When is Commission Payable to An Agent Who Sells Your Property?- Rob Balanda

Under standard documentation, commission is payable by the Seller in a number of circumstances.

Firstly, if settlement takes place.

Secondly, if the Buyer defaults under the Contract and forfeits (loses to the Seller) their deposit money.

Finally, if the Buyer and Seller, for whatever reason, agree to simply release each other from the Contract and go their own ways.

In my opinion, a Real Estate Agent’s success is an “all or nothing” affair.

I believe they should only be paid if the matter proceeds to settlement.  I recommend that investors carefully read the fine print in the Agency Agreement and make alterations to provide that commission is only payable on settlement.

In my opinion, they are paid handsomely if this result is achieved.

Receiving commission if a deposit is forfeited to a Seller will usually result in the Seller receiving very little of the deposit monies with most of the deposit monies going to the Agent in payment of commission (particularly where the deposit in many transactions in todays market is not much more that the Agent’s commission in any case).

So too, if the Buyer and the Seller simply release each other from the Contract for whatever reason.[sam id=32 codes=’true’]

My last experience with this was where the male and female Buyers were both made redundant before the settlement of the purchase of their new home with no real prospect of re-employment.

In theory they were bound to settle the purchase but when they approached the Seller to let her know of their misfortune, the Seller responded at a human level by releasing them from their obligation under the Contract.

She lived in the same town as them and knew their redundancy and prospects of re-employment were real.

Why should an Agent be entitled to commission in these circumstances?

Don’t let the Agent’s greater negotiating and sales skills seduce you into agreeing to something different.

And don’t let the Agent dismiss your objection to this issue with the elegance and ease of a comment like “Oh, don’t worry about that, we would never charge you commission if the matter didn’t proceed to settlement.”

“Famous last words”, I say.

It reminds me of the medical staff in a bulk billing medical practice who are under pressure to push patients through when they say to you “Oh, don’t worry about it, it just looks like a rash to me.”



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Rob Balanda


Rob is a partner in the Gold Coast based law firm MBA Lawyers. He is a highly regarded educator of property investors and estate agents and the author of the "Made Simple" series of books and CD's.
Visit www.ClausesMadeSimple.com

'When is Commission Payable to An Agent Who Sells Your Property?- Rob Balanda' have 2 comments


    August 4, 2018 peter long

    If the deposit has been released before settlement can the real estate agent take their commission from the deposit ?


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