Blog by Andrew Peck

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"What is the Listing Brokerage's Remuneration?"

"What is the Listing Brokerage's Remuneration?"

"A buyer’s agent showed a property and subsequently their buyer made an offer on a property to the listing agent one week before the listing expired. The offer was rejected by the seller. Right after (1 day after) the listing expired, the buyer’s agent contacted the listing agent and verbally increased the offer, however, the listing had now been listed by a different Realtor. In this scenario, what should the original listing agent and/or Buyer’s agent do? If the buyer’s agent went to the new Realtor and successfully closed the sale, does the original listing agent still entitle to anything?"

This scenario is anticipated in the listing contract clause 5A(i)(b) which reads:

LISTING BROKERAGE’S REMUNERATION:

The Seller agrees to pay to the Listing Brokerage a gross commission of of__x%___of the sale price of the Property, plus applicable Goods and Services Tax and any other applicable tax in respect of the commission (commission + tax = remuneration) if a legally enforceable contract of sale between the Seller and a Buyer who is introduced to the Property or to the Seller, by the Listing Brokerage, a Cooperating Brokerage or any other person including the Seller during the term of this Contract is entered into at any time after the period described in (a) where the efforts of the Listing Brokerage or at any time after the period described where the efforts of the Listing Brokerage or the Cooperating Brokerage were an effective cause; provided, however, that no such commission is payable if the Property is listed with another licensed brokerage after the expiration of the term of this Contract and sold during the term of that listing contract.

This means that the buyer’s agent must deal with the new listing agent and the former listing agent is not entitled to any payment of commission even though they were involved at the initial stages. If the property were not relisted and the buyer’s agent returned to the property with the buyer, there are two options available:

  1. If the buyer’s agent is only going to act for the buyer they would seek their commission from a fee agreement however they should alert the seller to the former listing agency’s possible right to collect a commission within 60 days after the expiry;
  2. If the seller wishes to be protected from claims from the former listing agent, the buyer’s agent can seek consent from their buyer to amend their relationship to one of Dual Agency. The buyer’s agent would then take a listing, which would afford the seller the protection of the clause above.

I would caution the second approach as I believe this is one of those “what goes around, comes around” situations. Ask yourself the Golden Rule – would you like this to happen to you if you were the listing agent? If not, make the arrangement to get the former listing agent their pay. They will respect you and you will get better cooperation in the future.

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