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Listing Agreement Is The Key To Agent's Commission

Ask the Real Estate Lawyer: Real Estate Law Q&A

REM # LAW 691

By Ilyce R. Glink and Samuel J. Tamkin

Summary: A reader has dismissed their original agent only to have their new agent work with one of the original buyers. Now who gets the sales commission? Ilyce and Sam explain that the listing agreement or termination agreement will hold the key to this confusing situation.

Q: We recently decided to sell our house. We hired broker A and got one low-ball offer from client A. We fired broker A after poor service.
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She agreed to end the contract as long as we included a stipulation that if client A came back with an acceptable offer she was entitled to her commission.

After we were released from our listing agreement with agent A, we hired broker B. Now client A is working with a new agent, agent C, and has made us an offer on our home.

Broker B was told of our situation with broker A. If we sell to client A, do we owe a commission to broker B? Should agent C have even been allowed to tender an offer to us since her clients previously worked with agent A?

A: In a short period of time, you sure have met lots of agents. Obviously, the ultimate goal in a residential real estate transaction is to have a happy seller and a happy buyer.

Most, if not all, listing agreements will state that the listing agent is owed a commission if the homeowner sells the home to anybody that saw the home while the home was listed. Some listing agreements will carve an exception to this rule by stating that the commission will not be owed the original listing broker if the home is listed with and sold through another broker.

You need to determine whether your listing agreement or the termination agreement has a clause that would avoid you from having to pay the first broker a commission.

If you have no exclusion to the listing agreement and it seems that the language in the documents require you to pay the first broker a commission, you then need to make sure that you will only pay one commission in the transaction. Prior to signing with this buyer, you need to sit down with your current listing broker and determine how to proceed.

Your current listing broker may wish to get a waiver of a commission owed to the first broker or decide to share the commission with the first broker in some manner.

But before you sign the contract, you should have all three agents and brokers agree in writing to the amount they will receive as a commission from the sale of your home.

You could sign the purchase/sale agreement without having this commission deal worked out, but you risk being sued by agent A for a commission owed. You may wish to consult with a real estate attorney in your area to look over the listing agreements and termination agreement and give you advice as to where you stand on the payment to the first broker.

Samuel J. Tamkin is a Chicago-based real estate attorney. Ilyce R. Glink’s latest book is 50 Simple Steps You Can Take To Sell Your Home Faster and For More Money In Any Market. If you have questions for them, write: Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022 or contact them through Ilyce’s website




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