Scott's Weekly Column

Double Commissions?

If a property has been listed for sale for some months and the agency period has expired, some property owners will elect to change real estate agents to try and get their property sold.

It is the owners legal right to do this and there is no problem in changing to another real estate agent if the proper steps are followed.

The owner must first ensure their agency agreement with Agent 1 has expired, they must cancel this agency in writing and then they are free to sign a new agency agreement with agent 2. If a potential buyer who previously inspected the property with Agent 1 subsequently purchases the property Agent 1 has no legal position to claim commission from the property owner. Some misinformed agents will try and claim that the owner has put themselves in a position where they may have to pay double commission if an old buyer returns however this is not the case.

The law is quite clear, simply introducing a buyer to a property is not the basis of a claim for commission, and an agent must be the effective cause of sale to be paid. Unless a deal has been formally agreed to with a clear understanding on price, terms and conditions before their agency agreement was cancelled then Agent 1 has no right to be paid. Furthermore Agent 1 cannot continue to talk to the buyers OR the property owner as they have no legal agreement to offer the property for sale. In fact the only way Agent 1 can continue to talk with the buyer and offer the property for sale would be if Agent 2 (the new agent) has given them a signed conjunction agreement where both parties agree to share the commission.

If you are selling a property and have changed agents and your old agent has told you they will claim commission if a previous buyer returns I would recommend that you call the REINSW legal counsel or NSW Dept. Fair Trading to report the matter and seek their advice.

Have a great weekend!