REA Authority Agreement For Selling

[Perry]

I've seen this topic come up, from time-to-time, but never really
followed the discussion as it didn't interest me greatly. However,
I dimly recall a few points.

1) I have the idea that many people amend the deposit payment clause
so that it goes to the vendors legal representative. (not kept by agency)

2) That commission payment is not made until all final (cleared) funds
for the sale are certain.

And, given the "Nelson case," I wondered if it was prudent to include
a clause saying no commission payable if a tenant buys, even during
an exclusive agency period? Same for a family member, perhaps? Even
a work colleague?

My general question is what sort of general/specific changes do folks
make to such agency agreements?

[PatMat]

How about making the contract non-exclusive? Or reserve the right to sell privately during the agency period? That may actually motivate the agent to work harder to be the first to bring a buyer.

[rakeshdey]

Ya I dont know about How about making the contract non-exclusive?

[ladyagent]

Might as well put a clause in it to avoid paying the salesperson.

[Perry]

Facetiousness aside, the stock standard agency agreement contains most of
what's appropriate. Perhaps ladyagent can tell me what happens in the event
that a deposit is paid, the vendor incurs legal costs, the agent gets first bite
of the deposit money, then, the buyer fails to complete the purchase, because
of some unforeseen circumstances.

An acquaintance told of just such an occurrence, with two back-to-back con-
ditional agreements. Something adverse happened to the first one, which then
triggered a failure in the second one. Two vendor/buyers were caught out. The
agents were not at fault.

So, the question is: has the agent really sold the house until the full and final
payment is irrevocably made and received?

My list of 'sole agency' exclusions:

* sale to a relative
* sale to an existing tenant*
* sale by owner-alone efforts.

plus

* deposit to be paid to vendor's legal representative with agent being paid in full
...once vendor has been paid in full.

Apart from those, the other clauses seem about right and equitable, all round.

* Same agency acts as PM

[speights boy]

My list of 'sole agency' exclusions:

* sale to a relative
* sale to an existing tenant*
* sale by owner-alone efforts.

plus

* deposit to be paid to vendor's legal representative with agent being paid in full
...once vendor has been paid in full.

Apart from those, the other clauses seem about right and equitable, all round.

* Same agency acts as PM

I would have thought it was better just to ask the tenant and rellies if they were interested before the agency contract.
If any of them come back with a yes or perhaps, then just name them specifically as an exclusion.

The 'owner alone efforts' can get messy if for example the buyer first realises it's for sale by seeing a REA advert.
I prefer just a full private sale effort first if you think you can attract your own buyers.

I also agree with principle behind no commission until settlement; however expect major tantrums and blanket refusals to accept that clause.
Of course if the majority of vendors starting insisting on it we could force the ladyagents to change.

[Perry]

I would have thought it was better just to ask the tenant and rellies if they were interested before the agency contract.
If any of them come back with a yes or perhaps, then just name them specifically as an exclusion.

Sometimes, life gets in the way. A son/daughter has a sudden
promotion and transfer thrust on them.

A tenant may leave, another arrive, during the agency period.

The 'owner alone efforts' can get messy if for example the buyer first realises it's for sale by seeing a REA advert.
I prefer just a full private sale effort first if you think you can attract your own buyers.

What of someone replying to something pinned on the staff
notice board, at work? Or a weekly staff e-newsletter?

I also agree with principle behind no commission until settlement; however expect major tantrums and blanket refusals to accept that clause.
Of course if the majority of vendors starting insisting on it we could force the ladyagents to change.

Why do you think such a clause would be stoutly resisted,
apart from timing?

I am not suggesting that the agent is not due the fee agreed
on, at all. Rather, it seems easier to agree on the exceptions
at the start, rather than have awkwardness, later.

[speights boy]

^ If the buyer fails to settle you are still planning on paying full commission, and you just take what is leftover from the deposit?

[Perry]

If the buyer fails to settle, then the buyer was not a buyer.
Rather, a tyre-kicker. The REA is not paid a commission to
introduce prospective purchasers, but to sell the property.
And, until the agreed purchase price is paid in full, there is
no sale, in the correct sense of the word, right? So it seems
fair that once the sale is settled, the REA engaged to sell
the property gets paid in full, at the agreed rate.

Not sure if that answers your question. The point is that
'sold' isn't so until paid-in-full. Or is there another way of
looking at it?

[Keys]

Of course there is Perry.

Sold is when the contract states it is (listing). Unless you change the listing agreement.

Sold is when there is an unconditional contract on the property (S&P). Unless you change the sales agreement as I believe the commission bite is in there as well.

Make sure you give notice, in writing, that the general agency ends when the exclusive one does.

[Ivan McIntosh]

Yup, have to agree with Keys. There are plenty of cases where an unconditional sale failed to complete and the real estate agents kept their commission or, if no deposit had been paid, sucessfully sued the vendor for their money.

There are some agency agreements that are very vague on the meaning of a "sale", but most are pretty tight about it being an unconditional contract.