Real Life

Real estate agents and their commission rights

Can an agent claim commission on a house sale that’s fallen over?

**We recently signed an unconditional agreement with someone to buy our house. But just before the settlement date, the buyer reneged on the deal, saying the job they intended coming to our city for had fallen through.


This is a terrible situation for you to be in. Unfortunately, if you look at a standard real estate agent’s contract, it will state that the agent’s responsibilities end once an unconditional agreement is signed with a buyer. The agent will argue that she did her selling job – the fact that the buyer reneged was out of her control.

We thought we’d at least have his deposit to make up for it, but our real estate agent has deducted her fee from the buyer’s deposit. How can she do that? Our house hasn’t  actually sold, yet she’s taking a full commission.

So, legally, she is most likely in the right. Now, morally, that’s different. In my view, your agent should be prepared to share in your ill fortune. You’ve lost a sale, she should be prepared to lose a commission. I know a lot of real estate agents who would see it that way, too. After all, you’re still wanting to sell your house. She should get a commission at some point down the track.

But because she is legally entitled to deduct her full commission from the deposit, the most you can do is ditch her if your contract allows it and find a more compassionate agent. Most people don’t realise this about their contract with real estate agents.

It ends when an unconditional agreement is signed, not when full payment is made. Unless, of course, you alter the terms of the standard contract right at the start.

Do you have a consumer question for Kevin? Email [email protected], or post to Weekly Consumer, PO Box 90119, Victoria St West, Auckland 1142.

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