Scouting Agents
by Tim O’Dwyer M.A., LL.BQueensland Solicitor & Consumer Advocate
watchdog@argonautlegal.com.au
How to make a sale and collect a commission...when a property's NOT for sale!
The basic real estate rule across Australia is that a licensed agent is entitled to be paid commission on a property sale provided the owner has engaged the agent in writing for that purpose. It is not unknown for agents to make sales first, then later secure their sellers’ signatures to ensure entitlements to commission.
In Queensland, for instance, a real estate agent must not commence any selling activities for a client, nor collect a subsequent sales commission, unless both agent and client have first signed a government-prescribed form of appointment. The maximum fine for a breach of this three-year old law is $15,000, not to mention the more severe practical penalty of missing out on commission if the agent goes ahead and sells without being properly appointed. Not that this prevents some Sunshine State agents still trying to get paid for selling properties they are not lawfully authorised to sell – as the following true story shows.
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Peter Mericka B.A., LL.B of Lawyers Real Estate at 7:50 AM
4 Comments:
A good article by Tim O'Dwyer.
If a buyer approaches me and asks me to contact the owners of a particular property that is not on the market and he is genuinely interested in buying it, this, I believe is the correct procedure and one that I follow:
I explain to the buyer that I will be acting on his behalf and in his best interests because he has approached me. He must sign ( in Queensland) a Form 22a, listing appointment in which he appoints me as his agent for the purchase of this one particular property. I also explain that if our approach is successful and the sale goes through then he, the buyer, must pay the commission not the sellers. This is spelled out very clearly on the 22a.
The sellers are forewarned of course by me that while they will pay no commission on the sale , I am acting in the buyers best interests because the buyer has engaged me as his agent.
I have to admit I do not enjoy these situations. Recently after I explained all this to the prospective seller she decided to list her property with another agent because I was not acting in her interests. (The price of honesty?) My buyer naturally approached the other agent with the same offer which the seller accepted. The seller paid the commission not the buyer who was going to pay commission to me. The buyer still can not believe his luck.
On another occassion the seller graciously refused to let the buyer pay the commission because he was making all the money not the buyer.
I then had to prepare a second 22a as a one off listing appointment for this one buyer only.
Chris Warren
Thanks for once again providing The Blog with some valuable feedback, Chris.
Clearly you have a quite commendably ethical approach to selling.
You are probably one pretty rare real estate bird. While some might see you as a kind of cuckoo in the nest, I’d prefer to regard you as an eagle (scout?) soaring high above the turkeys.
Regarding your final anecdote, I must say I have some misgivings about the legalities of a situation where, one minute you are the appointed agent the prospective buyer, then the next you are acting and being paid by the seller. fear not, Fair Trading cares little about such inconsistances, especially when there is - in its words - "no consumer detriment.)
Meanwhile your Real Estate Institute has ominously given its members this warning to “PROTECT YOUR COMMISSION”:
“During recent times, more solicitors are asking for a copy of the PAMD Form 22a listing authority with the contract… Why? The answer is a little disturbing. With the…market moving and…prices increasing the amount of commission paid by the sellers is quite substantial. Some solicitors are looking at the validity of the listing authority and in some cases advising their clients that they do not have to pay commission.
It is vital that the PAMD Form 22a with REIQ Sales Schedule & Terms is properly completed. If it is not you may be putting your hard earned commission in jeopardy. For example:
1. An agent sold a property during the marketing campaign… The solicitor for the sellers asked for a copy of the listing authority only to be told…they did not receive one. RESULT: NO COMMISSION PAID.
2. A 60 day exclusive listing…was signed and a copy left with the sellers. Their solicitor asked for the copy…supplied with the contract... The solicitor advised the clients that the agent did not hold a valid authority because it was for 61 days…RESULT: NO COMMISSION PAID.
3. An exclusive agreement was entered into and copies were left with the sellers. The property was sold after the exclusive agency had expired. The solicitor again asked for a copy and received one. He advised that the sellers need not pay commission because (paragraph) 5.2 was not completed. RESULT: NO COMMISSION PAID.
It is vital that you have procedures in place to ensure that the correct form is used and that it is fully completed. “
Are there any Chris Warren like estate agents in Melbourne?
The agents in Melbourne, with one exception, have been absolutely dreadful. Do they recruit socio-paths down here in the 'business'?
Is it legal for a real estate agent not to receive commission for the services he/she has provided? How does this reconcile with the quantum meriut principle of law?
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