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I agree with your husband and disagree with the agents who have responded. I have negotiated a number of listing agreements (both for myself and for my clients), and I always strike that provision. And I've never had an agent refuse to list the house because of it. From the seller's (your) perspective, the commission should only be paid if the sale closes. Not in any other scenario.
There simply are too many potential ways that a deal could fall apart, and it is not in your best interest to be pressured to close the transaction only because you think you might have to pay your agent a commission if you don't. Just imagine that something that is outside of your control has gone terribly wrong, and you are not able to close the sale. Maybe the buyer is being a complete jerk and underhanded, isn't technically violating the contract but is taking advantage of you. Maybe your house burns down. Maybe there is a lawsuit that prevents the sale for some reason. Maybe you or your husband have a serious illness or injury and are not physically able to move. In all of these situations (and countless others) you will have enough stress deciding what to do vis a vis the buyer without being scared that you might end up having to pay a commission if you decide to terminate the deal.
What if the buyer loses their job or can't close for other reasons? I know some agents say that would mean the buyer isn't "able." But do you want to have to fight over it? The provisions I've seen don't say that the closing actually has to occur. They often say that as soon as the agent finds a buyer who is ready, willing and able, you owe a commission... no exceptions for situations where the buyer ceases to be ready, willing or able at a later date.
What if you get 5 offers at list price the first day and decide that you've seriously underpriced? You don't accept any thinking you can raise the price and get more. Your strategy doesn't work, and all the sudden you don't have any buyers, but your agent has a commission.
Some people might say that those things are very unlikely to happen. Very true. But the contract is not there to address the sale that goes through without a hitch. It's there to protect you (and the agent) when things go wrong.
Your relationship with your agent is, in no small part, based on mutual trust. You have to trust that your agent is going to work hard for you and not just use your listing to get more clients, and your agent has to trust that you actually want to sell your house. What happens if your agent is lying to you and doesn't work hard for you? Nothing - you lose opportunities and time (= money). If you're really lucky, you can catch them doing something really bad and terminate. You'll probably have a fight on your hands with the broker unless the agent was really agregious. That is a risk you take. It is not unreasonable to expect the agent to also take a risk, the risk that you are a serious seller.
Under no circumstances would I ever agree to pay a commission unless the sale actually closed.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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Geez Willy, my understanding of a bilateral contract is a promise for a promise (the mutuality of trust you refer to). If I do my part (my promise to produce the ready willing and able buyer) and the seller backs out of the contract for no good reason, I think I've earned my commission. (the sellers promise to me).
In my case, if the seller experienced a situation where he couldn't close due to some unforeseeable circumstance, I wouldn't press for the money even though I had earned it as I would think that would be the ethical thing to do. being reasonable and prudent is what I would try to strive for.
Striking that clause would make me wonder if the seller was just "testing the market" at my expense, something I'm not willing to do.
I agree with your husband and disagree with the agents who have responded. I have negotiated a number of listing agreements (both for myself and for my clients), and I always strike that provision. And I've never had an agent refuse to list the house because of it. From the seller's (your) perspective, the commission should only be paid if the sale closes. Not in any other scenario.
There simply are too many potential ways that a deal could fall apart, and it is not in your best interest to be pressured to close the transaction only because you think you might have to pay your agent a commission if you don't. Just imagine that something that is outside of your control has gone terribly wrong, and you are not able to close the sale. Maybe the buyer is being a complete jerk and underhanded, isn't technically violating the contract but is taking advantage of you. Maybe your house burns down. Maybe there is a lawsuit that prevents the sale for some reason. Maybe you or your husband have a serious illness or injury and are not physically able to move. In all of these situations (and countless others) you will have enough stress deciding what to do vis a vis the buyer without being scared that you might end up having to pay a commission if you decide to terminate the deal.
What if the buyer loses their job or can't close for other reasons? I know some agents say that would mean the buyer isn't "able." But do you want to have to fight over it? The provisions I've seen don't say that the closing actually has to occur. They often say that as soon as the agent finds a buyer who is ready, willing and able, you owe a commission... no exceptions for situations where the buyer ceases to be ready, willing or able at a later date.
What if you get 5 offers at list price the first day and decide that you've seriously underpriced? You don't accept any thinking you can raise the price and get more. Your strategy doesn't work, and all the sudden you don't have any buyers, but your agent has a commission.
Some people might say that those things are very unlikely to happen. Very true. But the contract is not there to address the sale that goes through without a hitch. It's there to protect you (and the agent) when things go wrong.
Your relationship with your agent is, in no small part, based on mutual trust. You have to trust that your agent is going to work hard for you and not just use your listing to get more clients, and your agent has to trust that you actually want to sell your house. What happens if your agent is lying to you and doesn't work hard for you? Nothing - you lose opportunities and time (= money). If you're really lucky, you can catch them doing something really bad and terminate. You'll probably have a fight on your hands with the broker unless the agent was really agregious. That is a risk you take. It is not unreasonable to expect the agent to also take a risk, the risk that you are a serious seller.
Under no ordinary circumstances would I agree to pay a commission unless the sale actually closed.
So you contend that a listing agent should take the listing, market the property, produce a buyer, go through the process to get to closing, and then, just before the close, if the seller says, "ya know, never mind, I've decided I want to stay" that the agent shouldn't be paid for doing what they were hired to do? And, while that circumstance is indeed rare, you feel an agent shouln't requre protection from that circumstance? Remember, if the buyer backs out, then a ready willing & able buyer hasn't been produced, and no commission would be due. This clause protects the agent from having the seller back out at the last moment & leaving the agent with nothing for his work. Why would any agent or brokerage agree to that? My feeling is that the seller is more than welcome to stay in their house, and no one can force them to sell it, but I did what I was contracted to do so you need to pay me for that.
Geez Willy, my understanding of a bilateral contract is a promise for a promise (the mutuality of trust you refer to). If I do my part (my promise to produce the ready willing and able buyer) and the seller backs out of the contract for no good reason, I think I've earned my commission. (the sellers promise to me).
In my case, if the seller experienced a situation where he couldn't close due to some unforeseeable circumstance, I wouldn't press for the money even though I had earned it as I would think that would be the ethical thing to do. being reasonable and prudent is what I would try to strive for.
Striking that clause would make me wonder if the seller was just "testing the market" at my expense, something I'm not willing to do.
And what if you don't do your part - you don't use reasonable, good faith efforts to sell the home (or whatever vague, squishy, nebulous obligations most agents assume in the listing agreement)? Nothing. Why should you have this super remedy of getting 100% of your compensation if the buyer pulls out, but the buyer gets squat if you don't perform?
So you contend that a listing agent should take the listing, market the property, produce a buyer, go through the process to get to closing, and then, just before the close, if the seller says, "ya know, never mind, I've decided I want to stay" that the agent shouldn't be paid for doing what they were hired to do? And, while that circumstance is indeed rare, you feel an agent shouln't requre protection from that circumstance? Remember, if the buyer backs out, then a ready willing & able buyer hasn't been produced, and no commission would be due. This clause protects the agent from having the seller back out at the last moment & leaving the agent with nothing for his work. Why would any agent or brokerage agree to that? My feeling is that the seller is more than welcome to stay in their house, and no one can force them to sell it, but I did what I was contracted to do so you need to pay me for that.
I understand your feeling. And I don't think it's unreasonable. As a seller, I have to protect my interests, and your method doesn't do it. But it does protect your interests.
IMO, it's incumbent on the agent to interview the seller just as much as the seller should be interviewing the agent. You and I both know that the seller won't have any recourse if you just sit on his listing, other than - in the best case scenario - terminating and chalking up all the lost time, opportunities and buyers to their poor choice in agents. Why should the seller take that risk?
I understand your feeling. And I don't think it's unreasonable. As a seller, I have to protect my interests, and your method doesn't do it. But it does protect your interests.
IMO, it's incumbent on the agent to interview the seller just as much as the seller should be interviewing the agent. You and I both know that the seller won't have any recourse if you just sit on his listing, other than - in the best case scenario - terminating and chalking up all the lost time, opportunities and buyers to their poor choice in agents. Why should the seller take that risk?
Because the seller wants me to do a job for him. If he hires me, then I have demonstrated at least enough skill to convince him I can get the job done. If you as a seller want to ask me to put in some protections against me doing nothing, then by all means feel free to ask. I know that I wouldn't have any issue with it. I'll write in a set of minimum efforts if that will make you happy. But I can't let you have the ability to use all my work & time, then leave me with nothing for it.
The other thing you & I understand is that this is mostly an acedemic discussion. I don't think that there is or will be a rash of homesellers suddenly backing oout of the contract that appears ready to closde.
And what if you don't do your part - you don't use reasonable, good faith efforts to sell the home (or whatever vague, squishy, nebulous obligations most agents assume in the listing agreement)? Nothing. Why should you have this super remedy of getting 100% of your compensation if the buyer pulls out, but the buyer gets squat if you don't perform?
I contend that if the BUYER pulls out, the seller would owe their agent nothing, even with the clause in place. If the BUYER pulls out, then we do not have a ready willing & able buyer. The clause is there to protect the agent from the SELLER pulling out at the last moment. Which he's more than welcome to do, but he has to understand that he is the only reason for the transaction falling apart, and that his agent did his job.
I contend that if the BUYER pulls out, the seller would owe their agent nothing, even with the clause in place. If the BUYER pulls out, then we do not have a ready willing & able buyer. The clause is there to protect the agent from the SELLER pulling out at the last moment. Which he's more than welcome to do, but he has to understand that he is the only reason for the transaction falling apart, and that his agent did his job.
What if the buyer demands repair concessions after inspections and threatens to walk if the seller doesn't agree? Not a willing buyer, right? But what if the seller agrees to reduce the price. Then you have a willing buyer, right? But what if the seller later decides that they gave up too much in concessions and pulls out? Now you have a situation where the agent brought a buyer who is not willing to pay the price for which the seller originally (and currently) wants to sell the property. Did you produce a ready, willing and able buyer?
I don't disagree with you on your original interpretation, but the typical provision is written so that all of the gray areas tend to favor the agent.
You say that you're more than willing to include specific obligations on the agent, and I'm equally willing to identify specific situations where the transaction doesn't get to closing and the agent still gets paid: if the seller, for no reason at all, pulls out of a contract for list price with no concessions, just because they have changed their mind and no longer want to sell, I'm willing, as a seller, to pay a commission.
Now, now. That could just as easily be the answer to your question about why an agent would agree to striking the provision: because the agent wants a listing / commission.
Quote:
Originally Posted by Bill Keegan
If he hires me, then I have demonstrated at least enough skill to convince him I can get the job done.
If you take the listing, the seller has demonstrated at least enough sincerity to get you on board.
Quote:
Originally Posted by Bill Keegan
The other thing you & I understand is that this is mostly an acedemic discussion. I don't think that there is or will be a rash of homesellers suddenly backing oout of the contract that appears ready to closde.
Totally agree. I think that is why I haven't had any resistance to striking that provision. Seller's aren't out there to waste their time either. (Of course, that's what I get paid for - to identify the nasty situations and try to protect my client from them. Most folks think it's a waste of time, until the nasty happens and they wonder why they are exposed.)
What if the buyer demands repair concessions after inspections and threatens to walk if the seller doesn't agree? Not a willing buyer, right? But what if the seller agrees to reduce the price. Then you have a willing buyer, right? But what if the seller later decides that they gave up too much in concessions and pulls out? Now you have a situation where the agent brought a buyer who is not willing to pay the price for which the seller originally (and currently) wants to sell the property. Did you produce a ready, willing and able buyer?
In the situation described there was no "meeting of the minds", a price reduction and a repair are two completely different things and until both parties agree to terms there is no RW&A buyer. If the seller agreed to concessions, the buyer agreed to concessions, the contract was executed and the seller all of a sudden things they gave up to much...well one they should stop listening ot uncle Ned in Singapore about what he things their house is worth....and two this is the reason for the clause in the first place. As a seller you must make your decision BEFORE signing any sale contract. I won't get into the myriad reasons and other legal ramifications backing out of a signed contract causes.
I don't disagree with you on your original interpretation, but the typical provision is written so that all of the gray areas tend to favor the agent.
You say that you're more than willing to include specific obligations on the agent, and I'm equally willing to identify specific situations where the transaction doesn't get to closing and the agent still gets paid: if the seller, for no reason at all, pulls out of a contract for list price with no concessions, just because they have changed their mind and no longer want to sell, I'm willing, as a seller, to pay a commission.
If you are willing in that case, then why not have that in the agreement? That is what that clause in there for, not to cheat a seller out of a commission if something doesn't close
I can't find who said it right now, but if you don't trust your agent enough to know they won't sue you for commission if something unforseen happens and you genuinely CAN"T sell, then find another agent you CAN trust. I would not strike that clause, there is a far higher chance a seller will default on a contract because of "changing their mind" or discriminatory reasons than a sudden calamity that keeps a seller from being able to sell at the exact moment a RW&A buyer appears....remember you can always cancel your listing or take your property off the market.
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