement was drafted by some solicitors and barristers acting for the REI some time ago. They pretty much have it stiched up, except in this case you have highlighted here.

Recent court cases have awarded selling commissions to the agent who was the "effective cause" of the sale - not just the "introducer". You could safely sign this agreement and still not pay commissions to an 'introducing' agent who was not the effective cause of the sale.

Read this thread: http://www.somersoft.com/forums/showthread.php?t=74821

- the Agent is entitled to receive professional fee's (including commission) from the deposit if a purchaser does not complete a sale. Often the deposit will only be around the size of the commission (in this case 10k) so the agent gets covered but not the vendor who has lost time and money.

So you think that the agent has not lost time & money in getting a purchaser to an unconditional exchange of contracts?
Bear in mind, you can sue the defaulting purchaser as the vendor (but the selling agent cannot).
Nevertheless, it has also been negotiated succussfully by a SS member.

Do people normally accept or negotiate terms such as these?

People negotiate everything.

Any other 'standard terms' people would not normally accept? e.g. giving your agent POA to get deposit money from your solicitor or conveyancer for the agents professional fees etc.

I can think of NO reason why you would EVER do this.

 

[Ralph]

Thanks Propertyunity, useful thread - I wonder if the REINSW uses the same standard contract as REIVC.

A further question if I might, the t's and c's list as the trigger for an agents entitlement to a commission as the property being sold and states that ""sold" is the result of obtaining a binding offer" . I'd have thought that "settlement" should be the trigger to pay an agent - lest you pay commission and run the risk of a buyer falling over with your only chance to recoup commission being getting the deposit (which could be below the commission) and damages.

On your point re agent losses, I agree, everybody is hurt by a sale falling over. However at minimum I think the pain should be equitably shared. I guess the question comes down to what you believe an agents role is...just to get you a binding offer or to help ensure a sale goes all the way.

Cheers,

 

[Aaron_C]

In Victoria the deposit paid will be 10% of the purchase price. So that will more than cover you if the purchaser defaults.

 

[DaveM]

Thanks Propertyunity, useful thread - I wonder if the REINSW uses the same standard contract as REIVC.

A further question if I might, the t's and c's list as the trigger for an agents entitlement to a commission as the property being sold and states that ""sold" is the result of obtaining a binding offer" . I'd have thought that "settlement" should be the trigger to pay an agent - lest you pay commission and run the risk of a buyer falling over with your only chance to recoup commission being getting the deposit (which could be below the commission) and damages.

On your point re agent losses, I agree, everybody is hurt by a sale falling over. However at minimum I think the pain should be equitably shared. I guess the question comes down to what you believe an agents role is...just to get you a binding offer or to help ensure a sale goes all the way.

Cheers,

If a buyer goes unconditional and then cant complete due to finance, thats not the agents fault. Its not like they are asking for commission during the cooling off period.

If you keep the purchasers 10% then there is more than enough to cover the agents 2-3%, plenty to keep for yourself, and stick the house back on the market again and keep your bonus cash.

 

[vendoradvocacy]

- the period (after the exclusivity period) that the Agent can claim a commission if someone they 'introduced' to the property purchases it. The provision is reasonable, but question whether things like the period (4 months), and definition of 'Introduced' are normally negotiated.

If the agent introduces a buyer during their exclusive period, they have 120 days following the end of the authority to be able to claim commission on that buyer

- the Agent is entitled to receive professional fee's (including commission) from the deposit if a purchaser does not complete a sale. Often the deposit will only be around the size of the commission (in this case 10k) so the agent gets covered but not the vendor who has lost time and money.

If a sale is made the agent is entitled to their commission, if the purchaser does not complete the sale is comes from the deposit

Do people normally accept or negotiate terms such as these?

In 10 years, no one has ever bought this up

Any other 'standard terms' people would not normally accept? e.g. giving your agent POA to get deposit money from your solicitor or conveyancer for the agents professional fees etc.

If you dont trust agents, you should get someone who can protect you

Thanks for any advice.

 

[Terryw]

I sold some properties in VIC a few years ago and removed the clause about paying the commission if the property doesn't settle.