Last night got a phone call from a friend, out of the Central Virginia market area, who had their home listed with another agent. They told me that when the house was first listed the agent showed the property a lot, but in the past three months, there has not been any activity. In the beginning, the agent held open houses, but the last few months has not been in contact.
The listing agreement expired and soon after that, someone contacted the seller and made a verbal offer. Seller would like to accept but does not want to have to pay a $17,000 commission. He said, "But the agent didn't do anything."
Well, yes the agent did do his job. As a listing agent, the job requires making sure all the documents are filled out properly and market this property. Marketing on the Internet, open houses, put a sign out in the yard etc... It is the job of the listing agent to do what it takes to obtain a willing and able buyer.
Many times a listing agreement allows for a period after the expiration which if a seller were to get an offer on the property by someone who showed interest during the time it was marketed the broker is entitled to the commission.
Why you ask? Well, because once a property is listed many times the marketing efforts can continue to produce results for months afterwards. Many times I will get calls on property that I have listed that have already sold six months afterwards, even longer sometimes. The sales call is a direct result of the marketing efforts.
Okay, so what his next question was what if the property closes after the expiration period and any extension period. Well here, we run into the question of procuring cause, which is the purpose of the extension period clause.
Procuring cause means, what or who was the cause of this sale? The buyer in this case contacted the seller within the listing agreement extension period because of the marketing of the agent. Thus, the agent’s marketing is the procuring cause. Consequently, it is likely that the broker is entitled to commission.
Let me add, that I am not an attorney and by no means is this meant to be legal advice. This is just basic information. It is important to read and understand your particular listing agreement as each agreement could be different.
This has actually happened to me once. I listed and marketed a commercial property (for a relative). Once the listing expired, another agent took a buyer directly to the seller and negotiated a deal. All this happened within the extension period of the listing agreement.
My broker did not sue the seller in this case because it was a relative of mine. I have known of other cases similar that the broker has sued for commission. Not to say if my broker had, he would have won. Nevertheless, I do know it could have gotten nasty.
I also would never represent this particular individual again in a real estate transaction or give any more free advice. As far as the agent that took the offer directly to the seller, well, cannot help but remember this type of behavior and it does change what I think of her. Not sure, I could trust her again in any other situation.
Bottom line here it is just best to keep all the cards on the table. Every time I have tried to get away with something I knew was not the right thing to do it has always come back to bite me in the you know what. My reputation with my fellow agents, prospects and clients means way too much to me to ever do anything that would knowingly jeopardize this.