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Hi,
We are about ready to list our house but want to make a few changes on the Listing Agreement (standard Coldwell Banker agreement).
The biggest hitch my husband has with signing is the clause that says if our agent brings a ready, willing and able buyer and we refuse to sell we still have to pay commission. He wants to exclude that clause. I understand why an agent would want it included - they are still doing all the work, etc - but my husband is having a big problem with it.
A couple of questions then:
1) must the buyer be prepared to pay full listing price ONLY with no contingencies upon their offer to meet the terms of this clause?
2) will our agent freak if we ask to have this clause removed?
3) if we can't exclude it (i.e. no decent agent would agree to those terms) then can we modify it such that we pay a flat fee, say $2000, if we refuse to sell to a ready, willing and able buyer?
Thanks so much for your advice. This is such a nerve-wracking process!
That doesn't sound right at all. How are they defining "Ready, Willing, and able buyer" in the contract?
What if someone comes along and offers $1?
A ready willing & able buyer, for the purposes of most real estate contracts, is one that agrees to buy your property under the terms you have set forth, either in the listing agreement or in some offer/counteroffer to them, and has the financial & legal ability to do so. Offering a dollar is not seen as being willing. In fact, offering anything less than full price is not seen as being willing, unless & until you accept said offer.
The purpose of the clause is to protect the agent, and the brokerage, from you deciding you don't want to sell the house after they have done all the work & produced the buyer. What the clause is saying is that if they do everything they are supposed to do, they bring you a contract that meets your stated requirements, and you refuse to close, they have the right to demand payment anyway.
Yes, you can ASK to alter that clause, and to put in a fixed amount if that's what you like. As with any other contract for service, you can negotiate anything you want. If they agree to it, good for you.
The listing agreement states the price you will accept.
If the offer is one cent below that then that is not considered a ready, willing and able buyer.
I have never had anyone question that clause but it could be it was not fully explained to you.
Bill is 100% correct. There are a whole bunch of people that "change their mind" about selling altogether. The clause is meant to weed them out. If you are sure that you will accept an offer for 100% of list the clause should not scare you.
Instead of worrying about the clause put more effort into pricing.
Hi,
We are about ready to list our house but want to make a few changes on the Listing Agreement (standard Coldwell Banker agreement).
The biggest hitch my husband has with signing is the clause that says if our agent brings a ready, willing and able buyer and we refuse to sell we still have to pay commission. He wants to exclude that clause. I understand why an agent would want it included - they are still doing all the work, etc - but my husband is having a big problem with it.
A couple of questions then:
1) must the buyer be prepared to pay full listing price ONLY with no contingencies upon their offer to meet the terms of this clause?
2) will our agent freak if we ask to have this clause removed?
3) if we can't exclude it (i.e. no decent agent would agree to those terms) then can we modify it such that we pay a flat fee, say $2000, if we refuse to sell to a ready, willing and able buyer?
Thanks so much for your advice. This is such a nerve-wracking process!
-Kate (in MA)
You don't HAVE to sell anything to anyone. No mater how able, willing and ready they are. You can always refuse the contract with no penalty to you. What the clause is saying is that *if* you accept a contract and under the terms and conditions of that contract the buyer is "able, willing and ready" then you owe the agent her commission based upon your listing agreement.
But nobody can FORCE you to sell. Now mind you, if your agent DOES find you someone who is what you are looking for and you decide (for whatever reason NOT to sell it to them), then he/she is going to be pretty ticked off at you, but still, even so, she cannot FORCE you to accept a contract. So tell your husband to chill out about it. LOL
The clause is about seller's remorse and covers discriminatory issues as well. If they brought a buyer to you at full price with no contingencies but the buyers were a gay couple and you decided you didn't want to sell to a gay people, then you would owe them their commission.
If you have an accepted contract and a week before close decide you don't want to move after all...you get to pay the agent their commission.
I am ok with have the clause in there and I think I will just need to talk my husband down from his anxiety over it. We have every intention of selling. He's afraid of having to pay someone $30K if we don't sell. That's a big chunk of money. But the conditions seem defined enough to be reasonable. I can't imagine NOT selling if someone offered us list price with no contingencies.
I'd never thought of the discrimination angle, but that makes sense too.
I'm just crossing my fingers three-fold that we are lucky enough to find a buyer in the first place!
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.
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thanks
