Holding open homes, getting the right price, moving, and finding another property can all be stressful.
Before you embark on that process there is one important matter that should be given some serious thought, and that is the terms of the listing authority (or agency agreement) with your real estate agent (“the contract”).
When you list your property for sale with a real estate agent, you will be required to sign some paperwork. The documents authorise the agent to act on your behalf to market the property to potential purchasers and detail the costs you will incur for the service provided.
You may not be aware that once the agreement is unconditional, standard contracts will:
- Entitle the agent to receive payment of their commission; and
- Authorise the agent to receive the deposit from the purchaser and deduct their commission from those funds.
What happens though, if, through no fault of your own, an unconditional agreement does not proceed to settlement?
The contract entitles the agent to be paid the commission even though the sale is not completed. If the deposit was not sufficient (or no deposit had been paid) you could be out of pocket and left to find another purchaser of your property.
You may be able to take legal action against the purchaser for the loss suffered but this will take time and, depending on the financial circumstances of the purchaser, it may be ineffective. While we realise that some real estate agents may not insist on payment of commission in these circumstances, they usually have the legal right to do so.
How can you protect yourself from this risk? The answer is simple. Drop the listing authority into our offices (or email or fax it to us) so that we can check and amend the document for you.
What will we do once we have the authority? While we appreciate the hard work undertaken by real estate agents in finding a buyer, we will recommend that commission is only payable on settlement of the sale. We also realise that your relationship with your agent is important, so we will always discuss any amendments to the contract with your agent prior to making them.
Our legal executives are experienced in checking and amending these listing authorities, so leave your listing authority with us to check for your peace of mind.
Keep an eye on our future articles and newsletters for more information and matters to consider when selling or buying a property.
Written by Elise Hayes
The information in our articles is general information only and does not constitute legal or other professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article - including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.