Double commission a trap for home sellers

August 21st, 2012

Another complaint of ‘double commission jeopardy’ highlights a hole in the Real Estate Agents Authority complaints regime that could lead to more sellers getting caught up in rows between agents.

the authority found that Glenis Claydon, of Ponsonby Estate Agents ltd, breached a rule requiring her to inform a seller that they could be liable to pay commissions to two agencies.

Sellers can be up for two commissions if a buyer introduced by one agent then buys the property under the direction of a different agent.

the situation usually occurs when a seller has cancelled one agency contract and signed another, with the terms of any continuing liability set out in the contract or cancellation agreement.

the authority’s code of conduct also requires agents to explain such commission liabilities to their clients.

however, in her statement to the authority, Claydon said she told her client that there was ‘no risk’ of a double commission after their contract was cancelled.

‘I advised her throughout this process it would be one commission and that the splitting of it was entirely up to the two agencies concerned,’ Claydon told the complaints committee.

the issue was eventually settled between the two agencies, with 60 per cent going to the new agent and 40 per cent to Claydon. But a finding of professional misconduct was made irrespective.

the dispute followed a similar complaint by a Southland vendor pulled into a argument between two competing agents who had not informed him of the potential for a ‘double commission’.

the initial agent, who had not warned the client what would happen if an already interested buyer ended up buying the property, lost his commission and was censured and fined $1000.

Real Estate Institute of new Zealand chief executive Helen O’Sullivan said commission disputes were quite common but dealt with traditionally via her organisation’s mediation service.

Now that membership of the institute was not compulsory, the mediation service had lost some of its bite and the only way of airing such disputes was through its public complaints process.

‘These issues can get quite fraught from time to time . . . Ultimately, for real estate agents the standard terms and conditions are that you only get paid if you achieve a sale.

‘It can happen that you put in a lot of work in the 90 days that your agency agreement exists and then the property gets sold on the 92nd day to someone with whom you had been working.”

that was why most listing agreements provided for the original agent to be paid if this occurred, she said.

however, O’Sullivan advised sellers to read their contracts carefully and, if necessary, engage a lawyer at the start of the sales process.

‘Understand what you’re signing, don’t sign anything in a hurry, take independent advice.”

– © Fairfax NZ News

Double commission a trap for home sellers

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