Special offer

So how do real estate agents get paid?

By
Real Estate Agent with eXp Realty LLC 0225227139

A real estate brokers compensation is specified in the listing agreement.  Compensation is considered to be  earned when the broker has accomplished the work for which he was hired, and it is due at closing.  Most sales commissions are payable when the sale is consummated by delivery of the seller's deed.  This provision is generally included in the listing agreement.  The broker's compensation is earned when a completed sales contract has been ratified by a ready willing and able buyer and by the seller.   So just for clarification purposes the compensation is earned at the time of a ratified contract and then payable at closing.

In order to be considered the procuring cause the real estate broker must have taken action that started or caused a chain of events that resulted in the sale.  A broker that causes or completes an action without a promise or contract to be paid is termed a volunteer and has no legal claim for compensation.  In order to collect a sales commission from a seller, the agent must be able to prove that the seller agreed to pay the broker a commission for the sale.

 Keep in mind that once a seller accepts an offer from a ready, willing and able buyer, the seller is technically liable for the broker's commission regardless or not the buyer completes the purchase.  A ready willing and able buyer is one who is prepared to buy on the seller's terms and is ready to take positive steps toward consummation of the transaction. 

A broker who as produced a buyer ready willing and able to meet the listing terms is usually entitled to a commission if the transaction is not consummated for any of the following reasons:

  1. The owner changes their mind and refuses to sell.
  2. The owner's spouse refuses to sign the deed.
  3. The owner's title contains uncorrected defects
  4. The owner commits fraud during the transaction
  5. The owner insists on terms not in the listing, such as the right to restrict the use of the property
  6. The owner and the buyer agree to cancel the transaction.

Should you have any further questions about procuring cause I encourage you to seek the advise of a professional attorney licenced to practice law in the state of Virginia.  This is article is not to be taken as any advise given upon the legal matters discussed.

 

 

Posted by

Nannette Turner Saunders, Associate Broker

Short Sales Coordinator

Keller Williams Realty

1709 Laskin Road

Virginia Beach Va

Comments (5)

Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Nannette procuring cause, one of the most misunderstood terms in real estate. You summed it up nicely.

Thanks. Good Post!

Mar 03, 2008 02:05 AM
Nannette Turner
eXp Realty LLC - Lynchburg, VA
Online Marketing Home Ownership Advocate Specialis
Thanks Michael!  It is confusing and complicated.  After much study and deliberation it can be demystified!
Mar 03, 2008 02:06 AM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA
Good information.  Thankfully, I've been able to avoid these situations so far in my career. 
Mar 03, 2008 04:15 AM
Nannette Turner
eXp Realty LLC - Lynchburg, VA
Online Marketing Home Ownership Advocate Specialis
Chris- Good for you! And I hope you continue to avoid them.  Happy Selling!
Mar 03, 2008 04:19 AM
Jim Ludes
RE/MAX Top Properties - Coal City, IL
Grundy/Will County, IL REALTOR

Hate to necropost this one....but I "had" to. GREAT post....but what's with the gal giving the middle finger?? haha 

Jul 20, 2008 09:34 AM