When do the REAs get paid?

[Legionarie]

Just curious when the real estate agents get their commission? Is it after the sale has been closed? Is it after deposit has been paid? Is it after settlement?

Knowing how/when they get their commission might help in negotiating (not sure yet how, but...)

Thanks

 

[Perp]

They become entitled to their commission when the contract becomes unconditional, but by convention they usually don't collect the commission until settlement. They can demand payment of their commission from the vendor at any time after the contract becomes unconditional. (This protects them in instances where the sale fails to complete.)

 

[Propertunity]

Knowing how/when they get their commission might help in negotiating (not sure yet how, but...)

No, I'm not sure how either.......in fact I'm pretty sure it's quite irrelevant

What Ozperp said is right. They pick it up on settlement or if it fails to settle - sometime after the legal battles - but it must have exchanged.

 

[RightValue]

They become entitled to their commission when the contract becomes unconditional, but by convention they usually don't collect the commission until settlement. They can demand payment of their commission from the vendor at any time after the contract becomes unconditional. (This protects them in instances where the sale fails to complete.)

Which is why the full deposit must be paid BEFORE a contract becomes unconditional .. minimum deposit should be at least commission and expenses .. say 5% ..

cheers

RightValue

 

[urban cowboy]

No simple answer to this as it depends on the contract conditions, type of contract, state laws and negotiations with the vendor.

Tracey's comments certainly are the norm, but there a dozen different scenarios regaring payment of comms.

No it won't help you negotiate as you are unlikely to ever know the details of the comms payment & no agent would tell you info like that.

 

[wylie]

Which is why the full deposit must be paid BEFORE a contract becomes unconditional .. minimum deposit should be at least commission and expenses .. say 5% ..
RightValue

Is this right? I think we have paid less than "normal" (10%?) deposit in the past and not topped it up prior to unconditional status. In fact we generally go in with a clean contract, so there is no time prior to it becoming unconditional.

UC, can you clear this one up? I am sure we have not had two brass razoos to rub together at times we have put deposits together in the past, and have relied on equity to get us over the line, so I am curious about this one.

 

[Frizzle]

Minimal deposit amounts accepted

Legionarie, I have seen contracts where the buyer's deposit barely (and sometimes, not even) covered the 0.25% penalty amount if terminating in the cooling off period .... and more often than not, these contracts went through quite smoothly.
Frizzle

 

[moyjos]

I too have bought houses without paying a full deposit. I can think of two where I know we only paid $1000 and the rest at settlement. (back in the days off 100% loans)

I will have to ask my broker about this one, as I am looking at buying again and am relying on equity.

 

[Perp]

I agree with wylie and moyjos; your deposit can be tiny. I try never to pay more than $500. The agent may try and push it up, but it's up to the vendor. The agent gets paid in any case, if the contract goes unconditional, and if the deposit is inadequate to cover commission, that's the vendor's risk.

 

[urban cowboy]

there is no requirement in QLD under law for any particular amount of deposit. can't speak for other states...

I have taken contracts for multi-million dollar properties with a dollar deposit. I have also taken 50% deposit, but that creates its own headaches as it is lawfully regard as part payment of the contract when over 10% (i think...too much red wine to be sure.)

The whole 5% thing comes about as generally it would cover all the agents commissions and marketing expenses that haven't yet been paid for. Even though the agent must keep it in a trust account, they still have a sort of control over its release. The point is - as the buyer that is not your problem!!

my advice - take it or leave it - never be bullied into paying more of a deposit than you are comfortable with. but remember that the more deposit you put forward (for some reason) tends to indicate how serious you are about the property. Never could figure out the logic with that, but it is true.

hope this helps...

cheers
UC

 

[Perp]

I have also taken 50% deposit, but that creates its own headaches as it is lawfully regard as part payment of the contract when over 10% (i think...too much red wine to be sure.)

Quite right; over 10% deposit and the buyer has additional rights and can extend settlement etc... bad for the vendor, not the buyer!

 

[Peterw]

It is very interesting, how the legislation varies from state to state. The main act that covers agency, has the biggest variations. In Vic, if my memory serves me correctly, the agents can take their commission from the deposit in the trust account, when the contract becomes unconditional. That is why they go for the bigger deposits. Under basic "law of contract" no deposit is necessary, however as a seller, I am not sure I would accept an offer that has no deposit, or a minor one. If the buyer does not proceed, all I am left with is litigation, and that is expensive, and uncertain. The other piece of legislation that impacts, is the "Land Sales Act", which I think is a bit more similar, as it come from our Westminister ancestory. That is where the problem of greater than 10% deposit comes in.
So, back to the original poster, I would think in Victoria when the agent gets commission earlier, a higher deposit may make you offer get stronger legs.
regards
Peter Weiss

 

[JDM]

It is very interesting, how the legislation varies from state to state. The main act that covers agency, has the biggest variations. In Vic, if my memory serves me correctly, the agents can take their commission from the deposit in the trust account, when the contract becomes unconditional. That is why they go for the bigger deposits. Under basic "law of contract" no deposit is necessary, however as a seller, I am not sure I would accept an offer that has no deposit, or a minor one. If the buyer does not proceed, all I am left with is litigation, and that is expensive, and uncertain. The other piece of legislation that impacts, is the "Land Sales Act", which I think is a bit more similar, as it come from our Westminister ancestory. That is where the problem of greater than 10% deposit comes in.
So, back to the original poster, I would think in Victoria when the agent gets commission earlier, a higher deposit may make you offer get stronger legs.
regards
Peter Weiss

Is anyone aware of what happens if the agent draws their commission from the deposit upon unconditional and the contract is then terminated upon a breach of the Seller thus entitling the Buyer to a refund of their deposit?