Beware of Double Commission


If you are not happy with the estate agent you are using and decide to move to another agency, be sure to give the first agency the appropriate notice period or you run the risk of paying a double commission. This is according to Roger Collings, Office Manager of RE/MAX Central in Victoria.

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“There are cases where a buyer views a property but does not put in an offer. After the property has been on the market for some time with one agency, the seller decides to open up the listing to other agencies. After dealing with the second agency, the same buyer goes back to the property for a second viewing – this time making an offer. The previous estate agency can argue that while they did not close the deal, they introduced the buyer and therefore should be paid a commission,” says Collings.

He notes that a situation such as this emphasizes the importance of canceling one contract before entering into another. The cancellation period allows the previous agent to follow up on any existing leads as a result of their marketing. “The notice period is normally around 14 days; however, it all depends on the contract the seller has signed. In some cases, the notice period can be as much as four weeks. Before signing any contract with an agent, be sure to read through it carefully and check the fine print to see what the expected notice period is if you wish to cancel and instruct another agent,” Collings advises.

Even after the notice period, there could be some continued liability to the agent, which again, is determined by the contract. While there is no standard definition of what is deemed to be an introduction, see how the term is defined in the contract. It is possible that the contract defines an introduction as anyone who has viewed the property or even seen the brochure. “If the contract or the agent suggests that you will remain liable for a fee if a person they initially introduced to the property went on to buy it, request a list of the names of those introduced so that you can provide it to the new agent,” says Collings.

According to legislation, any exclusive agency agreement is required to include a double commission warning which states that if another agent introduces a buyer who purchases the property while the agreement is in place, the sole agent will be paid commission, as well as the agent who introduced the buyer. If you decide to instruct a new agent, be sure to inform them of your previous experience and list of names of people who have expressed an interest in the property. “If the new agent is aware of the situation they might be able to strike a deal with the previous agent and work out how the commission can be split between them fairly, rather than a double commission scenario. In most cases, agents will be willing to come to some agreement that will benefit all parties involved,” Collings concludes.

Choose wisely, choose RE/MAX.

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