Dual Commissions?

Question

Let's say I have a property for sale. Let's say I have become dissatisfied with my Realtor, and I switch to a new Realtor. So my first Realtor is Realtor A and my new Realtor is Relator B. Let's also say that each contract includes a 7% commission.

About a week after I switch to Realtor B, an offer comes in. The offer is from someone who first looked at the house when it was listed with Realtor A.

So, I understand that I was under contract with Realtor A when this looker was looking, and became interested in my house. I understand that Realtor A has earned the commission, and I am obligated to honor my contract with Realtor A.

My question is about Realtor B. Do I owe Realtor B anything?

If I do, do I owe each Realtor 7%, or do they split the 7%.

Angie Menegay · Answer

I'm with Joel Owens on this.  In TX, your agreement with A typically has a protection period (3-6 months etc.) but it's voided if you relist with another Realtor (B in this case). As far as the buyer is concerned, it is highly unlikely that either A or B will also be the buyer's agent (i.e. "showing" the house to the buyer). The buyer will probably have his own agent (let's call him C), and your listing agent (B as of now) will be splitting his 7% commission with that agent C.

Hypothetically, assuming A is also the buyer's agent, then B will split his commission with A, because A is effectively the buyer's agent in this case. If B somehow manages to become the buyer's agent (which is rare), then B will become a dual agent and gets the entire 7%.

You shouldn't have to worry about whom B splits his commission with. You're obligated to pay B 7%, and he'll deal with splitting that with the buyer's agent (whoever that might be). These terms should be clearly spelled out in your listing agreement.

Hope that helps!
Angie

Wayne Brooks · Answer

First, yes the short sale bank is going to dictate how much commission is ultimately paid (it will be 5-6% if not a single agent), since it is coming out of their Net proceeds and they don't Have to agree to anything. Some listing brokers will have yoy pay the difference in any reduction in their (listing) side of the commission, but not usually.  Secondly, it would be a procuring cause issue.  Discuss this with your Realtor B, and have him agree to indemnify you from any claims by Realtor A, or have some language in your listing agreement that addresses it.  If you've had no offers close to your listing price after 6 months, it is simply overpriced.
Depending on your bank, there are also bank specific listing addendums that need to be executed.

Bill Gulley · Answer

I see Angie types faster than I do,  :)

I know you said not to quote you, but this is correct.

You can terminate a brokerage agreement at any time, they will have a protected period after any termination or expiration of the agreement.

The procuring cause in you example is Realtor A who is protected under the protection period.

In that case the A broker should follow through with closing responsibilities, B gets nothing.

However, in reality, the B broker may close and the A & B brokers may split the sales commission due. This is decided between the brokers, not the agents. An agent could continue a claim without the support of the broker but I've never seen that done.

The controlling agreement is the first one executed, you could have 50 listing agreements in 20 days, each will have a protected extension for the broker/agent who was the procuring cause of the sale.

This is also driven and controlled by local custom as all brokers have a working relationship within each Board of Realtors franchise.

If you are ever in such a situation you should call the most recent broker and inform them of the circumstances and ask for a board determination or written letter of agreement in the matter between the applicable brokers (not agents, but thier brokers).

If one broker is not a Realtor (member of the Board of Realtors) then you need a release or letter of agreement between the brokers.

A real estate commission usually can not be the basis for any lien upon a property, but it can become a civil matter.

Suing a seller for commission is bad PR for any broker, in residential dealings such is rarely done, larger commercial can be different.

And yes, the bank may not agree to a lower payoff unless commissions are agreeable.

Joel Owens · Answer

Hi Bob,

The bank will be paying commission in a short sale and it's doubtful they will cover 7% total to both sides.

Does your current agent have a track record successfully closing out short sales?? If not you could have been wasting your time all along. I hope you didn't sign something making yourself liable for any deficient amount of the commission the bank will not cover.

As  far as owing a commission to the first agent it depends on the agreement you signed with them. Normally there is a protection period built in but if you re-list then the protection period goes away.

What the protection is for is the brokerage getting the buyer and the seller wants to terminate or withdraw the listing and do a back door deal etc.

Jennifer Lee · Answer

oh i am sorry, never done short sale, i hope you find help ;p

Jennifer Lee · Answer

i am pulling out my real estate licensing book. i m still in class:

to be entitled to commission: individual must be
1. licensed broker
2. the procuring cause of the sale
3. employed with valid contract with buyer/seller

PROCURING CAUSE of SALE,the broker must have started or caused a chain of events that resulted in the sale. ex. open house, ads, showing the buyer.  broker who cause or complete such action without contract or without having been promised payment is a volunteer and may not legally claim compensation.

i think Both gets a cut. b/c i think this a question brought up in class.

the question was if you were B, and buyer was from A, do i have to share my commission.  and i think it was yes..
in your contract with A is there an clause that says, A still gets commision if your contract expires and his "buyer" puts in offers after bef X days???

don't quote me ;p

Bob Battel · Answer

I should also add that this is a short sale. Does our bank have anything to say about how much commission is paid?

Bob Battel · Answer

This is all hypothetical at this point. We do have a house for sale, and we are thinking of switching Realtors. Our contract expires in a few weeks, and we've had a couple of interested lookers.

So, let's say that Realtor B never showed the house to the looker, and that the offer was made through Realtor A.

What about if the offer was made through Realtor B?

Jennifer Lee · Answer

did B show the house bef offer, was offer made through B or A?

Dual Commissions?

Most Popular Reply