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$10,000 commission - no deal

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  • $10,000 commission - no deal

    $10,000 commission - no deal

    4:00AM Saturday Jul 18, 2009
    By Anne Gibson
    Kate Holgate and son Jack in front of a house she tried to buy in a 'part exchange' deal with her own house in Torbay. Photo / Paul Estcourt
    A North Shore house-hunter who lost money on a failed deal wants to warn others to avoid her fate.
    Kate Holgate and her partner signed a contract to pay cash and swap their Torbay house for a more expensive Long Bay house. Classic Real Estate, trading as The Professionals Mairangi Bay, got $31,000 commission of which Holgate paid $10,000.
    But the deal soured after the bank refused to discharge the mortgage on the Long Bay house and no transaction was completed.
    Holgate said the situation was unfair because she was left out-of-pocket, with no new house and with no one to complain to.
    After mid-November, property deals gone sour will go before the Government's new real estate agents authority which aims to bring independence, transparency and more power to consumers.
    The new Real Estate Agents Act 2008 removes many functions that the Real Estate Institute fulfils, overhauls the complaints system and axes the old law passed 32 years ago.
    Holgate said she had nowhere to turn apart from private litigation, more expensive than the $10,000 she has lost.
    "The crux of the issue - and very relevant to others in the current market - is that the agents deducted their commission before settlement took place. They also got commission of approximately $21,000 from the other vendor with whom we were trading houses. We were also paying him a cash difference as his house was more valuable so it was not a straight swap.
    "The agents have not wanted to know about our plight and we have had no apology or explanation from them as to why they feel they are entitled to keep our money," she said.
    Havard Daniels, licensee of The Professionals Mairangi Bay which has since shut, said he talked to the agents involved in the deal but could do nothing to help.
    "It appears that Classic Real Estate and [the agents] have acted correctly. The decision to cancel the contract was out of our control and made by yourselves," Daniels told Holgate.
    "I can find no information that would indicate we have acted other than in the best interests of all parties to the transaction," he said, citing the reasons behind the deal failing to proceed.
    The vendor of the Long Bay house was helpless after the move by the bank "pulling the rug from underneath" him, Daniels said.
    It was Holgate's call not to take action against that vendor.
    Real estate rules from November:
    * Real Estate Agents Act 2008 comes into force.
    * Axes Real Estate Institute's regulatory role.
    * Brings in new Real Estate Agents Authority.
    * Compensation of up to $100,000 possible.
    * Now, the maximum fine for agents is just $750.
    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

  • #2
    how are you supposed to protect yourself against this?

    find the bank involved and ask them if they will release the mortgage?

    would the owner tell you which bank?

    is the bank allowed to tell you?

    how long would it take?
    have you defeated them?
    your demons


    • #3
      There's another thread on this.

      You can protect yourself via contract, by ensuring that the deposit is held in a trust account (or, as the yanks say, in "escrow") until settlement.

      But under the current standard procedure, there is no protection for purchasers.


      • #4
        with this kind of publicity the agents need t get their act sorted and offer something along the lines of an escrow accouint, (like that WILL happen) or letters from the vendors solicitors, or bank holding the mortgage, saying they will release the property for auction

        or they can expect to be doing the same amount of auction work for less buyers and lower prices
        have you defeated them?
        your demons


        • #5
          Although I loath agents, their argument is that they have done what they contracted to do, which is to get an unconditionial buyer. Therefore, they are entitled to the commission.

          Basically, the agents are right. The vendor instructs the agent to find a buyer, and agrees to pay commission. The agent finds a buyer, gets a deposit and then deducts the commission from the deposit. If the vendor can't settle, the buyer is entitled to get the whole of the deposit back, from the vendor.

          Whether the vendor can afford to refund the deposit is a separate issue.


          • #6
            Yeah the agents should always pay the money back in cases like this. They have technically done their job but the other parties have been let down, so they should refund.

            In this case the agency had closed. And so I guess they've taken the money and run. You couldn't do this sort of thing and stay in business.

            As GF says, the only thing you can do is, as the purchaser, make sure the deposit is only disbursed upon settlement. OR, you don't pay a deposit and the agents have to get paid separately by the vendor. The agents will fight this tooth and nail.

            Squadly dinky do!


            • #7
              hot off the email from the agent

              Thanks eri
              I have had a response from the vendors lawyer:

              Hi xxxxx,

              If that is a concern the purchaser is able to insert a clause to say that

              • the full deposit is to be retained in the vendor’s solicitors trust account undisbursed until settlement with interest to accrue for the benefit of the vendor

              Its pretty unfair to you as agent as it means you will have to wait until October for your commission. I hope you will permit the above clause to be inserted.

              have you defeated them?
              your demons


              • #8
                Good grief!: Have many times do you so-called "property investors" have to be told the bleeding obvious?

                The purchaser cannot "insert a clause".

                It is a matter for agreement.

                Here is relevant question: How many of you sat Bursary and got over 250?
                Last edited by SuperDad; 18-07-2009, 09:24 PM. Reason: Sanitised post.


                • #9
                  Originally posted by Green Fish View Post
                  Here is relevant question: How many of you sat Bursary and got over 250?
                  I got school certificate.

                  Do you mean 250%?


                  • #10
                    Ffs ! ! !

                    Why pay a deposit?

                    If selling, why agree to a listing contract with that clause in it regarding commission?

                    Something like "commission is payable upon full settlement" or such like.
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                    • #11
                      Several years ago, when I sold a property, the RE Agent conducted himself very unprofessionally and unethically which caused me much distress and compromised my financial position.

                      I purchased a property through the same Agent (Contemporaneous settlement) and duly paid my deposit into the RE Agent's Trust account. I then tried to re-negotiate the fee because of my treatment by the Agent. Basically I was told where to go.

                      I then discussed this situation with my Lawyer and was advised that the RE Company was legally not allowed to deduct his fee from the deposit. I was advised by the Lawyer that I had to authorise the release of the Agent's fee.

                      I deducted several thousand dollars from the Agent's fee and paid the remainder to the RE Company. I duly received an account for the balance of the fee, which I did not pay. I have heard nothing since.

                      This seems to contradict all of the above posts. If I was able to do this, why can others not??
                      Last edited by Aston; 19-07-2009, 05:33 PM. Reason: clarity


                      • #12
                        Was this in New Zealand?

                        Vendors pay the fee here. Not purchasers.
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                        • #13
                          Originally posted by Keys View Post
                          Vendors pay the fee here. Not purchasers.
                          Sorry, I meant sold. I sold and purchased through the same Agent.

                          I have edited my last post.

                          This was in NZ in 2006.