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Old 08-11-2012, 04:10 PM
 
397 posts, read 494,063 times
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Quote:
Originally Posted by Captain Bill View Post
I do see see that as being fair, however, I also stated that I would not want that for myself. As long as the seller is going to continue with my listing and sell the home there is no need for me to want that
Then why dont you stipulate that in your LA. What if the listing period ends and the seller doesn't renew? Would you then use their EM as an incentive to continue listing with you. Seems like if you are keeping this EM "gem" in your LA just in case you need it...even though you would probably never use it. I am sure you discuss (with your seller) all the ways the seller can keep their EM if the buyer defaults.

Quote:
However, remember that it does not call for the agent to get half the EM. The EM goes to the seller.

In the case of the buyer default, the agent is entitled to the full commission, or an amount equal to 1/2 of the EM, whichever is less.
Under the ARMLS, and probably ever other LA out there, the EM is credited to the seller at closing. I get it.

However, if deal doesn't close to due the buyer ("buyer default"), the Broker gets 1/2 of EM. I really don't think most sellers realize this at the time they sign their LA. Sure it is in the legalese fine print, but even some agents on this thread seem to have missed that detail in the contract.

 
Old 08-11-2012, 04:11 PM
 
397 posts, read 494,063 times
Reputation: 210
Quote:
Originally Posted by Captain Bill View Post
It isn't. It is in study material on contracts that I have.

If you think it should be in there then contact the AAR legal counsel and make the request.
Not suggesting that it should, just wanted to make sure that readers understood the context within which your sellers are signing the LA.
 
Old 08-11-2012, 04:27 PM
 
Location: Salem, OR
13,764 posts, read 31,736,915 times
Reputation: 12151
Quote:
Originally Posted by RE Skeptic View Post

An agent may not want to collect commission in the scenario you described, but the contract is with the broker and they may think otherwise. If it is a given that broker would not enforce, why not stipulate in contract?

The broker would only do so if they want to take the risk. The MLS rules require a buyer agent compensation to be paid out for procuring a buyer. if the seller breaches the contract mid transaction, the buyer agent has a case to collect commission from the listing agent. There is no way a listing agent will expose themselves to potentially having to pay out a fee without having any means to collect it from the seller. By leaving it open, the broker has the ability to collect if needed.
 
Old 08-11-2012, 04:31 PM
 
Location: Gilbert - Val Vista Lakes
6,069 posts, read 12,723,665 times
Reputation: 3810
Quote:
Originally Posted by RE Skeptic View Post

...However, if deal doesn't close to due the buyer ("buyer default"), the Broker gets 1/2 of EM. I really don't think most sellers realize this at the time they sign their LA. Sure it is in the legalese fine print, but even some agents on this thread seem to have missed that detail in the contract.
No, "Owner shall pay a brokerage fee equal to the lesser of one-half of the earnest deposit or the full amount of the commission".

There are many cases where the EM is greater than the commission. One transaction where I was the buyer agent on a $1+mil home, the listing agent commission was $1,000. (one thousand). The EM was $10,000.

You don't know what most sellers realize. You're assuming that most sellers are stupid or illiterate. That is not the case.

There is no "fine print".

FAILURE TO COMPLETE is in all caps and bolded. All the text is the same size, very readable.

You can say what you like to rant about Realtors, (and that is obviously your sole purpose here) but there is never an excuse for anyone to not read and understand a contract.

In very large all cap letters just above where the owner signs it says:

..."BY SIGNING BELOW, OWNER ACKNOWLEDGES THAT HE HAS READ, UNDERSTANDS AND ACCEPTS ALL TERMS AND PROVISIONS CONTAINED HEREIN AND THAT HE HAS RECEIVED A COPY OF THIS LISTING"...
 
Old 08-11-2012, 04:37 PM
 
Location: Salem, OR
13,764 posts, read 31,736,915 times
Reputation: 12151
Quote:
Originally Posted by RE Skeptic View Post
If the seller changes his mind, he is not breaching contract,
Yes he is. Changing your mind isn't a contingency in the contract. It is a breach, unless the seller specifically retains the right to change his mind about the sale. That is kind of the point of contracts. You agree to honor the terms. If the seller's job fell though and they are under contract, they need to sell their home to the buyer and honor the terms, or attempt to cancel the sale if the buyer agrees. They would still owe compensation to the agents since the agents did what they contracted to do, which was to procure a buyer. I actually had that happen once, but the transfer feel through while we were considering the offer so it was never executed. I agreed to terminate for a certain fee.


Quote:
Originally Posted by RE Skeptic View Post
As for the EM, this refers to buyer default not seller default.

I think you are reading this clause incorrectly.
Yes I was. I assumed I was reading a clause about seller failure to complete. Ours are separate clauses out here.
 
Old 08-11-2012, 04:48 PM
 
Location: Gilbert - Val Vista Lakes
6,069 posts, read 12,723,665 times
Reputation: 3810
Quote:
Originally Posted by RE Skeptic View Post
Not suggesting that it should, just wanted to make sure that readers understood the context within which your sellers are signing the LA.
The listing contract in 6g FAILURE TO COMPLETE actually makes it very clear that if the seller defaults, he owes the commission.

It was being pointed out that losing a job transfer is not a valid reason to cancel a contract. The buyer can sue for specific performance compelling the seller to carry out the terms of the contract. The buyer can also cancel the contract and sue for compensatory damages plus get earnest money refunded.

However, in the AZ Purchase Contract, buyer and seller agree to Alternative Dispute Resolution, which first is mediation, and if that does not work, then arbitration. After the mediation, either party may opt out of arbitration and can go to court.

Alternatively, if the disputed amount is not over $2,500, either party may elect to go to small claims court.
 
Old 08-11-2012, 04:59 PM
 
Location: DFW - Coppell / Las Colinas
30,044 posts, read 34,794,485 times
Reputation: 36122
Quote:
Originally Posted by RE Skeptic View Post
My point exactly. The LA commits the seller to pay commission even if a job transfer falls through. Some would argue that this is a "legitimate reason". Was just responding to Silverfall's statement that implied a "legitimate reason" would relieve the seller of commission payment.
In most states, If the house was under contract and the seller defaulted and walked away from the the contract the seller

1. Could be sued by the buyer to enforce the contract to close or damages and
2. The broker could go after the seller for the commission.

So yes, if the Broker has performed and fulfilled their obligation under the contract. If the seller defaults they may owe the money. It actually does not matter the reason such as losing a job.

As Bill and others have mentioned multiple times, whether the Broker goes after the Seller would be determined by the factors involved. They may not do it but they have the right.

The Broker going after a defaulting seller is rare, usually it's the Buyer bringing a suit to enforce performance or seeking damages. Sellers facing Buyer enforcement of the contract normally forces the seller to move forward and close on the house.

Yes, there have been sellers who've gotten cold feet but move forward, fulfill their contract and close. If extenuating circumstances arise usually a Buyer and all parties are understanding, release the seller and accept some type of $$ for time and effort. But not always.

Whether you like it or not, or think it's Fair... that's the way it works.
 
Old 08-11-2012, 10:12 PM
 
397 posts, read 494,063 times
Reputation: 210
Quote:
Originally Posted by Silverfall View Post
Yes he is. Changing your mind isn't a contingency in the contract. It is a breach, unless the seller specifically retains the right to change his mind about the sale.
Silverfall,
You did not quote my whole sentence:

"If the seller changes his mind, he is not breaching contract, but according to this LA, would owe the Broker the commission."

The typical LA obligates the seller to pay commission if certain criteria are met. If the seller backs out of a deal he is not in breach as long as he pays the commission stated in the contract. The LA is really more about the seller paying the Broker than actually selling the house.
 
Old 08-11-2012, 10:47 PM
 
Location: Needham, MA
6,342 posts, read 9,114,084 times
Reputation: 5329
Quote:
Originally Posted by RE Skeptic View Post
Silverfall,
You did not quote my whole sentence:

"If the seller changes his mind, he is not breaching contract, but according to this LA, would owe the Broker the commission."

The typical LA obligates the seller to pay commission if certain criteria are met. If the seller backs out of a deal he is not in breach as long as he pays the commission stated in the contract. The LA is really more about the seller paying the Broker than actually selling the house.
When Silverfall is saying the seller is in breach she's referring to the purchase contract not the listing agreement. I just want to make sure we're all on the same page in regards to that.

If you went to your mechanic and said fix my car and then changed your mind as he was finishing the repair wouldn't you feel the mechanic is due their fee? The point is that the job the professional was hired to do got done. You do a job successfully then you deserve to get paid. If you flake out you still owe a fee. The job still got done.
 
Old 08-11-2012, 11:04 PM
 
Location: DFW - Coppell / Las Colinas
30,044 posts, read 34,794,485 times
Reputation: 36122
Quote:
Originally Posted by MikePRU View Post
When Silverfall is saying the seller is in breach she's referring to the purchase contract not the listing agreement. I just want to make sure we're all on the same page in regards to that.
This has been clearly explained to him multiple times. He just does not want to accept since it does not fit his argument.
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