August 2016 // Real Estate & Home Builders Guide // 17E
ARE SELLERS TRYING
TO GAME THE SYSTEM?
By Ilyce Glink
and Samuel J. Tamkin
Tribune Content Agency
A
Q
: You recently responded to
a question by a seller that
wanted to know whether a
listing agreement was valid if it
had no expiration date and asking
whether they could terminate it.
They also asked whether they could
proceed to sell to a buyer that saw
the place during the time the place
was listed.
I am a commercial real estate
broker, not a residential broker, but
I can still translate this for you.
Here is their real question:
“We have a buyer (brought to
us via the efforts of the broker)
who isn’t paying us as much as we
would have wanted and we think
we have found a way to make it
work -- not paying our broker! We
are also trying to not pay for legal
advice so we are writing you. We
noticed that someone forgot to
ill in the agreement date and we
are wondering if we can void the
contract on a technicality and get
out of paying the broker.”
Seems to me they likely have
a form that says the listing starts
on such and such date and expires
X days from the “date of the
agreement” and that the “date of the
agreement” blank was inadvertently
left blank (note their reference to
“undated”). This doesn’t sound
to me like an agent trying to rip
someone off with a “forever”
agreement given it has a start date.
Their letter doesn’t say we
signed this in May and was
supposed to be for X days but
we realize it has tricky wording
and never expires. If it is actually
a Realtor agreement (vs agent
prepared agreement), it is doubtful
THINKSTOCK IMAGE
that it is written to last forever
with no ability for them to cancel.
Their letter doesn’t say the agent
is bad. In fact, the letter says they
have a buyer; they want to sell to
the person that was brought via the
broker and they are worried the
agent will (rightfully) sue them over
it.
The short answer should have
been, “Morally, if you sell to
someone brought to you by the
agent, the agent should get paid a
commission. Legally it depends on
the words in your agreement and
your state’s law -- you will need
to pay an attorney to tell you if
can get away with ripping off the
broker. Finally and practically, no,
you cannot sell to someone brought
to you by the broker before the
agreement expired or you made any
efforts to terminate it and expect to
not pay the pay the broker and not
get sued.”
I wish the “wishes of luck” were
reserved for the poor agent who has
spent money and time marketing
their property that they are trying
to rip off.
: Thank you for your candid
observations. You may be
quite right about the motives
of that correspondent. You are also
right that in just about every case
we can think of, the seller of a home
would owe a commission to a listing
broker where the seller sells the
home during the listing agreement or
during the protection period after the
expiration of the listing agreement.
As we pointed out in our answer
to the reader, there are times that
some real estate agents overreach
and try to have it both ways. They
want to tie up the seller to the listing
and commission agreement but may
not perform as they have promised or
try to tie up that seller for a period of
time that may be unreasonable.
Your comment about the
“missing” date in the document may
be the right read. But on the odd
chance it isn’t, we have an obligation
to cover both sides of that issue. If
the document didn’t have a date, the
broker may have omitted it or the
document may have been drafted
improperly.
In either case, if the seller is
entitled to terminate the agreement,
the next issue is the protection given
to the listing broker. As you alluded
to, most listing agreements have a
protection period that allows that
broker to recover a commission if the
seller winds up selling the home to a
buyer that saw the home during the
time the home was listed.
In some markets, real estate
agents know that sellers may switch
brokers; and when they do, if the
seller lists the home with another
company, that company will get the
commission even if a buyer saw the
home during the time the home was
listed with the original broker. We
appreciate your letter and insights.